Are you struggling with constant late payments from your customers? Is a lack of cash flow caused by those late payments stifling the growth of your business? If so, you may want to consider offering multiple payment options.
By giving customers more options when it comes to paying their invoices, you can make it easier and faster for them to pay. This means fewer late payments and a healthier cash flow for your business.
In this article, we'll discuss the benefits of offering multiple payment options and how to use them to get invoices paid faster.
The power of convenience and choice
One of the most critical aspects of providing multiple payment options is how they interact with your customer's payment behaviors.
The reality is that most people don't act in line with their intentions, and research shows that even a small inconvenience is enough to prevent a person from making a payment.
Studies on payment behavior have repeatedly found that the adoption and usage of payment instruments depend on transaction-related and personal characteristics, as well as perceptions of payment instrument attributes.
Simply put, even if your customer has the best of intentions when it comes to paying you, it doesn't take much to derail those intentions, resulting in a late payment.
While it is hard (although not impossible) to influence your customer's personal characteristics, you can have a very real impact on their usage and perception of the payment instruments at their disposal.
By offering multiple payment options, you can give your customers the convenience and choice they need to make paying their invoices on time easier. Whether it is paying by credit card, bank transfer, or online payment systems like GooglePay or Stripe, giving customers more choices makes it more likely that you will get paid.
The convenience factor and the ability to cater to diverse customer preferences are critical to getting invoices paid faster and helping to maintain a healthy cash flow.
Eliminating payment barriers saves time, resources, and ensures regular payments
Understanding customer payment habits
The first step in getting paid faster and implementing effective credit control is understanding your customer's payment behaviors. This is especially true for companies trading internationally, as location and demographics significantly impact payment behaviors.
Research by global payment provider Stripe highlights location's huge role in customers' payment preferences. In markets with a high smartphone penetration, such as the UK, and the US, digital wallets, like Apple Pay or Android Pay, are more popular than traditional payment methods.
However, this same pattern is not repeated in Germany, which also has a high smartphone penetration, but where card payments still dominate. A customer in Germany is almost three times more likely to pay for a good or service using their debit or credit card than with an online wallet.
Expand this to a global scale, and the differences become more impactful. In areas with large unbanked populations, such as India and Southeast Asia, payment methods like cash vouchers or bank transfers are essential methods of online payment.
In China, large sections of the population use localized digital wallets and card networks, such as Alipay, WeChat Pay, and China UnionPay. If you are doing business with these markets, not offering these payment methods could mean missing out on a significant portion of international customers.
Demographics also have a huge impact on payment behavior. Digitally native millennials are more likely to favor digital wallets and app-based payment systems like Venmo and Paypal, while older generations may prefer traditional payment methods like bank transfers or cheques.
When taken together with the research highlighted earlier shows that convenience plays a significant part in getting customers to make a timely payment, and it becomes clear that understanding your customer's specific payment preferences and catering to them is a critical step in getting paid on time.
Reducing friction in the payment process
Once you've spent time assessing your customer's payment behaviours, the next step is to analyse your own payment process. The best accounts receivable process is the one that consumes the least amount of resources and offers your customers the fewest pain points.
A range of common barriers to payment can occur in the traditional invoicing cycle, preventing customers from paying, including:
- Bill shock - If invoices pile up and are all sent out in one go, customers may be shocked by the total amount due. You can prevent this by communicating proactively about upcoming payments, implementing Payment portals into your credit management process so customers can see a breakdown of their invoices in one place, or, you can support customers by breaking up invoices into smaller amounts with payment plans.
- Inconvenience - If your customers have to go through multiple steps in order to make a payment, it can significantly increase the likelihood of late payments. Ensure you provide easy-to-follow instructions for each payment method, and consider using automated payment solutions, such as recurring payments, to reduce the number of steps required.
- Lack of payment options - If customers are unable to pay in their preferred way, they may put off paying or not make a payment at all. Multiple payment options, such as online wallets or card payments, increase the likelihood of getting paid on time.
- Inconvenient payment methods - If you offer only one or two payment methods, it can be inconvenient for those without access to the required technology or who are unfamiliar with the payment method (e.g. offering Apple Pay for Android users). Provide a range of payment options to make it as easy and convenient as possible for customers to pay their invoices.
- Inconsistent billing cycles - Most customers are used to regular billing cycles, and if they receive invoices randomly, it can be hard for them to keep track of when to pay. Instead, offer monthly or bi-monthly billing cycles and automated payment reminders that make it as easy as possible for customers to pay on time.
Taking steps to eliminate these common barriers to payment can help you get paid faster and more regularly and save your business time and resources in the long run.
By understanding customer payment behaviours, offering multiple payment options and removing any friction from the invoicing process, you can ensure that customers pay their invoices on time, every time.
Enhancing security and trust
An often overlooked aspect of providing multiple payment options is its positive impact on your customer relations.
Outside of just demonstrating your commitment to making their payment journey as easy as possible, offering multiple payment options also strengthens customer trust and boosts security.
Fraud, data, and identity theft, and other forms of cybercrime are major concerns for customers when making online payments.
Offering your customers a secure payment gateway that uses high-end encryption and data security measures shows them that you are invested in maintaining their data security.
Furthermore, by keeping customer payment details safe, you are demonstrating to them that their privacy and security are a priority for you. This increases the likelihood of customers returning to your business in the future and clearly indicates to potential customers that they can trust you with their money.
Leveraging technology for seamless integration
While attempting to cover all your customer's disparate payment preferences might seem insurmountable, you can use a range of technological solutions to make it easier.
Integrating payment gateways into your existing invoicing and accounting software allows you to offer secure and convenient payments without needing to spend time and resources creating a bespoke solution.
These integrated solutions provide access to multiple payment methods, allowing customers to pay in their preferred way. They also automatically sync any payments with your existing records for easy tracking and reconciliation.
You can use platforms like Chaser Pay to offer a broader range of payment options that cater to local payment preferences, such as offering Apple Pay, Google Pay, instant bank transfers, Amex, and more to customers.
Investing in off-the-shelf solutions such as these can save you time and money in the long run while making it easier for customers to pay and reducing the likelihood of late payments.
Reducing the roadblocks on the path to payment
To sum up, meeting customer payment preferences is a simple and easy way to increase your chances of getting paid on time. By understanding customer payment behaviors and investing in integrated technology solutions, you can make it easier for customers to pay their invoices.
This reduces the time and resources spent on chasing payments and strengthens customer relationships by demonstrating your commitment to security and convenience.
Businesses that are prioritizing customer-centric payment methods will benefit from shorter payment cycles and increased cash flow.
If you’d like to reduce late payments by offering customers multiple payment options, Chaser provides Payment portals and Chaser Pay as part of its end-to-end credit management software. Contact us today or start your 14-day no-obligation free trial to find out more.
