For most business owners, the method in which you collect payments from your customers can mean the difference between a customer gained or a customer lost. And with the vast array of payment methods to choose from, it’s only normal to feel that “As long as payments are coming in, I’ll accept whatever form it comes in.”
But such decisions can have a lot of side-effects and doesn’t work for all businesses. And even if your business relies solely on one payment method, doing so might mean that there’s still space to improve, especially in an age where buying habits and expectations are constantly shifting with the times.
Still, the most common mistake small business owners fall prey to is a failure to change by sticking to “tried and trusted” methods. If you’d like to know whether your business can benefit from a change in the way you collect payments, read on to find out some of the telltale signs that a significant change is due.
1. You have to chase after customers every month for payments
Whether it be gym memberships, monthly subscriptions or payments requiring invoices, recurring payments are something present in many businesses. And unless you have a surefire way of ensuring your customers stick to their promise, there will always be a select percentage of customers who seem adamant on making the lives of you and your employees harder.
Such customers will use any means possible to avoid the responsibility of paying up despite the countless emails, calls and messages. Perhaps they repeat the same excuse over and over to delay, or claim that they’re overseas (even though months later, it’s questionably still the same excuse).
The outcome? Extra stress on employees, extra costs incurred for the follow-ups, and very likely – a lost customer. This is one of the reasons why automated Direct Debit can help establish a friendly relationship with you and your customer from the get-go and hinder the possibilities of them pulling any tricks halfway down the road.
2. Delayed payments due to late invoices are commonplace
A survey by the SME Media Group and Inti International University shows making late payments has become a very common problem in Malaysia, with 73% of business operators saying it was Malaysia’s business culture.
Surely, this is something most business owners can relate to. Despite having the payment terms in black and white, companies simply refuse to abide by it. If you’re a small business owner, such culture and habits can be detrimental, as explained by the Atradius Payment Practices Barometer Survey.
“Unpaid invoices can have a serious impact on a businesses’ turnover or cash flow. Not only because non-payment by buyers costs a business time and money in respect to pursuing collection of debts, but also because bad debt reserves represent money that is unavailable for use in growing the business. In addition, the longer the receivables remain outstanding, the lower the likelihood of turning them into cash.”
Such complications can be avoided by using a payment method which enables trust on both ends. Curlec allows businesses to set a date which can be discussed with the other party beforehand to ensure that payments can be withdrawn on an agreed date, a feature the usual manual or online bank transfer lacks. Read more on how to get your business paid on time here.
3. Keeping track of cash/cheque is a headache
Cash and cheque are two of the most traditional payment methods used in Malaysia. However, the cons of using these payment methods outweigh the pros. With cash, you might find that keeping track of everything in the cash register can be an absolute headache. Cash not totalling up at the end of the day and mysteriously going missing… Plus, keeping huge sums of cash only puts your business at risk of losing said money to internal or external theft (another constant worry!)
Cheques on the other hand, place and even greater strain on the business when it “bounces” due to insufficient funds. Extra costs involved, administrative annoyances, and time spent following up just isn’t worth it.
4. Your fees for online payments are through the roof
Online payment gateways such as PayPal, are convenient and all-inclusive payment methods, that are particularly useful for ecommerce transactions. But there’s one thing most businesses can agree on – the insanely high fees. Set up fees, annual fees, transaction fees, the list goes on. Take PayPal for example. Merchant rates for up to RM12,000 for Malaysian customers is 3.9% + RM2.00 per transaction. Such fees can slowly but surely eat away at your business’ account and though they don’t seem like much, over time they can accumulate and make a significant dent. In comparison, Curlec’s services only charge 1% per transaction, capped at RM10, with no other hidden fees.
5. You find yourself doing too much admin
Often overlooked are the tangible side-effects of using payment methods which may not be the most suitable for your business. Namely, time wasted and all the manual work required. Take cash payments for example, employees will be required to manage the cashier, collect cash and tally the total once or even twice a day, only for the possibility of them pickpocketing from the till. Plus, not to mention the costs and time involved in hiring and training new employees! With automatic systems like Curlec for example, there’s hardly a need for an employee at all.
High employee and material costs actually play a huge factor as well, though when considering payment options, not many business owners take this into account. Equipments such as payment terminals to accept debit / credit card payments and cash registers may also not be worth it at times. But with Direct Debit, all you need is a laptop or computer.
If you’d like to know what payment method suits your particular business best, connect with us by filling up the form below this page!