Getting paid in a good economy is easy.

Here’s how to position your business to get paid in more challenging times.


Many businesses shy away from electronic payment because of the associated cost.  However, going into a potential economic downturn is a good time to reconsider your credit policy and payment acceptance strategies.  In these conditions, getting paid in a timely manner becomes both more important to your business, and less likely to occur on the part of the client.  And in a recession, it’s cash flow that kills the businesses, not the margins.

So if your worried about a recession or downturn, here are some ways you can leverage electronic payments to speed receivables and reduce losses:

Contain losses with up front credit card payment

In many cases, you can simply provide two options to the customer – payment upon receipt via credit card, or payment on net terms if paid check or equivalent. When your customer pays by credit card, they have until the next billing cycle anyway before any interest is accrued.  Plus they get the benefit of rewards points.  You get funded in 2 days instead of 30 (or more), with no potential losses to bad debit.

Invoicing terms and payment options

If you invoice and an upfront credit card payment is impossible, you can still structure your credit policy to ensure either prompt payment, or low-cost payment.  Many businesses are issuing invoices that are payable on credit card net 5, or via check or equivalent net 30.  This way you either get paid fast, or get paid cheap.

Credit card instead of financing options

When you offer your customer financing, you’re taking on the role a bank.  And often with none of the credit underwrite, and the hassle and cost of enforcement in the event of nonpayment.  Your customer’s credit card will do that for you, and it only cost you 2% or so.  Plus you have the money in full now instead of an open receivable.

Reduce slow pays with greater ease of payment

Some slow pays are the customer intentionally stringing out payments.  But in many more cases than you realize, its due to ease of payment.  Its remembering to send a check instead of just taking care of it right now on a card.

Card on file / account on file options for immediate payments

If you use services like Amazon, Grubhub or Uber, one of the great benefits of their services is you don’t have to input your card to make a purchase.  This makes purchasing frictionless.  While a credit card is less friction than a check, a card on file option makes paying even easier.  This could be through a cart, portal set up, or could just be as simple as having the card saved in secure tokenized format on the payment processor’s gateway.

Reduce uncertainty in your business

Its been said waiting is the hardest part.  With check payments, you either get a check in the mail today, or you don’t.  Part of it is the uncertainty if the payment is coming in on day 3, day 30, 45 or at all.  While the cash flow is key, the uncertainty makes planning difficult. With electronic payment you know the funds are either there, or about to be there.

ACH > Check

The ability to provide an ACH option helps two ways.  If you have an electronic invoice or web payment form that has the ability to pay credit card or ACH, the majority are going to pay credit card.  But some are going to pay ACH.  And at an average of $.39 flat, an ACH payment is just shy of “free” to accept.  So if you can get 1 on 10 to pay that way, you just cut your payment acceptance cost by almost 10%.  Or, for people who were going to pay check anyway, you have notification of payment sooner (you know when they pay rather than when the mail arrives), and get the funds directly to your bank several days faster.

Cleaning up outstanding balances

A funny thing tends to happen when businesses that previously didn’t take credit card start accepting credit cards.  That first month, their volume goes way above their anticipated monthly averages.  Reason being, once you have a credit card option, you can usually go clear up a lot of old debt / bad debt you had on your books.  And for those who even still cant pay at once, you can set up an automated payment plan to start paying down the balance.

Doubling credit time by allowing CC payment.

In particular for folks having a tough time paying an invoice, by taking credit card you’re at minimum doubling their float.  They have at least one billing cycle before any interest is accrued.  And even if they don’t pay off in full, they can make payments against the balance.  That is between them and their bank, you already have your funds.

Reduce your reorder timeframe

You likely have clients with outstanding balances that arent reordering from you, because they have an outstanding balance.  They don’t want to call to reorder when they owe you money. And you may not be keen to ship goods or provide a service to people who still owe from last time.  But if they pay on credit card, their balance with you is $0.  Nothing stopping them from reordering.

Even if you get paid in cash, you’re losing to inflation

Here’s one you may not have thought of.  As of this writing, inflation is running 7.1%.  Divided by 365 days in a year, that 0.0195%, or just under 2 basis points per day.  So if you receive a payment in full in cash 30 days from the date of issuance, those dollars are worth 0.59% less than they were when you issued it.  Go out 45 days and you’re at .88%.  60 days and you’ve lost 1.17%. So why not take a credit card for 2.5% or less and have the funds tomorrow?


This of course all assumes you:

  1. Have good rates on your credit card payment acceptance. This rate should almost always be somewhere between 2 and 3%. In some cases it can be less.  Anything over about 2.50% bottom line is worth a review.

  2. Your processor has the necessary tool set to support these services. That would include a virtual terminal with a card on file option, recurring billing, electronic invoicing, and hosted payment forms, capable of credit and ACH services.  Integrations to accounting or ERP software a plus.

  3. Your processor understands and supports your credit policy and terms of sale so that you don’t end up with frozen funds or transactions held up for audit.

If you can’t confidently answer yes to the above 3 items, here’s where we can help.   At Merchant Solutions LLC, we go beyond just great rates and talk to business owners like you every day about how to best leverage electronic payments within their business.  Fill out the form below today and we’ll have a Certified Payments Professional contact you to discuss how we can help.