If you are providing any type of service to customers, either physical or virtual, you are a service-based business. One of the major struggles you may already face in the service industry is getting paid in a timely fashion. Not only is it cumbersome to draft an invoice, the customer will drag their heels, forcing you to spend valuable time chasing down payments. According to a study done by Fundbox, out of approximately $45 billion invoices that were sent out, $25 billion was paid late. In this article, I will explain how I eliminated my problem with late payments by utilizing automation technology.
Why are payments late?
Late payments are a recurring issue; if a client is late once, there is a good chance this is a habit they will repeat every time they order your service. For a service-based business, returning clients typically comprise the bulk of their customer base compared to new ones. Clients order services and if they are happy with those services, they tend to return for more, creating an ongoing relationship between the customer and the business.
According to Business Insider:
New online shoppers are only half as likely as returning customers to place an item in their cart at just a 7.6% rate, compared to 14.8% to existing shoppers
These numbers would be even higher for service-based businesses. Returning customers are a necessity for a business to thrive, but how do you eliminate late payments without straining your relationship with your clients?
First, let’s take a look at the customer life cycle for a conventional service-based business:
- Client orders services.
- Business delivers the service, and sends the invoice.
- Client pays, and the engagement is completed.
- Client comes back for more work.
- Steps #1 to #4 repeats again and again.
If you are sending an invoice to your clients after delivering the service, then you are giving them an option to decide when they want to pay, putting too much trust on the relationship. The client eventually ends up paying, but your business doesn’t fully recover from the stress.
Treat your customers really well, but don’t give them the power to choose when to pay. Service-based businesses should function like a bar. Their customer life cycle should look similar to this instead:
- Client orders services.
- You deliver the service, add it to their open tab, and automatically charge their card.
- Client comes back for more work.
- Steps #1 to #3 repeats again and again.
You see the difference? You eliminated an entire step, removing the need to chase the client to pay you for services. The charges apply automatically after every future engagement, making the process completely transparent.
The solution is automation
The heart of the solution is automation. To automate a business is to automatically perform the repetitive tasks of that business using available technologies. Most of these technologies are available to businesses through online applications. The problem is that there isn’t a single solution that will automate all aspects of your business, so if you want to be as effective as possible you will need to use a multitude of different tools. The key to automating your business is to automate everything gradually and use the appropriate tool for each task.
But Shar, what does automation have to do with eliminating late payments?
Great question. Everything. To eliminate late payments you need to automate your billing system. This means that payments are automatically processed, without the extra work of sending an invoice and the awkward situation of reminding customers what they owe you. If you are looking to automate your entire business, billing automation is a great place to start. These are some of the common billing scenarios that you should be automating:
- If you are providing your clients with a recurring services, automate your billing!
- If you work with many returning clients and send them invoices frequently, automate your billing!
- If you work on projects and accept percentage of the fee upfront and the rest upon completion, automate your billing!
- If you’re using Quickbooks online, Xero, or any other billing system to send out invoices to clients, juts automate it!
- If you are running a SaaS business, automate your billing!
How do you automate your billing? using Stripe and Servicebot.
Automate using Stripe and Servicebot
Stripe is the most robust online payment gateway in the market. A payment gateway system is the middle man between your customer and your bank account. It takes the payment from the customer’s credit card and deposit it to your bank account. Stripe takes a processing fee of 2.9% + $0.30 from every transaction.
Almost every system that automates billing works with Stripe as the primary online payment system. Your end customer never interacts with Stripe, they just pay and Stripe takes care of the rest.
Although Stripe does provides some basic automation capabilities, to automate your billing, you need a good billing automation system that synergizes well with Stripe.
Servicebot is a billing automation system. It is made to sit on top of your Stripe account and act as the ultimate virtual office for your service-based business. It is an e-commerce platform for selling services and automating recurring billing. It is used to:
- Automate recurring billing.
- Automate sending invoices.
- Automate opening a tab for new and returning clients.
- Allow clients to request quotes.
- Give out free trials of your services to clients.
- Allow clients to manage their recurring billing.
Servicebot is also an open-source system. If you are a developer, you can use the open-source version to customize the system and integrate it with existing websites.
Summary
If you are a service-based business, a conventional e-commerce website is not what you’re looking for to charge your clients. Do the following to automate your business billing system:
- Create an account with Stripe.
- Create an account with Servicebot.
- Connect your Servicebot website to Stripe.
- Start charging your clients online using your Servicebot website. Servicebot will automate your business and save you time and money.