5 Questions to Ask About Your Payment Collection Process As the Economy Opens Up
The ongoing health crisis forced most businesses and entrepreneurs into making adjustments of all sizes. This involved minor tweaks in daily operations to wholesale pivots. One of the areas in which many businesses had to shift focus and add some flexibility is payment collection and processing.
How your company gets paid is essential to its continued growth and success. Thankfully, the economy is opening back up in many places. That presents a terrific opportunity for entrepreneurs willing to take a good long look at their payment collection practices and ask a simple question.
How can you build on the momentum and cater to your customers in ways that keep them coming back in the future?
1. Are you collecting electronically?
Consumers who find out that they cannot securely pay your company using digital technology may well abandon you altogether in favor of your competition. Today’s consumers simply expect to be able to pay their bills online.
According to a 2018 survey by the Federal Reserve Bank of Atlanta, more than 53% of the dollars spent on bill payments were paid electronically. Today, buyers enjoy a wide range of digital payment options, from PayPal to Afterpay and more.
It’s never been easier to empower your customers by providing a way to pay for their purchases online. If your company only accepts checks or cash, fix that as soon as possible.
2. Are you making it easy to buy on mobile?
If you’re not catering to mobile device users, you’re literally turning away money.
Already, over 70% of smartphone users make purchases using mobile technology. That could be through an app, point-of-sale or using a mobile device to buy through a store’s website directly. When you look at millennial and GenX shoppers, that number increases. It will only go higher in the future.
Start by exploring your own customer data and perhaps survey existing purchasers to gauge their preferences for mobile payment and shopping experiences. One relatively recent trend is the development of and reliance on Progressive Web Applications, or PWAs. These are websites that act like apps on user’s mobile browsers, without the need to download or install new code. (PWAs can also be implemented on desktop.)
Today, your customers and prospects expect a smooth, user-friendly and customer-centered experience. How easy have you made it to purchase from your company or website using smartphone or tablet technology? Here, too, a little market research can produce big results.
3. Do you offer financing options of some sort?
Customer financing empowers customers to complete purchases from your company or e-commerce site on their terms, without making you wait for payment. It’s the definition of a “win-win” strategy, with customers getting their goods or services immediately and being able to pay for that purchase over some length of time. All the while, the merchant company (i.e., your business) gets paid in full right away.
Customer financing options such as Affirm for consumer goods, Hearth for home improvement projects and more can help your customers afford the cost of purchasing your goods or services in the most financially sensible way.
As such, it’s a value-added service that helps transform prospects into paying customers. Customer financing can reduce your abandoned shopping cart rate and help increase revenue and completed sales. What’s more, according to one study conducted by PayPal, customer financing can increase your average order amount up to 15%.
4. Do you clearly communicate with customers at all points?
It’s crucial to communicate openly and clearly with customers at every point during the purchasing experience — before, during and after. When you tell them exactly what they’re getting from your company and what their experience as your customer will be like, you can expect a smoother relationship from beginning to future purchases.
It’s also crucial to manage your customer’s expectations about payment and services, including:
When and how often you’ll invoice
When payment is due
What happens when payment is late
Whether you’ll add late fees or collection costs to past-due amounts and to what extent
The crucial part is to make sure your terms and policies are clearly stated and visible to your customers or clients. You’ll probably also want to check with a business attorney in your area to ensure your policies comply with applicable laws.
Establish a system or set of procedures to follow every time a client or customer is late with a payment. A series of emails or phone calls should start with a gentle attempt to contact the responsible individual and “check in” with them about the late payment. Life and business are fairly chaotic these days, and mistakes do happen.
5. Do you reward early-paying customers?
Offering a reward system to customers who pay promptly is a simple way to encourage them to buy. Even something as simple as a small discount for paying in 10 days instead of 30 days can encourage early payment.
Moreover, this approach helps you turn one-off customers into repeat business and maybe even loyal customers for life. Because most people don’t expect this kind of enticement, those who take advantage of it tend to develop significant amounts of goodwill towards the company in question. They might also be more likely to recommend your brand to friends and colleagues who are seeking recommendations. And as the economy opens up more and more, any reward, no matter how small, can help lead your company to a more successful future.