Using Online Payment Forms to Shorten Your Receivables Collection Days

Do you want your customers to pay you faster? How do you entice them to do so? Instead of using early payment discounts or other terms, this post introduces another way that makes it easier for your customers to pay you early – emailed invoices with online payment forms.

Benefits of Reducing Your Receivables Collection Days

Let’s say that you issued an invoice that is due 30 days upon its issuance date. If your customer pays you 3 days after the invoice issuance date, what business impact does it have on you? Conversely, if your customer pays you 30 days AFTER the invoice due date, what impact does it have on your business?

Generally, the faster you receive payments, the better. Why? Because cash is the bloodline of your whole business cycle! In a nutshell, here’s what I mean:

When you receive cash earlier, you can make early payments to your vendors/suppliers. At the same time, you can purchase more items AND make more sales within the same time period. Simply stated, assuming all else equal, a business with a collection cycle of 15 days can double the sales of a business with a collection cycle of 30 days.

Think of cash as your inventory. Turning your inventory 10 times within a year versus turning your inventory 20 times a year makes a world of difference. Thus, if you plan to grow your business, one method is to shorten your collections days so you have the cash to further grow your business.

A Simple Way to Shorten Your Cash Conversion Cycle

Due to the importance of the collections cycle, businesses have created ingenious ways enticing customers to make payments early. A method that is met with most success is to offer discounts for early payments. However, this method is not adopted by most businesses because it cuts into their margins.

A simpler way that doesn’t affect your profit margins is to offer online payment forms for your customers. Here’s an example of an online payment form when businesses use Servora, an online accounting software provider:

Using Online Payment Forms to Shorten Your Receivables Collection Days image Online Payment Form ServoraUsing Online Payment Forms to Shorten Your Receivables Collection Days

This online payment form can be automatically generated whenever an invoice is created and emailed from using Servora. To try generating an invoice and these online payment forms for free, start a free trial with Servora.

Why your customers will love you when you offer them Online Payment Forms

Most business transactions are still done over the mail using checks. However, this process requires a lot of manual labor and offers little protection on the buyer’s side. When you offer your customers online payment forms that accepts PayPal, credit cards, and Amazon payments, your customers are able to enjoy the following benefits:

  • Removes the barriers of writing and recording checks…
  • Credit card benefits – cashback, mileage, etc…
  • If using credit card, credit card statement reconciliation…
  • Protection from dispute if using PayPal or credit card…

How likely do you think that your customers might take advantage of the benefits listed above?

Simple Requirements of Using Online Payment Forms

If you utilize an online payment form, there are several requirements that must be met prior to allowing your customers pay online. You must first sign up for a 3rd party payment processor that will process payments and integrate with the online payment form. Most payment processors will charge your business a minimal percentage fee per transaction:

  • Merchant Account integration (Authorize.net, Paypal Payments Pro)
  • PayPal integration
  • Amazon Payments integration

Using Online Payment Forms to Shorten Your Receivables Collection Days image Servora payment merchant intergrationUsing Online Payment Forms to Shorten Your Receivables Collection Days

If your business choose to use an accounting software like Servora that offers online payment forms, it will actually offer better accuracy because it is integrated with your books/accounting records.

Conclusion

Offering online payment forms is a method to for you to collect receivables twice as fast as compared to snail mail. Not only would your customers benefit from the protections offered by credit card companies and PayPal, you can also receive payments faster to grow your business.

What other benefits do you think online payment forms can bring for you or your customers?

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