Autopay: Get Paid On Time-every Time Using Ach Processing
The latest numbers on billing expenses put cost per invoice at around $8
. This includes statement mailing, payment processing, reconciliation and collection costs. Reducing those costs clearly has a direct impact on the bottom line.An often overlooked area where savings can be realized is in payment collection. The ability to rely on predictable cash flow while at the same time freeing up man hours spent on payment collection tasks has dual benefits. Strategic Planning for future growth is much more viable when you know you have $X coming in the door on the 1st or 15th of each month. At the same time you can allocate human resources previously spent in the collection arena to other revenue generating areas.
ACH Processing (and credit card processing) offers those exact benefits. It can be a relatively simple task to implement an AutoPay system and encourage your clients to enroll (we have an entire marketing campaign available to implement AutoPay ). Additional benefits would be electronic communication of billing details (no invoicing) for AutoPay participants.
Fees for AutoPay can vary. In the credit card world the merchant is ALWAYS charged a discount rate. This rate is typically in the low to mid 2% range. An example would be if your discount rate for qualified (qualified means you process a consumer's credit card and that card is not associated with a rewards eg frequent flyer miles program and capture numeric address data) is 2.25% that means that for every $100 payment processed you pay $2.25 (plus a typical .25 transaction fee).
Contrast this same transaction processed via an ACH debit (electronic check). A typical fee might be a flat .30 (thirty cents). You save close to 90% of the processing fees. Even smaller merchants benefit from these savings-larger merchants can save $1000's each month. The credit card payment does have an "authorization" component. That means that you know at the time of sale the customer has the requisite funds available on their card and that this monies have been set aside for you-the merchant. In the ACH world you have to wait 2-3 days to know the funds have cleared. There are also check verification tools that can mitigate loss exposure (query ATMVerify).
So consider an AutoPay plan for your business and enjoy the benefits of reliable, predictable cash flow. Use ACH processing to both offer a payment alternative and reduce payment costs.
by: Wayne Akey