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Determining the Best Customer Payment Options for your Small Business - and Managing the Bad Ones

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Determining the Best Customer Payment Options for your Small Business - and Managing the Bad Ones

By Caron_Beesley, Contributor
Published: October 29, 2010 Updated: November 30, 2012

As a small business owner you are dependent on cash flow - and making sure that your customer payments transact seamlessly, securely and reliably are critical to that cash flow.

Her;s an overview of the payment options you may want to extend to your customers as well as the best practices and self-protection tactics you should employ when accepting customer payments.

Which Customer Payment Options are Best for You?

Identifying which payment methods are best for you depends on the type of company you run and how you conduct business. For example, retail establishments can benefit from a variety of cash and non-cash payment options including checks, credit cards and, most securely of all, debit cards. For restaurants and fast food establishments, non-cash forms of payment are an absolute essential to boosting the volume of transactions.

If you transact any business online - otherwise known as 'e-tailing' - accepting credit and debit card payments are a must, but many smaller businesses are also embracing online transaction services such as PayPal that offer both lower fees and potential access to a greater number of buyers who prefer the enhanced security features.

To identify which payment options best suit your business, SCORE offers some sound tips in this brief article - Choosing a Vendor to Process Your Online Transactions*.

In addition, you should also familiarize yourself with guidance provided by the government on this topic. For example, did you know that if you accept a cash or cash-equivalent payment from a customer for more than $10,000 you are required to file Form 8300 with the IRS to capture more information about the buyer? For your own protection, yo-ll also want to understand which forms of customer ID are legally required and acceptable as a condition for writing a check in your particular state.

To find out more about establishing payment and collection policies and understanding the laws that regulate them check out this quick one-page overview from the government through its Business.gov Web site.

When Customer Payments go Bad

Despite all the initial skepticism and concern about making and accepting online payments, ironically enough i-s the more traditional forms of payments that pose the most problems for small businesses.

With over $50 million in bad checks written each day the impact on the small business owner in terms of associated bank fees, time and cost of collection (or not), is an unwelcome burden.

There are a number of practical measures that you can take to prevent bad checks hitting your bottom line, from the most drastic - not accepting checks at all - to more measured approaches such as accepting only cashie's checks, using a check-verification bureau, scrutinizing every check, and posting a bad-check policy. As with most lines of defense, yo'll need multiple strategies. Read more about putting these measures to work for you in this quick article: 'Making your business rubber-check proof*'.

Additional Resources

Get more information on determining the best customer payment options for your small business at these links:

 

*Note: Hyperlink directs reader to non-government Web site.

About the Author:

Caron Beesley

Contributor

Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley

Comments:

I have been looking looking around for this kind of information. cheap wedding dresses Will you post some more in future?2011 wedding dresses I'll be grateful if you will.
This article should be required reading for start-ups since cash flow determines whether or not a business makes it. I want to know what I can do if we go out and put parts and labor into someones property and then they don't pay.
I suggest read the fine prints for the online payments contracts, before going to the lowest fee. on the card non present world you have a very liberal policy on charge backs and usually terms of refunds stated on the site are not respected by the banks, the cost of 1 charge back for a small business could mean a much higher fee at the end of the month than a lower rate.
Thanks for the tip i will try to execute it to the business I'm planning for - sunmoonco ---This post was edited to remove a commercial link. Read our discussion policies for more Community best practices.
That's all great, we accept all these forms of payment including credit cards for pool services and repairs but what about not getting paid.  I want to know what I can do if we go out and put parts and labor into someones property and then they don't pay.  With Texas having homestead protections for homeowners, can we put liens on properties?  I'm thinking even though I typically get approval for all repairs in writting by email, is that ehough to prove that I am owned the money?  I hate to ask good clients to pay anything up front as I always feel it's imprtant to complete a job and have a satisfied customer before they have to pay and 99% if the time that works great but amazingly peolple can be happy with the service and still say they can't afford to pay..where does that leave us?  It makes me crazy to have my guys out there working hard in 100 degree heat to get someone's pool up so they can enjoy it and we don't get paid and don't really know what recourse we have.  Somehow these same customers can afford to have Mercedes and Beamers in the drive way...go figure.
Hello! I do not see a condition of use of the information. Whether it is possible to copy the text written by you on the site if to put the link to this page?my email 47shveden@gmail.commy site KonferensMessage Edited by NicoleD on 09-08-2009 11:41 AM
santamaria - please refer to this page for more info abour reproducing content on this site: http://www.business.gov/about/policies/
Well. I'm glad to say that I run an online business and I just rely on one of the online Merchants. I usually use Paypal, but Google checkout is also really good to use. They have the best rates for my small business, and customers have a number of options to pay then.
Hello! I do not see a condition of use of the information. Whether it is possible to copy the text written by you on the site if to put the link to this page?my email 47shveden@gmail.commy site KonferensMessage Edited by NicoleD on 09-08-2009 11:41 AM
hi Caron,Excellent discussion on payment options. I think any small business that is serious needs to accept credit cards. We groan at the merchant fees we have to pay, but it's good to get the guaranteed payment up front instead of trying to collect down the road!This article should be required reading for start-ups since cash flow determines whether or not a business makes it.Steve Booth

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