With today’s technology, there are a variety of ways to make a payment, from the payment method (cash, credit card, check) to the avenue in which a payment is submitted (phone, mail, online).
As a company who already accepts payments from your customers, you might be asking yourself what effect offering more than one way to pay will have on your business. The truth is, flexible payment options benefit not only the customer but also the merchant.
Here are 3 reasons why businesses should provide their customers with flexible payment options.
Encourage Faster Payments
Giving customers multiple ways to make a payment will increase the speed in which payments are made. Consider a business that only accepts payments over the phone or through the mail. The customer must reach out during normal business hours or send their payment days early through the mail to make sure it gets processed on time. Instead, if the business offers 24/7 payment options, like an online portal, customers can pay at their convenience. Electronic payments, such as credit card and ACH, also give customers immediate ways to pay versus a paper check, which usually takes 3-4 business days to arrive in the mail.
Companies can speed up payments even further by allowing returning customers to save payment information in a secure digital wallet rather than entering in their payment details each time they make a payment. According to PYMNTs, a survey of 8,600 consumers found that 48% chose digital wallets as their preferred method of payment.[1]
Another great way to encourage faster payments is to offer customers payment terms with discounts for paying invoices early. When customers pay early, companies make less collection calls and maintain a stronger cash flow.
Drive Customer Loyalty and Retention
Customers look for vendors that are easy to do business with. Simplifying the bill paying process and reducing the time spent paying bills will increase customer convenience, improving overall customer satisfaction. According to The Mastercard New Payments Index, which surveyed over 15,000 consumers in 18 countries, 84% of respondents said they expect to make purchases when they want and how they want.[2]
Businesses that offer flexible payment options will be best suited to manage these growing customer expectations, resulting in strengthened customer loyalty and retention. And with today’s consumers being more digitally native, focusing on electronic invoicing and billing options is more important than ever.
Reduce Costs
Payment flexibility can reduce costs for both the customer and your company. On the customer side, same-day payments and payment reminders help them avoid late fees. Customers can also avoid the cost of printing and mailing paper checks if given the opportunity to send payments electronically. For your company, flexible payment options reduce manual labor by automating processes like sending payment reminders and processing recurring payments.
Firms that rely on automated collection processes, like scheduling payment reminders, see a 30% shorter Days Sales Outstanding (DSO) than firms who rely on manual processes. [3] This is typically due to firms with manual processes taking longer to follow up with customers on overdue payments.
Getting Started
If you are interested in learning how you can implement flexible payment options, check out our PayFabric solution that helps companies process payments and automate their accounts receivables processes.
Contact us today to learn more: 909-482-4701 or sales@nodus.com.
[1] Real-Time Payments Report. PYMNTs.com. October 2020
[2] Mastercard New Payments Index: Consumer Appetite for Digital Payments Takes Off. Mastercard. May 2021
[3] B2B Payments Innovation Readiness Report. PYMNTS.com. September 2020
