Guest post by Square.
Getting paid. It’s the bedrock of any business, but unfortunately, it can sometimes take a while. From slow-to-deposit funds to clients forgetting about their invoices, there’s a lot that can stand in the way of getting paid fast. Luckily, there are some steps you can take to make sure you see money in your account as quickly as possible. Here are some tips for how to ensure you get paid faster — and speed up the time it takes to actually make a transaction.
Opt for digital invoicing.
If you’re mailing out paper invoices, it’s likely you’re not getting paid as quickly as you could. Digital invoices are a much faster option, not to mention a more convenient one for your clients. An online invoicing system allows you to quickly spin up an invoice (using a ready-made template) and send it to clients via email, from which they can quickly settle up. And because everything is right there in their email inbox, there’s the added benefit of things not getting “lost in the mail.”
Be clear about terms.
When you send invoices, don’t leave any room for interpretation. Add due dates and reinforce them with a friendly message thanking your customers for their business and reiterating the deadline. This way, it’s clear that you want the payment next week, not when they get to it.
You might also consider giving people an incentive to pay early, like offering a slight discount for customers who pay a certain amount of time in advance. Once they experience the benefits of early payments, they’ll never settle for being just on time again.
Be strategic about your invoice timing.
Obviously, you get paid faster if you send an invoice as quickly as possible. Online invoicing apps can help with that, allowing you to send an invoice directly from your phone after you’ve finished up a job. (This is particularly helpful if you’re out in the field, away from a computer.)
But if you have a backlog of invoices to send (it happens to the best of us), be strategic about which days you fire them off. Crunching some numbers from Square Invoices, we found that those sent on Thursdays have the highest likelihood of getting paid the fastest. On average, they’re paid within two business days.
Opt for credit cards, not cash or checks.
Not only are Americans paying with paper less and less (a recent Nilson Report projects that by 2018, cash and check payment volume will decline by 24 percent and 46 percent, respectively, in the United States), cash and check deposits can take a while to land in your bank account. Electronic payments (credit cards and mobile payments), on the other hand, usually show up in your account within one to two business days.
But remember, when you’re looking into a point-of-sale (POS) system that accepts credit cards, make sure it also accepts chip cards (EMV). The nationwide switch to chip cards (which are much more secure and harder to counterfeit than magstripe cards) is well underway. What’s more, something called the liability shift went into effect in October 2015, shifting the onus for certain types of fraud onto businesses if they aren’t set up to accept chip cards.
Take steps to avoid chargebacks.
A chargeback happens when a customer disputes a charge from your business and asks the card issuer to reverse it. Chargebacks are meant to protect consumers from unauthorized transactions but can mean big headaches for businesses. That’s because when a chargeback happens, the disputed funds are held from the business until the card issuer works things out and decides what to do. And this can often take a chunk of time.
While you can’t completely control whether a customer instigates a chargeback, there are steps you can take to prevent disputes. Those include a secure POS that accepts chip cards, a reputable e-commerce platform, a streamlined shipping process, and a clearly stated return or cancellation policy. Read more about chargebacks and how to prevent them.
Accept mobile payments (like Apple Pay).
Reducing the amount of time it takes to get paid is important. But speeding up your checkout time helps you make more sales in a shorter amount of time (especially if you have a line out the door). And while chip cards are much more secure than magstripe cards, you’ve probably noticed that they’re pretty slow to process. Mobile “contactless” payments (like Apple Pay, Android Pay, and Samsung Pay), on the other hand, are much (much) faster. They’re just as secure as chip cards but take just seconds to process. So if you want to speed things up, it’s worth looking into a POS that can accept both chip cards and mobile payments.
All these tips help take the waiting game out of getting paid. But they also go a long way toward helping you to offer the best, most streamlined customer experience.
Learn More About Square
Square creates tools that helps sellers of all sizes start, run, and grow their businesses. Square’s POS System offers tools for every part of running a business, from accepting credit cards and tracking inventory, to real-time analytics and invoicing.