Manage Multiple or Recurring Payments
How to Manage Multiple or Recurring Payments
When you set up the structure of your business, you needed to decide how it would be organized. It may have come down to issues of hierarchy and how your various departments or employees worked with each other. In the end, one of your prime considerations probably was the nature of the work your company does as you worked to become efficient and cost-effective as possible. If you chose a project-based model, you may now be facing billing challenges that you did not anticipate. Taking steps to overcome these obstacles is vital if your business is to thrive.
Before we dive in, let’s get down to a definition of a project-based business. In general, companies are either structured to sell products or to complete tasks. The latter is what is known as a project-based company. As a side note, it’s also viable to build a hybrid structure that incorporates aspects of each of these models. Typically, in the project structure, teams are put together to get a job done, and there is only limited interaction between groups. In most cases, it only happens when the tasks at hand make it necessary. Certain types of businesses lend themselves to the project-based model. Examples include web and graphic designers as well as construction workers and other contractors.
What distinguishes project-based companies from those that are focused on products is more than chain of command. If you are to run a successful project-based enterprise, you have different accounting needs. Whereas standard business accounting is concerned with all revenue and expenses for the entire company, project-based financial management uses accounting that focuses on each job. This model has powerful advantages. Revenue and expenses are tracked day by day, providing constant input about what is working and what is not. Thanks to this close, ongoing scrutiny, the entire project is under the microscope, including materials, labor and time delays. This makes it easier for managers to make changes quickly and bill appropriately with fewer mistakes and less need to make corrections later. The overarching goal of project-based accounting is to ensure that the task is done on time and on budget by monitoring and recording all components of the work throughout the process. Failure to stay on budget is the most common reason for projects to fail outright or fail to be profitable.
Recurring Billing: The Biggest Challenge
In the project-based model, work happens over time. As a result, you will often find that you need to help your customers split their payments into manageable chunks that they can pay over the course of the job. While this scenario certainly makes sense in most cases, it can lead to some challenges:
- Keeping track of your customers. This is a particularly pesky problem if you have a large company with numerous jobs being completed simultaneously by different teams. In situations like this, it’s crucial to invest in tools that keep track of your large customer base, note any promotions individuals may be using, and send immediate notifications for any delinquencies in payment. You don’t want to complete too much additional work without being paid for the work already completed.
- The need for flexibility. Clients will have their own individual payment requirements. One might request a monthly option; others could prefer quarterly, semi-annually or even once a year. In order to meet these varying needs, be sure your payment processing company furnishes you with the tools and knowledge you need to customize these payment schedules.
- Automation. Today’s technology takes most of the guesswork out of those day-to-day business tasks that can so easily fall between the cracks. Because you definitely do not want to forget to send invoices to your customers, find a merchant services provider that can help you automate the task using your point-of-sale solution. There certainly is no need to reinvent the wheel every time a bill needs to be sent.
- Keeping payments secure. If clients fear that your website, your mobile payment device, or your on-site credit card payment solution is not secure, they will be justifiably reluctant to entrust their sensitive payment data to you. Check with your payment processing company to be sure that all your systems are fully upgraded and PCI-compliant.
- Transaction issues. If your customers pay online, you may encounter times when their transactions fail for whatever reason. Searching for these takes time that would be better spent running other parts of your business. With recurring billing software in place, you don’t have to go through the tedious process of monitoring each one as it comes in, and your customers can instantly be notified of the problem by email. The software feature also makes it easy for you to create a tracking report that helps you spot trends that merit a closer look.
- Unnecessary complexities. Even if your clients tend to only make payments for the project you are completing, you should be sure that your recurring billing software integrates seamlessly with the payment gateways and shopping cart on your website. It’s more cost- and time-efficient to accept both project-based and product-based payments using the same solutions. Not only is tracking in real time easier, but it also makes sense when you are looking at the flow of revenues and expenses across the entire company.
For many enterprises, following the project-based model is the most efficient way to complete the work at hand. Others may find that a hybrid structure that combines some job-centered and some project-based features is optimal. Whatever the best solution is for you, it’s important that you are proactive in terms of your accounting practices. Taking steps to make recurring customer payments flow as smoothly as possible before problems arise can save you infinite hours of backtracking through records, with all the frustration and stress that entails. With the help of a high-quality billing and/or payment software suite, you can use your time and resources to expand and grow your business.
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