As an MSP, your goal is to provide the most value possible to your customers. But, to put it simply, you’re in business to make money. You provide a service, and in return, your customer pays you for providing that service. When a customer doesn’t pay, that’s when there’s a problem — at least for you.
One way to ensure you’re paid on time is by providing your customers with a range of payment options. You want your customers to pay quickly when they’re ready to pay, so your goal should be to eliminate any hurdles they may come across when trying to pay you.
But how do you know which payment options to offer your customers?
First things first, do you know your customers’ preferred payment method? If you don’t, survey your customers or go through your bank transactions to determine how most of your customers are paying for your services.
For instance, how many of your customers are paying via ACH transfer (also known as direct deposit)? If I had to guess, I’d say most of them. ACH transfers are a common way for SMBs to accept payments from their customers. In fact, more than 24 billion ACH transactions were processed in 2019.
Of course, some of your customers may also prefer cutting you checks for services rendered. While this may not be your ideal option for payment, if it works for some of your customers, then I wouldn’t make waves; however, you can try offering them incentives for switching to another payment method.
Accepting credit card payments seems to be the most controversial payment option for MSPs, mainly due to the added expense of credit card processing fees, but I’ll get into that later. My opinion on the matter is while not all your customers want to pay your invoices via credit card, some do. By offering these customers the option to make credit card payments, you’re showing them how accommodating of their needs you can be, which, in return, oftentimes increases customer satisfaction. Satisfied customers are more willing to refer your services to others.
Improved cash flow is also huge a benefit of accepting credit card payments. Instead of waiting for a check to clear, a credit card payment hits your back account within a few business days of your customer initiating the transaction. You're unable to pay your bills and employees when customers don’t pay on time. You’re usually paid in a timely manner when a customer pays your via credit card.
Of course, accepting credit cards as a form of payment has its disadvantages. For instance, credit card processing fees cut into your bottom line. While the typical credit card processing fee ranges, it's usually anywhere between 3 to 4 percent for MSPs. However, many MSPs believe the benefits of accepting credit cards outweigh the additional expense.
Another disadvantage of accepting credit card payments is you may have to chase down expired or declined transactions. While that may not happen often, it’s still something to consider when determining whether you should accept credit card payments from your customers.
The more payment options you offer your customers, the more likely you’ll be paid in a timely manner.