Payment options have their own pros and cons.
Obviously, getting paid is an extremely important component of your business. It is a wise choice to make it as easy as possible for your potential clients to pay you. It could be a mistake not to offer multiple payment options. Payment options have their own pros and cons.
In the good old days, everyone paid in cash . Your first cash transaction probably was when your parents gave you an allowance in cash. It is doubtful that they wrote you a check.
- You get your payment immediately. With cash, there’s no waiting around – the client/customer either has it or they don’t.
- There are no additional fees. Additional fees are added on to other payment options. With cash, there’s no “processing” and there is usually no middle man.
- Not many people carry cash anymore. Most of the population has switched over to credit, debit, electronic, and other forms of non-cash payments. If you insist on only taking cash payments, you’ll end up losing a lot of customers.
- Cash is easy to counterfeit. Be prepared to invest in counterfeit banknote detection pens.
- Extra bookkeeping is required. Cash, especially large amounts of cash, can be hard to keep track of. Your bookkeeping needs to be more detailed than ever if you hope to stay out of trouble with the government come tax time. It will also take several trips to the bank.
Credit (and Debit) Cards
- Credit cards are the most common/preferred payment option. You’d be hard-pressed to find someone without a credit – or at least a debit card.
- Credit Cards are easy to use. They are quick to process.
- Keeping track of security precautions. There are several laws that must be adhered to when you decide to accept credit cards. In order to prevent security breaches and protect your clients, you’ll have to develop a higher level of awareness. Legally, you can’t hold onto a client’s information past a certain point.
- Processing fees. Both credit and debit cards require processing fees in order to finally receive your payment, some higher than others.
Checks are directly connected to your potential client’s bank account, drawing on whatever funds they’ve deposited into their checking account.
- Accepting checks allows you to deal with bigger businesses. If you’re hired to provide services or products for a larger corporation, they will most likely pay you with a check. If you refuse to accept checks, you’d be turning away most of the larger corporations.
- Checks can be processed electronically now. You can process checks electronically if you have the means to do so. There may be a processing fee.
- Older Folk like to pay with checks. If your target market includes retirement-age customers, accepting checks could put you one step ahead of the competition.
- Checks can bounce. If your client has insufficient funds in their account at the time they attempt to pay you, their check could bounce. Not only does this result in a payment delay, but you could potentially be charged a fee depending on where you bank. You may also be charged an overdraft fee if you paid bills or gave the go-ahead to an automatic payment counting on your client’s check to go through.
- Clients have too much control. Check-writing clients have the power to issue a “stop payment” on any check they write. Meaning, your client can essentially write you a check, take your services or product, and then take their money back.
- Trips to the bank. If you’re being paid via checks on a regular basis, you’ll also be making trips to the bank on a regular basis. Depending on your branch, you’ll have to calculate in travel time – and potential bank holds.
This payment option actually encompasses several smaller options. For the purpose of this article, “Mobile Payments” will be classified simply as any payment you can make or receive on your phone; whether it be through an SMS message, a QR code, NFC, or anything else.
- Nearly everyone has a phone. Like credit cards, it’s nearly impossible to find someone without a phone. So, whether your client is sending you a payment through their phone, or initiating a payment through your phone, you’ll be covered.
- Payments are generally fast. So long as your phone is up to snuff, the rest of the procedure goes quickly!
- Certain mobile methods are prone to security leaks. Depending on which mobile payment method you choose, you may have to worry more about security.
- Not all readers are created equal. If you choose a mobile payment method that involves using an app then you may have compatibility issues. Most mobile credit card readers are iPhone compatible, but nothing else is guaranteed.
- An update can cramp your style. Whenever you depend on an app to help run your business, you run the risk of said app “breaking” when an update is released. If you upgrade the program you use and it’s no longer compatible with the phone you’re using to accept payments on, it may be a problem.
Electronic/online payment options such as PayPal are becoming the new normal for some businesses.
- It’s easy. Online payments are arguably the easiest payment option of all!
- It’s fast! Next to cash, there’s no quicker way to get paid than this.
- The fees are high. With few exceptions, the fees involved in receiving online payments are higher.
There are, of course, other options for getting paid such as money orders or direct deposits.
No matter which payment options you prefer, always send out professional-looking invoices and charge what you are worth.