🤑 Let's Get That Money!
Tools to help you receive money from your customers easily. There's no reason for you to be handling customer paper checks over the postal service!
Imagine a customer wanting to pay you, but your process requires them to pull out a checkbook, write the check, put it in an envelope, mail it, or drop it off; you wait at least seven days to receive your check; you wait another two days to deposit it, then it takes another 2 days for the money to be available in your bank account. Finally, you can use that money to pay for expenses. How tedious and annoying is that process?!
As a business owner, you want to make it easy for your customers to pay you. If you’re a professional services business, ensure your invoicing system allows your customers to pay you online via card or ACH. If you run a restaurant, make sure your point of sale is easy to use. If you run a software or digital goods company, make sure your online payment processor connects easily to your customer’s favorite way to pay online. It’s all about how fast you can receive your customer’s payments to increase cash flow. If you’re waiting 30, 45, 90 days to receive payment but you have expenses you have to pay during that wait time, you’ll always feel like you living check to check.
Yes, these methods to receive payments online will require you as a company to pay processing fees, but that’s a small price to pay for easy payment collection. If you’re really annoyed by the 3 - 4% fees, then just bake it into your customer price. I don’t believe going the full manual route in order to avoid processing fees actually saves you that much money. It definitely takes up your time.
Tools to use to get your customer’s money:
Invoicing System
Point of Sale (POS) System
Payment Processors
Invoicing System
Quickbooks Online or any accounting system will allow you to send invoices online and allow online payments via credit cards or ACH. You just have to make sure you turn on the payments function in your accounting system. The pros of invoicing from your accounting system are that your revenue is automatically recorded in your income statement and you can easily track. You can also run an Accounts Receivable Aging report — this lets you see who owes you money and for how long. This way, you can come up with a collections strategy.
Point of Sale System
You’ve most likely used a point-of-sale system as a customer before. They’re everywhere, and some are industry-specific, like Toast. You see Toast used by restaurants. Their backend reporting is useful for restaurants, and they have integrations. I recently saw a coffee shop using Dripos as their POS system which seemed to be created for the cafe industry. Some banks also offer merchant services that include POS systems. Just make sure their system has integrations, and it’s easy for you to pull reports online. Square is another popular system that’s easy to use and implement, so many independent shops use it.
Payment Processors
Payment processors such as Stripe, Paypal, or Square allow anyone to pay you online easily with a link. All three also let you send invoices if you don’t have an accounting system yet. Ensure all accounts created are connected to your business, not a personal account. They’re easy to use, and you’ve probably interfaced with each system as a customer. I don’t believe in using peer to peer payments like Venmo or CashApp for business because it’s too easy to switch between your personal and business account. If a business owner wants the QR code functionality, it’s easier to create one that links to your Stripe, PayPal, or square account.
Having an easy way to receive customer payments is fundamental to your business. It makes sure your cash flow doesn’t dwindle as fast, and you have enough balance to pay for your expenses. Most businesses have payment terms such as 30 days, 15 days, or due on receipt. You have to choose which payment terms make sense for your business. For businesses such as restaurants, payments are expected on the day of service, so they have quick cash turnover, but a consulting business has a longer time period for payment.
🔜 The next post will be about creating a process for monthly close and reconciliation of accounts.
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😁 Disclaimer: I'm not your employee or finance consultant, so all business decisions are yours.
Woolichooks provides finance consulting services, which include setting up finance software systems and processes to enable companies to scale for growth.
So helpful! I need to set up payments for my business next week and this helped me get an understanding of what to expect!