Processing Recurring Payments: Get Paid In Full By Automating Receivables

May 16, 2018 by Kornum Burnham

In almost any business undertaking, an owner may encounter multiple sweaty-palmed experiences. Obviously, an owner realizes that this includes the precipitous territory of conducting business.

Possibly the most daunting situation impacting an “it is not all what it’s cracked up to be” company owner is a payment that’s late or not arrives. Consider the personal school owner who educates a parent about the monthly fee only to obtain this reply: “Only give me a couple more days” Think about a construction company owner who rightfully seeks a periodic payment from the client and is disregarded with “I will pay you when I could.” Imagine a fitness center owner who might have to perform back flips only to collect on this monthly payment.

Whether by choice or even requirement, there seems to exist a bandwagon of customers who might not so readily depart with their cash regardless of their responsibility or what’s morally perfect. This lamentable circumstance (i.e., once an owner can’t efficiently collect money that is expected) seriously hampers money flow – a business’ lifeline, crucial to its vitality. When business expenditures outpace revenues (negatively influenced by late or non-payments), industrial failure is guaranteed.

There exists two primary ways in dealing with an undesirable client whose cash remains elusive. Many companies still adopt the collections procedure – if they perform this job in-house or contract with outside agencies. In case the business opts to speak to the customer directly, bill after invoice may be forwarded which is very labor-intensive and costly. An owner needs to think about the expense of invoices, postage, overdue notices and collection calls, and the time it takes personnel to fulfill this obligation (and the concomitant cover / benefits such personnel are accruing). Outside collection agencies aren’t necessarily an advantageous option. They generally keep at least 25 percent of an owner’s deserved profit.

The second way of managing the cash flow-challenging customer is predicated on the assumption that a business owner must be proactive. Subscription tracker /she should realize the benefits of automatic payments, and how this procedure could more readily prevent the “Dear client, please pay me” letter.

Automated payments are a vehicle where a client’s account is automatically debited and transferred into an owner’s account on the precise date a payment is due. Upon the decision to obtain a product or utilize a service, a potential customer signs a simple release form, giving permission to transport payment on a particular due date.

There exists two principal ways when check processing is involved. One alternative is via paper drafts which might be issued via appropriate software and delivered to the owner so that he can deposit them (like they had been paper checks) or delivered directly to the owner’ bank. The processing company acquires the customers’ banking information and converts the information to the proper bank draft.