Most business owners struggle to keep their finances on track.
No matter how much time we spend cash planning, maintaining accounting software, organizing books, keeping communication open with customers, and monitoring status updates of payments, we can’t control what we can’t control.
Let’s say that your customer misses a due date and then leaves for vacation. At the same time, you may have another customer that forgot to approve one of your invoices.
What happens if a check gets lost in the mail? Can your business sustain that kind of delay?
Think of how much unnecessary room for error that paper-based processes create: paper gets lost, mail takes time to arrive at its destination, banks and mail services shut down during holidays and weekends, and deposits take time to clear.
There’s a lot that can go wrong between point A, your customer approving a payment, and point B, that payment reaching your bank account.
One way to alleviate this uncertainty is to set up a system for getting paid online.
This system reduces the potential for error that paper inevitably brings. Using software, you can create a hub for processing digital transactions. You can integrate this hub with your accounting software. Imagine: your customer pays your business with a click of a button, and that payment automatically syncs up with your books.
With this capability in place, you’ll not only process transactions faster— you’ll also reduce the busy-work that comes with depositing checks, reconciling funds, and maintaining a paper trail.
Here’s what to know about getting paid online and setting up with your payment system:
The Process Begins with Your Accounting Software
In order to receive payments online, you need accounting software that supports this capability.
If you’ve been managing your books using spreadsheets or a paper-based system, now will be the time to migrate. You may choose to start fresh with a new system for a new tax year, archiving your previous years’ books to your new system.
You can also consider migrating several years’ worth of books, especially if you need to track financials over multiple tax seasons for your business.
You’ll want to choose accounting software that is flexible and integrates with different types of software. This capability will enable you to build up your business’s financial operations steadily, over time.
You may decide, for instance, to connect your inventory management system with a point of sale (POS) solution that syncs up with your books. You might also decide to connect this accounting infrastructure to a credit card processing system. What’s important to remember is that:
- The accounting software decisions that you make now will have impacts to your finance operation years from now and
- You need enough flexibility, with your technology, to prepare for the unknown.
In doing your due diligence, make sure to choose accounting software that enables your business to evolve, being mindful that the company that you’re running today may be very different from what you’re building toward in the future.
For this reason, many small business owners decide to use Quickbooks Online.
The software is robust enough to stand alone, meaning that you don’t need other software to manage your accounting workflows.
You can accept online payments within Quickbooks, enabling your customers to transfer funds from their bank accounts to yours in a few steps. You can also enable credit card payments and connect your software to popular payment processors such as PayPal and Bill.com.
Online Payment Options to Consider
There are several ways that you can receive payments online:
- Direct payments or one-time wire transfers through bank accounts – This payment method is similar to receiving a check, except that you’re eliminating paper and automating the creation of a digital account record, along the way. You can read more about direct payment systems via ACH here.
- Automatic payments between bank accounts – You set up your customers’ information once and bill them regularly, at predefined intervals throughout your contract term. This payment system maximizes the chances that you’ll get paid on-time by minimizing the chances for paper-based error. If you’re a Quickbooks user, you can learn how to automate credit card payments here.
- Credit cards – Oftentimes, your customers need to follow detailed accounting workflows to send you a check. Let’s say that you run an events business, for instance, and your company is planning a conference on behalf of your client.
In order for your customer, perhaps a marketing manager, to pay you, he or she needs to obtain approvals from a department head, leader from your finance team, and possibly an executive.
One way to circumvent this challenge is to accept credit card payments online and/or through a mobile payments solution. As a business owner, you’ll pay a transaction fee. But the trade off is that you get paid, faster. You can read a cost benefit analysis for accepting credit cards in your business, here.
- Mobile payments – This method of accepting payments is especially valuable for companies that have a lot of facetime with their customers. You can use your smartphone as an extension of your accounting software.
Using a credit card reader, you can process payments on the phone or after an in-person planning meeting. If you’re using a Quickbooks reader, you can accept mobile payments directly in your accounting software.
You’ll want to use a combination of these methods. Ease of use for your customers = faster payments. With faster payments, you minimize your potential for accounting or administrative hiccups.
Choosing Payment Processing Software
Most likely, you’ll need to use multiple rather than just one payment-processing system.
You’ll need to evaluate criteria ranging from transaction fees to payment processing times, ease of use, and compatibility with your clients’ systems.
Will you want to customize your payment portal with your branding or logos? Will your customers consent to setting up online portals? These questions are important to keep in mind and build into your long-term strategy.
Here are a few options that you’ll want to consider enabling:
- PayPal is one of the most popular and well-known methods for getting paid online. The platform is set up to process payments from hundreds of countries, legally and securely, around the world. PayPal has a free, retail service for consumers, so there is no cost to your customer for making a payment. As a business owner, however, you will be responsible for paying a fee for each transaction. You can use PayPal to receive money transfers, electronic checks and/or credit cards. PayPal charges 2.9% plus $0.30 per transaction, based on volume.
An ACH payment is a type of bank-to-bank transfer. The term “Automated Clearing House” refers to an electronic network that can process payments in batches. Small business owners can sign up for a service, in which they pay a monthly fee to make this type of transfer. ACH transfers cost less than direct wire transfers, which are typically $25/month for domestic transactions and $40/month for international transactions. In contract, businesses pay a monthly fee for ACH transfers.
- WePay is a payment processing service that integrates with many different types of accounting software, point of sale systems, ecommerce systems, email marketing providers, and bank accounts. The service is a part of Chase, meaning that anyone who has a Chase bank account can easily use it—and that the platform comes with strong fraud detection, compliance, and integration capabilities. WePay charges similar processing fees to PayPal.
Stripe allows business owners to process payments via credit cards or direct deposit. It takes care of all your payment needs—from storing cards to handling subscriptions—all without using a merchant account. Like WePay and PayPal, Stripe charges 2.9% plus $0.30 per transaction, based on volume.
- QuickBooks Payments is a great option for small businesses on the go and for those already familiar with the QuickBooks portfolio products.
One major benefit of going with QuickBooks is that ACH Bank Transfers are 100% free, unlike other payment processing companies. Aside from being able to accept online payments, you can also process payments in-person using the mobile card reader and mobile payment app.
This platform makes it possible to manage your books—including sending, receiving, and accepting payment—from your mobile device. If you have employees, their payroll service can also process paychecks, calculate payroll taxes and file payroll tax forms.
Getting paid online helps businesses run smoother, with more efficiency.
When you eliminate paper from your company, you streamline the process of managing that paper.
As a result, you free up time to streamline automated tasks in your business— which, in turn, frees up time for you to grow your business in areas where your company is billable. Conserve time and save resources by getting paid online. All the tools that you need are at your disposal.