Battle of the payments Choosing the best payment option for your firm
@GoCardless @CommsBreakdown
Steve Ash, Consultant and Writer, CommsBreakdown Steve is a consultant and writer, specialising in accounting, marketing, business software and fintech apps. He’s partnered with GoCardless, provider of automated payment solutions, to find the best way for your Xero firm to get paid.
Getting paid on time is vital element of keeping cash flow positive and giving your Xero firm some financial stability. But with so many different payment options to choose from, how do you know the best way to get your cash collection done and dusted? Steve Ash from CommsBreakdown has partnered with GoCardless to run through five of the key payment options, outlining the pros and cons of each option...
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5 days is the average time it takes to get paid for UK small and medium-sized accounting firms. And the story isn’t much better in Australia, with the average debtor days for Australian firms sat at 55 days. So does accounting have a payment problem? With such a variety of different payment options and online payment gateways now available, is there a better way for your Xero practice to get paid? To get you up to speed with wide range of payment options out there, we’ve pulled together the key contenders for a 2018 ‘Battle of the Payments’ showdown.
But the concept of paper-based cheques, instructing a bank to pay a fixed amount, is starting to look rather long in the tooth compared to many other payment options. Despite plans to discontinue cheques by 2018, consumer backlash has meant that cheques are still alive and kicking as a payment method, particularly in the USA. The pros of cheques: • Good for large payments where you want to avoid any large transaction fees • Admin commitment manageable if you only have a few clients The cons of cheques:
1. Cheques • Banks will charge you for each cheque you cash • Cheques can take up to 7 days to clear • Amount is fixed by the client when writing the cheque • Lots of manual processes (paying in, updating records) needed • Starting to look outdated in the digital age Payment cheques (or checks in the US) have long been a traditional way for customers to pay large bills. 16 / Issue 15
2. Bank transfers
Bank transfers (or money/wire transfers) are another tried, trusted and traditional method of clients paying their bill. Using their online banking, or by giving their bank a direct one-off instruction, clients can make a direct payment to your business account. Bank transfers are typically fast and easy to initiate, but there is one key drawback – it’s the client who’s in control of when payment is made, meaning that late payments are highly likely. The pros of bank transfers: • Reliable and fast for the customer to set up • No associated costs for standard bank transfers (unlike cheques) though there may be charges for larger sums
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