United States
It’s said that time is money, and nowhere is that more true than in the professional-services realm.
Whether charging by the hour, the project, or subscription, these types of businesses—think accounting, legal services, management consulting, engineering, IT consulting, marketing, healthcare, and wealth management, to name a few—rely on predictable cash flow to pay staff and other operational non-negotiables. In fact, payroll accounts for up to 80% of their revenue, and receivables typically lag completion of services by 30 to 90 days.
It’s no wonder cash crunches are common if invoices aren’t collected on time. Even prosperous firms can get upside down if they’re not careful.
That’s where modern payment solutions come in. As a banker advising professional-services business clients, you have the opportunity to help them improve cash flow as well as free up staff time and streamline operations. Your recommendations are a value add that can not only strengthen their company but also cement bank loyalty and bring in word-of-mouth referrals.
This article provides education about better payment options for professional-services businesses. As your state association’s strategic payments partner, Payroc offers a comprehensive range of solutions. We’re here to help you deliver best-in-class merchant services that benefit your clients as well as you.
The Old-Fashioned Way
Many professional-services companies still rely on paper invoices sent via either snail mail or email. Customers receive the invoices and pay them by paper check—via return USPS mail—whenever they get around to it. This old-fashioned way of invoicing and getting paid tends to be slow and prone to late or missed payments.
Many service businesses work directly with consumers, but of course some—like management consultants and engineering—are mostly B2B. And while it’s true that both B2C and B2B businesses have been moving away from paper invoices and paper checks in recent years, many firms haven’t yet settled on an ideal solution.
Email and Text Invoices with Payment Links
A good first step for professional-service businesses in need of modernizing their accounts receivables is electronic invoicing. Rather than attaching an invoice to an email, this solution allows bookkeepers to send out invoice notifications via email or text. The notifications include payment links that take customers to an online payment portal that can be customized to look like the company’s brand. Inside the payment portal, customers can see their invoices and pay with a credit or debit card, or with ACH—whichever methods the business prefers to accept.
Payment links tend to solicit speedy payment because they’re quick and easy for customers to act on. The lower the friction, the faster the cash flow. Automated reminders can also be sent at regular intervals, and receipts are also automated. And most payment-portal systems auto-sync with QuickBooks Online and other accounting software, saving significant time for owners and bookkeepers.
Recurring Billing and More
For businesses with more complex billing and payments needs, more sophisticated online payment portals are available. These go way beyond “click to pay.” Here, features like autopay, recurring billing, partial payments, payment plans, deposits, and scheduled payments are all available. In some systems, customers can also create account log-ins and have access to their full service and payment history.
Here again, receipts, reminders, statements, and accounting software sync are all automated. And business owners have real-time visibility into which invoice notifications have been viewed, which invoices have been opened, and which have been paid.
With smart billing in place, the entire A/R process gets so much better. The customer experience is enhanced, back-office efficiency improves, and the invoice-to-cash cycle tightens.
Also keep in mind that many small business owners have used QuickBooks Online for billing and receivables services—but there are more cost-effective tools out there.
Smart Terminals
Professional-service businesses that want to be able to accept customer payments in the office or on the go may be interested in a simple smart terminal setup instead of or in addition to electronic invoicing with payment portal. Many smart terminals include back-office functions that give businesses more ways to manage their companies and accept one-time as well as recurring payments. And those with virtual-terminal capabilities also allow businesses to log in on a computer and manage billing and accept payments (in person or over the phone) from multiple devices.
Managing Payment-Processing Costs
Professional-service businesses are often less accustomed to shouldering payment-processing costs than their retail counterparts. And their higher average invoices mean that even the small percentages lost to processing fees can add up. The good news is that there are options to help alleviate these expenses.
Some payment providers offer compliant surcharging and dual-pricing programs that allow the business to share card-processing costs with their customers. With dual-pricing, customers can be offered the choice of paying the card price or a lower ACH price, empowering them to choose which payment method works best for their circumstances.
Level 2 and 3 processing (now called Project 3 by Visa) is another payments tool that good payments providers offer to professional-services businesses that accept commercial-card payments. These allow high-ticket charges to be routed through the credit-card interchange channels at lower rates.
Payroc Is Your Payments Expert
Many professional-services firms are a bit behind the times when it comes to billing and payments. You likely have clients on your roster who are in need of better, faster accounts receivables and payments systems—and who would welcome your suggestions about how they could enhance their billing efficiency, time-to-cash, and customer experience.
Payroc provides best-in-class merchant services not only to retail shops but to professional-services businesses as well. We work alongside bankers to support your clients’ needs, making your bank an even more invaluable business ally in your community.
To learn more about professional-services billing and payment options, connect with me by selecting “Get started” here.