How Does My Business Get Paid?
Getting paid for your products and services has always been important. However, with the COVID-19 pandemic, some of the ways businesses are paid may be changing. From the coin shortage to fear of touching money, companies may be struggling with decisions regarding new payment options.
Many companies are requesting payment by credit cards or debit cards only. Other companies may be utilizing other options with the increase in online ordering. How do you know what payment option is best for your company?
Methods of Payment — Which Payment Method is Best for Your Company?
The payment methods below combine traditional forms of payment with a few of the new payment options available to consumers and businesses.
Cash and Check
Cash payments are probably the most straightforward form of payment for most businesses. There is no question of whether the amount is “good,” but many people are moving away from using cash.
Checks are another traditional form of payment. However, businesses struggle to spot fraudulent checks and verify whether the check is “good” when written, which is no guarantee the funds will be in the account when the check is presented for payment.
Debit cards allow consumers to pay for goods and services directly from their bank account without writing a check. In most cases, when a customer swipes a debit card for payment, the system “pings” the customer’s account to verify the funds are available, which eliminates some of the issues with nonpayment. In most cases, the business receives the payment within one or two business days.
The downside of debit cards includes the processing fee charged to the businesses, the equipment required to accept debit cards, and the extra work to reconcile payments with the company’s books.
Credit cards allow consumers to pay for goods and services even though they may not have the money to pay for those items immediately. The upside for businesses is that credit cards encourage consumers to purchase goods and services even if they do not have the funds right now to pay for those items.
However, credit card companies charge service fees. Service fees can be costly for a company. Some small businesses pass those fees along to customers.
Many companies have developed payment apps that can be used in-person to pay for services and goods. The person uses an app on a smart device to make payment through a POS system. Businesses have to set up the systems and have the equipment to process the charges to accept contactless payments.
Online Forms of Payment
If your business sells products or services to online customers, there are several forms of payment that can be accepted. PayPay, ACH (electronic checks), Venmo, Amazon Pay, Google Pay, and Apple Pay are just a few examples of how consumers can pay online. Each of the methods has unique characteristics that make them better or less appealing to a business.
The Bottom Line
The payment options you choose depends on your customer base. If your customer base is mainly elderly individuals who shop in person and don’t understand the complexities of a smartphone, your payment options are simple – cash, check, or credit.
However, if your business caters to individuals who are engaged in the latest technology, have never written a check, and do not carry cash, you probably need to offer contactless payment systems, online payments, and other non-traditional forms payment.
Small businesses may want to ask customers what they prefer as payment options. Larger companies may need to utilize a wide range of payment options to ensure they appeal to a large customer base.
Whichever payment option you choose for your company, you must track your income. A detailed accounting of business income is crucial for filing business taxes and completing business reports and projections.
Also, security is another concern when choosing payment options. Companies are responsible for securing personal data. A business must ensure that it has the equipment, software, and security plan to protect customer payment information and data.
Contact Our Florida Business Law Attorney with Questions
Attorney Matthew Fornaro assists business owners with a wide variety of business matters, including business formation, business litigation, business dissolution, intellectual property, and business transactions. If you have questions, call 954-324-3651 or contact us online to schedule an appointment with a Florida business lawyer.