The Art of Getting Paid – Collecting Non Cash Payments

Originally Published in Registered Gas Engineer Magazine – May 2017

If you’re regularly struggling to get paid on time and always seem to be chasing late payments, you’re not alone. According to the government, SMEs are owed £26.3bn in overdue payment.

You needn’t be one of them if you take action.

You will find a lot of these steps are common sense, but what makes the real difference to your business is getting the systems (software or otherwise) in place so it is not reliant on someone taking action. Making these systems as automated as possible will limit the amount of time you spend chasing unpaid invoices.

The ideal case is to get the majority of your customers to pay on site, ideally as soon as the job has been completed,  as that urgent boiler repair will seem a lot less urgent a month or two later.

The easiest way is to give them options  – cash, cards, cheques, direct debit, pay me now links, Bac’s.

Accept them all – some of these options will cost more, but keep in mind the cost of your time spent chasing or the risk of not getting paid at all.

Provide an invoice straight away, either by email or printing a copy, can also help.

This has the added benefit of making sure everything was included in the invoice and when you move to the next job your mind will be clear to focus on the job at hand instead of trying to remember everything.

The focus should be to make it as easy as possible and so it is one less thing the customer has to deal with.

Don’t be shy about asking – ‘Can I take a payment now?’

For the invoices that were not paid on site, you can use software to automatically chase and provide a link within the email for your customers to pay you.

And the final part is a way to easily see and track any outstanding invoices.

Use either a good accounts package or any of the custom built software for Gas Engineers which should have this feature.

Taking Payments on Site (App Based)

Recently there has been a much wider range of different providers to choose from.

There are still the traditional offering of mobile card machines provide by banks which have built in sim cards so they are able to be used on site.

These normally come with 12 to 18 month contracts, monthly and transaction fees, plus tend to take quite a bit of time to setup – they are mainly geared towards large companies and brick and mortar stores.

They also tend to have more complex pricing, where the fees change depending on the type of card (debit, credit , business) and how you take the payment (in person, over the phone) making it almost impossible to work out the fees before you start using them.

With the newer app base solutions, sign up / set up is very quick and pricing is normally pay as you go, without monthly fees.  As an added bonus they also deal with the compliance requirement on your behalf – without charge.

Between all providers there is a large difference in pricing so it is worth spending the time checking them out.

Providers – iZettle, Square, Worldpay, Paypal, PayNow for Stripe (links to your Stripe account)

Over the phone Payments (Virtual Terminals)

These are very similar to the apps, but offer a website where you can enter your customer’s card details and take the payment over the phone.

Providers – Stripe, WorldPay, Paypal

Payment Links (Pay Me Now)

These can be either be a dumb or smart link.

A dumb link is where anyone can pay you any amount.  You customer would click on the link and enter the amount to pay and you would use the same link for all of your customers.

Providers – Paypal

A smart link is created for every invoice and your customer would just need to click on the Pay Now button within or next to their invoice. This also has the added benefit of letting you know once an invoice has been paid and is offered by a number of accounts software packages.

Providers – Worldpay, SagePay, Xero , Quickbooks.

Subscription Payments

We are finding that more and more companies are starting to offer a monthly maintenance package to their customers.

This helps customers avoid unforeseen costs and give them the reassurance they know exactly what their outgoings will be each month.

This also helps you build a monthly reoccurring income and any risk is spread across a large number of customers.

You can take payments via Direct Debit or by Card. Out of the two methods Direct Debits are more cost effective.

Just be aware that with direct debits it can take up to 6 days for the funds to clear into your account so it is more suitable for on-going subscription rather than a one off payment for a repair.

Direct Debit Providers – GoCardLess, EazyCollect

Credit / Debit Card Providers – Stripe, Worldpay, Paypal

Card Processors

Stripe – Phone, Subscription and on Site with PayNow App.

Easy to use, quick to setup,  low and straight forward fees (1.4% + 20p)

An all-round good provider.

WorldPay – on Site, Phone, Subscription

Pricing wise it can work out very similar to stripe but a whole lot more complex – as the fees depend on the type of card (credit and business 2.75% / debit 0.75% ) and there are a monthly fees for the service and a yearly fee for PCI compliance – so a lot more paperwork.

Interestingly they have an option to send out an invoice with a link to accept payment.

Paypal – On site, over the phone, subscriptions

Paypal is well known and has the option of using a card reader (£45) you link to an app or just use the app on your phone and manually type in your customers card details.

It is easy to setup, no monthly costs, but with fees ranging from 2.75%  and 3.75% + 20p per transactions it is one of the most expensive on the list.

Website can be hard to use and there are few very steep hidden fees for example if a customer queries a payment.

Could be worth exploring if you are doing a very small number of transactions of low value or use solely as a backup method.

iZettle – On Site

Very easy to setup and uses card reader (£29+vat) linked to an app on your phone.

No monthly costs and fees between 2.75%  to 1% depending on how much you process each month.

Direct Debit Providers

GoCardless – Subscriptions

Easy to use, quick to setup and straight forward pricing of just 1%.

No monthly fees and can setup and track subscriptions.

EazyCollect– Subscriptions

Similar to GoCardless, seems to have more options and may be slightly cheaper.

Appears to be more complex and will not accept annual subscriptions.

Note: If you are able to get your own ‘Service User Number’ from your bank, it will make it even cheaper but normally you would need a turnover of at least £1 million.

Cheques

As a bit of a side note there are plans to make Cheques a whole lot easier and quicker with major changes later this year requiring all banks to clear cheques within a day instead of the current week or so.

And Barclays and Lloyds Banks looking to accept cheques imaged via their own apps, so you will not have to visit the bank.