Digital Payments: Just How Vital Are They For Your Business?
Discover Why Digital Payments Are The Lifeblood of Every Business
Before we dive into what digital payments are, how they work, I wanted to discuss why they are so important for your business. Important enough they warrant an entire Post.
Also, while the term ePayments can include everything from credit cards, electronic checks, bank transfers, and a host of other ways to move money electronically, for the purposes of this post we’re simply going to focus on processing credit cards.
To get started, let me ask you:
“What do you think is the most important function of any business?”
When I ask folks this, they usually come up with some variation of the following…
– Deliver the greatest product/service imaginable
– Provide the greatest customer service ever
– Innovate regularly
Yes, these are all important elements of running a solid business, but are they really the most critical functions? Let’s see…
First, is delivering the greatest product/service vital to running a successful business? Well, I’d say that McDonald’s has proven there are billions of dollars to be made even when offering a fairly mediocre product compared to the millions of other restaurants in the world.
Compare the cut of meat you get at a Mickey D’s to something like Ruth’s Chris Steakhouse. I don’t have to say anymore, and I bet you see my point. Right? Both companies are extremely successful, both sell beef, but the difference in the quality of products they put on their customer’s plates couldn’t be anymore stark. See what I’m saying?
Okay, so if delivering a stellar product is not the key to running a successful business, then providing top-notch customer service must be imperative, right?
Well, let me ask, when was the last time you had a stellar customer service experience at a Walmart? Walmart did over half a TRILLION DOLLARS in revenue in 2018 alone. Half a TRILLION!!! That’s a “T”. $500,000,000,000 is more than twice the revenue of the next company on the Fortune™ 500 list, Exxon Mobile. Keep in mind that Walmart did this despite the fact that almost no one who works there can help you find anything, ever. I’m not saying the people who work at Walmart aren’t the salt of the Earth, folks, I’m guessing they’re just not trained or paid enough to care.
My point is, it’s clear that most folks would rather save money, even if it means getting less than ideal customer service.
So what about the last point about viable businesses needing to “innovate regularly”? Honestly, this point can be argued in so many ways, even down to how each of us defines the word “innovate”. I’m not kidding. Someone from the west coast of the U.S. is going to have a much different interpretation of the word “innovate” than someone from, say, China, Europe, or Ethiopia.
Even those in the U.S. are going to vary drastically in how they label something as “innovative”. Allow me to present one product that I think has been grossly mislabeled as “innovative” for years now. So much so that consumers have been persuaded into spending BILLIONS of dollars for no good reason.
What is this seemingly magical product, you ask? None other than the Apple iPhone. I don’t mean the original iPhone, as that was truly revolutionary.
However, in my opinion the iPhones 4 thru 9 were just the same phone with slightly better cameras or screens. Sure, there were other enhancements, but nothing as truly groundbreaking, or “innovative” as the original.
It didn’t matter though. Apple’s marketing is so effective, and their followers are so personally vested (or devout) in the brand that no matter what they put out, someone will label it as “innovative”. Case in point, this gem of an image from the 2019 Developer’s Conference that perfectly captures Apple’s culture (note: the root word of culture is “cult”)…
#1: A computer monitor stand is not art. It’s just not…mmmmkay?
#2: A stand should never cost $999, but here we are. Thanks, Apple!
Anyway, knowing all this now, I again ask…
“What do you think is the most important function of any business?”
Wait for it . . .
Almost there…
One more sec…
GETTING PAID!
That’s it. Without this one critical act, it’s certain death for any business. Seriously.
Did you know that the #1 reason why businesses fail is under-capitalization? In other words, they don’t have enough money in the bank to keep their doors open. Not getting paid = no money = no business. Period.
If McDonald’s doesn’t get their $2 for the burger and fries you just ordered they wouldn’t be able to pay their staff, or market their franchises.
[Fun fact: Did you know that, to-date, we’ve never gone to war with a country that’s allowed a McDonald’s within their borders? I guess that “special sauce” really is special.]
This principle of getting paid applies to every other business in the world, including the behemoths mentioned above, and your business. Without getting paid Ruth’s Chris’ wouldn’t be able to buy those fine cuts of meat; Walmart wouldn’t be able to open more warehouses; and Apple wouldn’t be able to position their $999 computer stands to the masses.
Given that “getting paid” is such a fundamental requirement for businesses, you’d think it’d be the focus of every organization. However, it’s almost always overlooked by even the savviest operators. Why? I believe it’s because most of us take it for granted. We all think, “Hey, I provide a better service than anyone else on the planet, so customers will love paying me for it!” Good luck with that.
Another reason? Take this extremely common accounting practice for example:
Anyone who took Accounting in business school was taught about the concepts of Accounts Receivables (A/R), Aging A/R, and the practice of writing off bad debts. “Writing off bad debts” means once your aging A/R reaches a certain point, usually 365 days past due, you should write it off as bad debt. That way, you claim it as a loss on your corporate taxes at the end of the year.
Wait, what?!
Write it off so you can intentionally take a loss? I don’t think anyone started a business and said, “I’m going to put my blood, sweat, and tears into this business. Then, I’ll wait for customers to not pay me, and get get a break on my taxes.”
Instead, how about we flip this idea on its head and thought about it this way – “What if we made it so incredibly easy for customers to pay, that we have no problems with Aging A/R again?”
I know this is possible because we’ve helped our clients do it. In fact, we helped a smaller beach community in South Carolina. They added our online payment option for paying parking tickets and reduced their outstanding tickets by 51% in just a few weeks. Imagine getting 51% of your A/R in the bank tomorrow.
Most bills don’t get paid simply because customers don’t always have an easy way to pay their bill. The reasons can vary, but most can be traced back to reasons like:
– They lost the original invoice
– The paper invoice got lost in the mail
– Customers don’t know where to mail their check
I could go on, but I think you get my point. Don’t get me wrong. I’m not saying that by making it easier for customers to pay they always will.
However, for the most part, customers want to pay so they can move on with their life.
So, it’s my contention that getting paid, or more specifically, by leveraging digital payments, you can realize money in the bank, happier customers, and more free time for the finer things in life.
For more information on getting a digital payment platform that’s right for you and your business, contact us today.