Service Pros: Secure your Paycheck while Saving Money

For service professionals, the core elements to running a successful independent business include:

(1) Scheduling appointments

(2) Communicating with clients

(3) Getting paid for your work

These are all crucial components to building a sustainable business. But if we want to drill down to the most important part of any business, let’s be honest…

Everyone likes getting paid.

For independent professionals and freelancers, however, the path to getting paid can be time-consuming and bumpy.

Many professionals, for example, still use software that requires them to invoice clients, which takes days if not weeks to collect what you’re owed. Others bypass invoicing and stick to a pay-in-person strategy, however these business owners are exposed to last minute cancellation and no-show risk for the entire time leading up to the actual job appointment. The savvy professionals secure their customer payments upfront to protect them from questionable clients, however antiquated software forces professionals to pay an arm and a leg for this “payment security” peace of mind.

The independent professional market is one of the fastest growing parts of the U.S. economy, yet the way these professionals get paid remains stuck in the 90s.

Invoicing Software

A customer booking is only half the battle – payment for service rendered is what professionals care most about. Invoicing has historically been the “professional” way to collect payment from customers. There are various invoicing software applications out there like Invoice ASAP and Freshbooks for small businesses. These run professionals anywhere from $15–20 per month, yet don’t protect them in any way. That is to say, customers can still be delinquent or slow to pay invoices, and the business is still exposed to cancellations and no-shows. Not to mention, times are changing, and these days clients don’t need to see formal invoices in front of them to determine whether or not a business is “professional”.

Payment Processing

“E-payment is the future!” says companies like PayPal and Square. They are right in that e-payments allow you to bypass trips to and from the bank and keep your wallet lighter (no cash!). However, for professionals who perform jobs and services for their clients, the e-payment process does not provide much protection in getting paid. Business owners are still exposed to cancellations and clients flaking out on appointments. Have you ever heard a customer say after a job is done – “Sure, I’ll just send you a PayPal later”. How much time do you spend after that following up with them to remind them? Or how about ones you never hear from again? And of course just like any electronic payment process, there’s a per transaction fee ranging between 2–4%.

Payment Security

What professional doesn’t like knowing that their payment is secure before accepting a job? Historically, simple merchant accounts (like Merchant Warehouse or Authorize.net) have been the way to go allowing professionals to collect client credit card details upfront, then charging the customer immediately after the job is complete. Professionals are not only protected from last minute cancellations (enforcing cancellation policies), but can also rid themselves of the extra step that invoicing adds, saving them time and reducing the risk of non- or slow-paying customers. One downside to this is the additional burden of having to securely store the customer’s credit card information for later processing which requires expertise in payment data security that most businesses cannot afford in-house.

At a minimum, however, business owners are spending $20 per month for merchant processor accounts, assuming they hit the minimum accepted volume requirements. There are other fees baked into these merchant accounts (depending on who you use) such as setup fees, gateway fees, statement fees, etc. Then of course there is a per transaction processing fee ranging from 2–4% per transaction.

Payment Option Landscape for Professionals

Put Money Back in Your Pocket while Securing Your Paycheck

Payment technology for service professionals and independent business owners is continuing to innovate. The key is to make sure you know your options, you know what software will work for your business, and you know where you can easily save money.

At the end of the day, we’re all working for that paycheck. So the most important variable to consider is making sure you are payment-protected as soon as you accept any job. And if you can put money back in your pocket while doing so – that’s the best of both worlds.