Integrate payments, diversify options to fight fraud and improve cash flow

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Many entrepreneurs say they’ve dealt with multiple instances of customer payment fraud, 8 percent of those affected reporting 10 or more instances, and more than half saying their first brush with payment fraud came within two years of starting their business.

Our research shows 41 percent of U.S. small businesses report having experienced cash flow challenges and 16 percent have experienced payment fraud — just in the last year.

What’s an entrepreneur to do when they’re passionate about what they do and yet they don’t want to let payments challenges dull that passion or take a huge amount of time ongoing? There are some lessons on how how to improve this challenge.
Align up front on expectations. When you take on a new client or project, it pays (pun intended) to invest the time getting clear on details of the deliverable, deliverable timing and payment timing. Going one step further, capture it in an estimate or invoice. The extra effort will go a long way in ensuring there’s no disputed charge later, nor any surprise like you expecting to be paid immediately upon service delivery while your client is planning to pay net 60.

Dispute disputed charges. We’ve come to see many entrepreneurs take the hit and move on. And we appreciate this may be the path of least resistance on smaller transactions. Yet you can fight and win a chargeback claim. Step one should be to engage your customer directly to clear up any confusion. It may help to remind them of your return policy, restocking fees and/or terms of service. You can also dispute through the bank, presenting documentation including signed contracts or receipts, relevant emails and screenshots of shipment tracking.

Open up to additional payment methods. Many entrepreneurs refuse to accept credit cards or even ACH given their fees. None of us likes added cost. Yet holistically, we’ve come to find allowing customers to pay with their preferred payment method increases customer conversion. And if you can help them to pay you immediately, better still. Also, if you assign value to not chasing down and waiting on payments, added fees can very well be ROI positive.

Use a platform with integrated payments. WePay’s survey found those SMBs that process all of their customer payments inside their go-to management software platform or app. This finding fits with our broader experience that software with integrated payments can make it much easier for clients to pay you immediately, and it’s inside something you’re already using. Some of the best platforms offer extensive risk and fraud protections. They can additionally give you access to new customer-friendly payment options.

Be skeptical when it’s too good to be true. As entrepreneurs do more business online, they’re increasingly falling victim to fraud that only becomes apparent at the time of payment. Don’t be scared, be prepared: Seek more information and assurance if you see warning signs like a high-value rush order from a new client, a person overseas wanting to work with your local business from afar or someone suggesting you pay their subcontractor from a lump sum they will pay you.

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