How to improve your payment collection processes
Smooth and efficient payment collection processes are key for the success of any business. After all, if this function is clunky and convoluted – or simply inefficient – there will be a direct and negative effect on your organisation’s cashflow. Inefficient payment collection means more time spent chasing customers, potentially more paper resource on sending reminders, and ultimately a higher risk of payments being missed altogether.
And late payments are a serious corporate problem, whether they come from individuals or businesses. Large companies in the UK are said to pay around a quarter of all invoices late, according to statistics from the Chartered Institute of Credit Management (CICM). Meanwhile, BACs statistics have shown that the cost of recovering overdue money for small businesses is now at an average of £9,000 a year for each SME.
Talking about the cost of overdue payments is all very well – but how can organisations reduce the likelihood of them happening, bearing in mind that maintaining strong customer relationships is also vital? Here are some key suggestions.
Many late payments aren’t deliberate – they’re due to the individual or business in question simply forgetting. As such, simple as it sounds, communicating regularly with your customers to remind them when a payment is coming up and when it is overdue is one of the simplest and most effective ways of increasing payments efficiency.
The trick is to carry out said communications in as efficient a way as possible. Manual or paper-based processes are resource-intensive, inefficient and error-prone. An automated, digitised messaging platform drastically reduces the time and the resource – both human and physical – that you need to spend on chasing payments.
Moving from manual processes to digital ones almost always speeds up said processes, reduces incidences of manual error, streamlines and consolidates data collection and analysis, and reduces reliance on resources like paper. The payments collection process is no different.
Going digital in payments collection means offering your customers an entirely online means of making their payment – ideally on mobile devices as well as via laptops or desktops. As a result, the initial payment request, any necessary reminders and the payment itself can all take place on the same device, vastly increasing both efficiency and the likelihood of a customer paying as soon as they receive their first reminder. As such, going digital has to be the foundation of any modern payment collection process.
Embrace digital wallets
On a related point, ensuring that you are set up to process payments made from digital wallets as well as more traditional means is a forward-thinking step which offers your customers more flexibility and agility. Particularly when customers wish to pay on the move, accepting payments via digital wallet can ensure that more payments are received as soon as customers receive their reminder, wherever they are, rather than waiting until they get home.
Provide an all-in-one payment process
User experience is more important than ever, as consumers become increasingly used to high-speed cellular connectivity wherever they go, and highly powerful smartphones and tablets. Yet simultaneously, changes to the payments landscape such as the introduction of PSD2, require additional layers of security and authentication between banks, merchants and customers. These can potentially slow down and complicate the user journey, causing customer frustration. This is why a single, seamless payments management platform is becoming an ever more useful offer to customers – ensuring efficiency for them and you.