Any business and its customers can benefit from an automatic payment system. It saves time, money, and improves customer experience. While there are many benefits, there are a few considerations to be aware of when implementing auto-pay for your company.
Let’s take a look at the 4 pros and cons of automatic payments for businesses.
Pro: Automatic Payments Save Time
Autopayments are transferred directly from customers’ accounts to your business on a schedule, eliminating the need for reminders and long processing times.
A lot of headaches for business owners come from reminding customers to pay on time, which can also lead to an awkward and time consuming collections process. And even when customers do pay on time, wire transfers and checks often take a couple of days to process.
Automatic payments help you save time and reduce frustration.
Pro: Can Improve Cash Flow
One important factor for improving cash flow is having customers that pay on time consistently. It sounds simple, but it can be difficult to achieve in practice when you’re at the mercy of your customers. With autopay, there’s no delay between when your customer is supposed to pay, and when cash hits your account.
Autopay also allows you to accurately plan for the future and manage expenses. Knowing payments will be on time each month gives you reassurance when budgeting and establishing future goals.
Pro: Better Customer Experience
Autopay is easier for everyone, especially your customers. They no longer have to deal with the constant reminders about making a payment, which creates less tension and more ease.
Pro: No Late Payments
While your customers no longer have to deal with late payments, neither do you! If you set up autopay with a vendor or for other bills such as your rent and payroll, you won’t have to deal with any late payment fees. You’ll also improve your relationship with your employees and vendors by paying on time consistently.
Con: Autopayments Can Be Inflexible
Automatic payments can be inflexible for both you and your customers. If your customer needs to change their payment schedule or cancel a subscription, it may require time and effort on their part. Likewise, if you want to negotiate a different payment plan with a vendor or customer, it will require more effort to change the plan compared to paying manually.
Make it as easy as possible for customers to update a subscription or change a payment plan. Making it difficult and time-consuming for them will only hurt your reputation and customer satisfaction.
Con: Less Engagement with Customers
While automatic payments lead to less hassle for your customers, it also means you’re missing out on opportunities to engage with them. If you’re in an industry where you don’t have the opportunity for a lot of communication with your customers, you may be missing that chance to interact with them.
Con: Can Be Difficult to Set Up
Autopay requires private information from your customer base and they may be hesitant to have their credit card or bank account in your system.
And if you’re trying to set up an automatic payment system on your website, it will require technical expertise to make sure it’s safe and efficient for both you and your customers. You also must ensure that you’re following compliance standards to avoid any legal issues.
If you’re looking for help with setting up automatic payments, Crown Bank is here to support you! Let us know how we can assist you.
Con: False Sense of Security
If you’ve set up autopay with vendors or subscription services for your business, it’s easy to become unaware of your company’s spending habits. While autopay takes a lot of the stress and time away when compared to manual payments, it can also lead to a false sense of security due to greater ease.
Remain vigilant in keeping track of payments to make sure your business expenses don’t get out of hand.