As an eCommerce business, you’ve likely found yourself in a situation where a customer fails to make a payment they owe you. Or perhaps they’ve saved items to their shopping cart but don’t immediately proceed with the online payment because the payment gateway was too complex.
Most businesses – especially those that are paid based on invoicing for delivered goods or services – struggle with payment issues from time to time. In fact, getting paid on time is the number one financial challenge reported by businesses in new research by cloud accounting software provider Xero. It revealed that business owners devote 1.3 days per month tackling overdue invoices, with the average invoice paid ten days late.
To help your eCommerce website avoid repeated phone calls, emails and reminder letters requesting payments, valuable time which you could invest elsewhere in your business, here are some tips on how you can get customers to pay you faster without damaging the relationship in the long-term.
Start with your payment terms and conditions
Clearly indicate on your website what you expect from customers as far as payments are concerned. When drafting your terms and conditions, ensure that customers have transparency about when they must settle outstanding invoices. Are payments due within 30 days or upon presentation of invoice? What are the late payment penalties? Also make sure they are aware of the forms of payment you accept to avoid any surprises at the checkout.
Add online EFT payments
Do you still ask customers to deposit money for goods ordered and email you the proof of payment? This is a time-consuming payment method and most customers will not immediately visit the bank to pay the money into your account.
You can make payments easier for customers who don’t have credit cards by offering them an instant EFT payment option. The transfer happens in real-time, as opposed to the delayed payments that usually occur with direct deposit requests. Apart from being prompt, electronic fund transfers make it straightforward for online businesses to track their payments. Moreover, the cost associated with processing EFT payments are significantly lower, helping you to trim overhead expenses.
Make online payments convenient
Give customers the freedom to choose when they want to make payments, while offering them more than one way to pay. While it may not be possible to provide every payment method, you’ll have to determine which type of payments your target market prefers or uses the most. By making payments as hassle free as possible, you’ll encourage customers to pay on time.
Consider recurrent billing
Rather than letting customers repeatedly supply their credit card information for products or services they use every month, you can get their consent to process a transaction as a recurring transaction. Your website will securely store their card details on the database and bill their account automatically on a regular schedule.
Send electronic invoices/payment links
If recurring payments are not suitable for your customers, another method to get customers to settle payments on time is via email invoicing such as PayU Receive. Nowadays, many invoices are designed to be delivered by email, with embedded buttons or links that customers can click on to “Pay Now.” Email invoicing systems also let you send automated reminders when the payment cut-off-date is approaching or when payment is overdue.
Offer early payment incentives
An early payment discount is offered by some businesses to encourage faster payment on credit purchases. So, a company that sells on credit will include something like “2/10 net 30” on the invoice, which basically translates as payment is due within 30 days, but if the customer settles payment within ten days, they will be eligible for a 2% discount.
Your eCommerce business must rely on a healthy cash flow in order to be profitable. Getting paid on time is a crucial element for success. Fortunately, it’s not that difficult to improve the speed of payments. As the above tips show, it all depends on setting rules which customers must agree to, staying in control of money management, and making it easy for customers to pay you.