One of the most important (and difficult) aspects of running a small business is cash flow. When you work for yourself income is often inconsistent, and regardless of age or experience 62% of freelancers say they regularly struggle with having enough money in the bank to pay bills.*
Luckily, small business owners have more choices than ever when it comes to receiving payments. Online payment gateways like Stripe make it easy to accept credit card payments from clients online. Point of sale systems like Square allow retailers to accept credit and debit card payments in person. Some small business owners are even choosing to get paid in Bitcoin.
Yet despite all the modern options, new data from FreshBooks finds 40% of small business owners get paid by check.**
Many small business owners accept checks to avoid the additional fees from credit card processors. However, even without the fees, accepting payments by check could be putting a dent in your cash flow.
Here are three things small business owners should keep in mind about getting paid online:
- Online payments are twice as fast
It takes small business owners an average of 28 days to get paid offline (check or cash), compared to 14 days online.**
- Customers expect the ability to pay by credit card
Customers are used to endless possibilities when it comes to paying bills — Apple Pay, credit card, Bitcoin etc. The more options for payment you have, the less barriers there are for a customer to pay, which is important considering one study found the majority of customers find paying by check “a pain”.
- In some cases, you can pass credit card fees onto customers
In some states, you can legally pass on the cost of credit card fees to your clients. The laws vary by region, so be sure to research the laws in your area or consult with a legal professional before passing these fees on. If you live in a region where you can pass the fees to your customer, Stripe has come up with a formula for calculating what to charge your customer on the invoice.
*Based on responses from 2700 small business owners in FreshBook Second Annual Self-Employment Report
**Based on a sample of 10,000 FreshBooks accounts