Companies don’t love shelling out money – they want to keep as much of it as possible. That’s fair, it takes a lot of effort for them to earn it. I’m not going to convince you that there are ways to make your customers enjoy giving up their money, but I can help them enjoy paying you month after month.
The relationship between a company and its customers
When it comes to paying the bills, there are a few important statistics that give us a context for understanding the relationship between a company and its customers. According to CMO.com customer-centric companies are 60% more profitable companies that do not focus on the customer. In addition, a Harris Interactive survey stated that 90% of marketers say that customer individualization is a priority because they’re learning that the more personal the approach, the greater chance of a positive response.
Technology is evolving and making electronic payments easier
Technology has changed consumer expectations in every way and everywhere. Think about all the things people can do with ease: order anything from Amazon, pay with one click, deposit checks, or even order a pizza from an app. Companies constantly evolve and add consumer offerings to make their lives and their purchases easier. It’s a simple rule - just make buying from you as easy as possible and customers will buy from you more often. If the buying process is cumbersome and clunky, people may look elsewhere.
Unfortunately, many B2B companies have generally ignored this trend as it relates to taking and receiving their customer’s payments. Delivering your customer’s invoices and taking their payments are customer facing activities. They are just as important to the customer as browsing your inventory or getting great service.
Most B2B sellers don’t have a portal today where you can log on, view invoice/billing history, make payments, and log disputes, requiring customers to do business over the phone with a customer billing specialist, with long hold times, between the hours of 9 am – 4 pm. This process not only aggravates customers; it also takes valuable employee time and money. If your business has a recurring customer base that frequently purchases from you, this process is all the more critical.
Why you may want to create a contract and an invoice
On its own, an invoice is not a legally binding document. However, when you combine it with a contract, you then have a document you may use should you need to take legal action against a customer. A contract must have clear payment terms so that your payments arrive when you expect them. It's important that it outlines the most crucial details of your transaction. You and your customer should consent to the terms of the agreement before work begins.
How to make sure a customer pays
One way to ensure a customer pays (and pays on time) is to clearly outline deadlines, fees, payment terms and other important details. This allows your customer, especially if they're new to your business, to understand what to expect regarding your payment policy, which includes when your invoices are sent and when they must pay. You can emphasize your payment terms as "net 30" or "net 45" or "due upon receipt." Doing this can ensure that you maintain your cash flow.
These problems are not insurmountable, which is why I'm going to provide a few best practices that will help solve your billing challenges.
How to convince customers to make payments
Here are 5 ways you can make your customers LOVE paying you.
1. Show them billing history and open invoices online in a self-serve portal.
If you want to get paid quicker (and positively impact cash flow), show your customers how they can see their billing and payment history via a self-serve portal. Point out that if the lose an invoice, it's not a problem. If your customers can't remember if they've paid a bill, show them where they can see their payments. Furthermore, if they're asking all of these questions at 3 am, tell them the information they need is available 24/7.
2. Ask them how they want to receive bills.
Acknowledge that accounts payable (AP) processes differ by customer. Some customers like one invoice per item while others need consolidated invoices. A few of your customers may have AP systems while most have accounting software. If you automatically deliver invoices in their preferred format, you will get paid faster. After all, customer experience is now more important than ever.
3. Do the work for your customers.
Sending a PDF or hard copy image of a bill because it requires manual data entry to get it into the system. Take advantage of invoicing and B2B payments automation technology and deliver a data file that imports directly into your customers’ QuickBooks or other system. You’ll get paid faster and accelerate cash flow.
4. Move them directly from the invoice to electronic payment with one-click.
Picture this: I’m on the accounts payable team and get my invoice from you in my inbox. I immediately click the “pay now” button, and it routes me to a payment portal with my account balance and preferred payment method already pulled up. What do I do? I make a secure ACH payment. Wow! That was easy.
5. Enable auto-pay.
You’ve probably forgotten that you pay your electric and water bills every month because you put them on auto-pay six years ago, so come out of your account once a month. Imagine if paying your organization’s invoices were that easy too.
Automated Clearing House (ACH) payments
ACH stands for Automated Clearing House, which is a U.S. financial network used for electronic payments and money transfers. Companies like to use ACH payments because it's a way to transfer money from one bank account to another without using cash, credit card networks, paper checks or wire transfers. Accepting ACH payments is another way to ensure a positive cash flow.
How do I get paid by ACH?
When speaking with new customers, introduce them to the idea of ACH transactions early in the conversation and during onboarding new customers. Having customers in front of you gives you the opportunity to discuss with them the possibility of paying by ACH. It also helps your customers better understand their payment options.
Getting existing customers to pay by ACH is another story because payment expectations have already been established. Plus, some customers may be slow to adopt a new payment process. However, you may want to show them how they may benefit from ACH payment processing. For example, customers wouldn't have to worry about paying on time because the funds would be swept from their business' bank account.
You may also wait until the time of contract renewal to speak with your existing customers about paying by ACH. This way you can address their concerns and perhaps even show the pros and cons of ACH payment processing vs. credit card processing. You may receive pushback, so be prepared to listen and offer to revisit the matter at a later date.
You can convince customers to pay you
When I talk with people and explain that it’s possible to get customers excited about making payments, they are surprised. When I explain that it’s not only possible, but actually less expensive than their current invoicing methods. I end up picking them up off the floor. Take a look at your processes and think about how much your customers love paying you. There might be a lot of room for improvement.
Article by Justin Main, Regional Sales Manager at Billtrust