In any business endeavor, an owner may encounter multiple sweaty-palmed experiences. Customers may engage in multi-tiered assaults ranging from vehement criticism of a product or service, censure for (the lack of) customer assistance, objection to time lag for delivering said product or service and the airing of numerous other grievances.
Of course, an owner realizes that this comes with the precipitous territory of conducting business. However, it remains a humbling experience when interacting with a vociferous client — an individual who will let everyone know from friends and relatives to, of course, “The Better Business Bureau” about the perceived shortcomings of the business.
Perhaps the most daunting situation affecting an “it’s not all what it’s cracked up to be” business owner is a payment that is late or never arrives. Consider the private school owner who reminds a parent about the monthly fee only to receive this reply: “Just give me a few more days.” Think of a construction company owner who rightfully seeks a periodic payment from the client and is dismissed with “I’ll pay you when I can.” Envision a gym owner who may have to do “back flips” just to collect on that monthly payment.
Whether by choice or even necessity, there seems to exist a bandwagon of customers who may not so easily depart with their money regardless of their responsibility or what is morally right. This lamentable circumstance (i.e., when an owner cannot efficiently collect money that is due) seriously hampers cash flow — a business’ lifeline, crucial to its vitality. When business expenditures outpace revenues (negatively affected by late or non-payments), commercial failure is all but guaranteed.
There exists two primary ways in dealing with an undesirable client whose money remains elusive. Many businesses still embrace the collections process — whether they perform this task in-house or contract with outside agencies. If the business opts to contact the client directly, invoice after invoice may be forwarded which is very labor-intensive and costly. An owner needs to consider the expense of invoices, postage, late notices and collection calls, and the time it takes personnel to fulfill this duty (and the concomitant pay / benefits such personnel are accruing). Outside collection agencies are not necessarily an advantageous alternative. They typically keep at least 25% of an owner’s deserved profit.
The second method of handling the cash flow-challenging customer is predicated on the premise that a business owner must be proactive. He/she needs to realize the benefits of automated payments, and how this process can more readily prevent the “Dear customer, please pay me” letter.
Automated payments are a vehicle where a customer’s account is automatically debited and transferred to an owner’s account on the exact date a payment is due. Upon the decision to purchase a product or utilize a service, a prospective customer signs a simple release form, giving permission to transfer payment on a specific due date. The customer chooses how to pay, most notably with checks or credit cards.
The operative question arises: How are funds transferred from customer to owner on a regular basis? While business owners are familiar with credit card terminals, many do not know about the existence of virtual terminals. A virtual terminal is an easy-to-use web-based interface where an owner can input the customers’ credit card and/or check payment information enabling him/her to accept phone, fax or email orders. For those virtual terminals that can facilitate recurring payments, the owner simply needs to input the initial number of payments and the length of time between payments.
There are myriad advantages using an automated payment system: It ensures reliable cash flow, cuts down on expenses such as mailing invoices or contracting with collection agencies, settles funds in a timely manner, streamlines the billing process, etc. Andy Grove, Intel’s Chairman of the Board, understands the aforementioned benefits. A few years ago he said, “In the same way that we have seen a massive flow of content to the Internet, we will see a shift to automated payment in the marketplace.” Any savvy business owner should want to be an active participant in this shift.
Author, William Hamilton, owns a payment processing company, IntelliCollect, and their services are listed at: http://www.intelli-collect.com. His company offers tremendous assistance to new and veteran business owners who need an effective solution to accept credit cards and checks.
