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Collecting payments: Problems business frequently face and how to overcome them once and for all

Published On
11 February 2023
Category
Getting paid

Common problems

How you go about collecting payments from your customers probably isnโ€™t an area you spend a lot of time researching. For many industries, manual bank transfers are simply thought of as the default way of getting paid.
But businesses that donโ€™t optimise their method of accepting payment commonly create a number of ongoing problems for themselves.

1. Late payments

Relying on your customers to manually pay you. Around the world, only about 35% of payments made to small businesses are made on time and without requiring follow up. And the average small business spends around 5.8 hours per month chasing up late payments (what a headache!).

2. Additional admin and wasted time

Failing to automate those parts of the payment process that can be easily automated. Globally, the average small business spends 4.9 hours per month on payment reconciliation โ€“ a task that can be easily automated if you have the right accounting systems in place, such as Sole App.

3. Unnecessary stress

Caused by the cash flow impact from late payments and time wasted on manual admin that could otherwise be automated.
In the best case, these issues are frustrating or upsetting. And in the worst case, they can stop business growth entirely, or drive you to insolvency.
But you can solve them. All it takes is exploring which payment method works best for your business model and customer base.

How to optimise your payments

When it comes to collecting payment from your customers, there are several online payment options available to you, other than manual bank transfers:

  • Direct Debit

  • Instant bank payments (using open banking)

  • Credit or debit cards

  • Digital wallets

The table below explores the pros and cons of each of these methods, to help you pick whatโ€™s right for you.

Payment MethodProsCons
Manual bank transfers
  • Free or very low fees (but can cost you through admin like chasing late payments and reconciliation)
  • Very low chance of transaction failing
  • High manual admin cost
  • Fully reliant on customer to pay on time
  • No notification about late, missed, or failed payments
Direct Debit (using our payments partner GoCardless)
  • Low fees
  • Low chance of transaction failing
  • Low manual admin cost (can automate payments to occur on invoice due date)
  • Notifications about late, missed, or failed payments
  • Payment confirmation isnโ€™t instant
Instant bank payments (using open banking)nstant bank payments (using open banking)
  • Instant payment confirmation
  • Low fees
  • Low chance of transaction failing
  • Prompts customer to make payment
  • Notifications about late, missed, or failed payments
  • Requires customer to manually approve payment
Credit or debit cards
  • Instant payment confirmation
  • Low manual admin cost (can automate payments to occur on invoice due date)
  • Notifications about late, missed, and failed payments
  • High fees
  • Higher chance of transaction failing
  • Cards can get lost, stolen, or expire
Digital wallets (e.g. PayPal)
  • Instant payment confirmation
  • Low manual admin cost (can automate payments to occur on invoice due date)
  • Notifications about late, missed, or failed payments
  • High fees
  • Higher chance of transaction failing
  • Cards attached to digital wallets can get lost, stolen, or expire

Optimise your payments today

Late payments, and the time you spend on payments admin, arenโ€™t one-off problems. They reoccur every billing cycle and cause ongoing issues. The sooner you address the real cause of these problems โ€“ by choosing the right payment method to offer your customers โ€“ the greater benefit youโ€™ll receive.

Sole connects with several major payment platforms, including GoCardless (for Direct Debit and instant bank payments).

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