Cash Flow For Dummies
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Efficient payment processing involves both automated systems as well as a variety of methods. Much as many of us would like to move away from checks altogether, almost every business has at least a handful of customers that insist on mailing in payments, whether they are a cute grandmother who has been a customer for 40 years or the biggest client contract in the bunch who somehow hasn’t managed to adopt electronic bill payments.

Processing payments efficiently means choosing the best payment method for a given situation, even if that means you use more than one. Options include the following:

  • Credit card terminals. In the traditional way that retail storefronts to collect payments, you can swipe or type in your customers’ credit cards and print a receipt on the spot. This method continues to work fine if you are a retail shop, but is inefficient if you use the terminal to process website or phone orders.

  • Website payments. Even if you don’t have an online store, you can still accept online payments. Major providers include Google Checkout, Amazon Payments, and PayPal; you can send clients invoices and they then pay you with their credit card using one of these services.

    Not only does this keep payment card industry (PCI) compliance in their hands and out of yours, but it can sometimes reduce the friction of making a payment if your customers already have their payment information stored on these services. With services like PayPal’s Virtual Terminal, you can also manually enter customers’ card numbers if you receive them on printed bills or over the phone.

    You can also create an online payment form that accepts the aforementioned payment methods using a form creation service like Formstack or Wufoo. These include dynamic options so you can actually use these forms to accept orders and charge the corresponding amount.

  • Mobile payments. If you are out in the field, such as at a tradeshow or fair, you can use a mobile payment method like Square to swipe customer cards. Square sends you a tiny device you attach to your mobile phone. You swipe the cards, have customers sign with their fingers, and Square sends you the funds within a few days. The future!

  • Text payments. Major banks and merchant accounts are increasingly offering the ability to send and receive payments via text message. Interestingly, this is the main way many people in the developing world exchange funds, and the First World is just now starting to catch up.

If you accept credit card payments, you need to be aware of PCI compliance regulations — security requirements that you must follow, or face huge fines. For example, you cannot print your customers’ full credit card numbers on receipts. Here are a few more caveats:

  • Never e-mail credit card numbers! This is inherently insecure behavior.

  • Accepting payments from 10 different sources rapidly becomes inefficient if they are not all connected to a central accounting system that tracks amounts due and payments received.

  • Sending a “past due” invoice to a client who paid via text message two weeks prior creates bad will and undermines your relationship.

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