Question

Topic: E-Marketing

Getting Paid By Business Clients Online

Posted by Anonymous on12/16/2004 at 10:23 AM ET 250 Points
I plan to start an internet business to provide business services online. Some of the clients will be individuals, but I hope to attract corporate clients domestically (US) and abroad. What is the best way to arrange payment?Credit cards are obvious, but may not work for corporate clients, especially international ones. Collecting on a P.O., on the other hand, involves substantial credit risk that I would like to avoid. And I certainly don't have the resources to chase a deadbeat, especially an international one. Any suggestion to make payment simple, but assured?
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RESPONSES

  • Posted bySRyan ;]on12/16/2004 at 10:40 AM Member
    Offer a significant discount to customers who pre-pay for services. Instead of collecting fees monthly, give them the option of paying for a year in advance.
  • Posted byInbox_Interactiveon12/16/2004 at 10:42 AM Accepted
    If the average ticket for your services is small, then credit cards may actually be the payment vehicle of choice for your corporate clients.

    If they need to pay by check or some other instrument that includes risk to you, however (and I think this becomes more likely if the ticket for your services is large), then is there a chance that you can get a deposit on your services before you start working?

    This would just about guarantee that you wouldn't be out of pocket in the unhappy event that a client didn't pay the balance (assuming the first check clears).

    Larger-ticket items can also be paid for by wire, of course.

    Unfortunately, just about every business has some bad debt. It's just part of the cost of doing business, and you need to factor it in when you price your service. If your gross margins are high, however, these losses are more tolerable than, say, if you were selling widgets for $1 that cost you ninety-five cents.

    For international clients, I'd use the method Michele mentions. Those fees are peanuts when you factor in the lack of credit risk on your part and the prompt access to the cash.

    Good luck with your business--and getting paid!

    Paul
  • Posted byInbox_Interactiveon12/16/2004 at 10:46 AM Member
    Just responding to this statement:

    If you have a service that people will pay for BEFORE receiving it, I'd like to get in on that action!

    We routinely invoice for 50% of expected project (100% service-related) billings in advance. The advance payment keeps clients engaged from the beginning because they now have cash invested in the project. Also, we feel there's a little fire under our feet because we've already taken someone's money. Finally, if we ever *do* get stiffed for the balance (this has happened only twice in 100+ client engagements), we have our out-of-pockets covered by the deposit.

    Just sayin'...

    Paul
  • Posted byInbox_Interactiveon12/16/2004 at 1:37 PM Member
    "My impression of PayPal has always been that it is appropriate for transactions between individuals. Will corporations make payments using PayPal these days?"

    I've been wrong plenty, but my opinion here is that the corporate use of PayPal will never take off en masse. Moreover, I think that using PayPal as a corporate payment mechanism--save only for very small Web retailers--looks kind of small-time, especially if you're a service provider serving corporate clients.

    (Apologies to anyone here who uses it in this method!)

    Plus, unless you're dealing with the owner of a small business, it's unlikely that they're going to have access to the company checking account to use PayPal. And if they are going to use a credit card, it just seems more professional to me if you're the one handling the payment, not PayPal. Getting a merchant account these days is very simple.

    In summation, I agree with you that PayPal just has the "feel" of a company that specializes in facilitating commerce between individuals and very small businesses.

    My $0.02. YMMV.

    Paul
  • Posted byPeter (henna gaijin)on12/16/2004 at 1:39 PM Accepted
    PayPal has the reputation of being for individuals or Ebayers, not 'real' businesses. Even if some people hold that opinion, you likely would not want to use it (or have it your only payment method).

    In the US, businesses are generally comfortable paying by credit card for smaller transactions (as yours would be). Many companies have beens witching away from invoices for smaller transactions, and instead using credit cards, because of the lower transactions costs.

    Companies outside of the US don't seem to use credit cards as much, but instead prefer direct money transfers (like Swift).
  • Posted on12/17/2004 at 3:33 AM Member
    我同意彼得(指甲花外国人),国际有限公司mpanies very rarely use credit cards, usually these are coporate cards which only the senior mgt has access to.

    I've dealt with many multi-national corporations in Asia and most of them prefer to send a cheque or pay by telegraphic transfer (wire services like SWIFT). We've always only accepted US$ and if you deal with larger companies they should have US$ accounts which will avoid the forex issue. Although, some of the smaller international clients may complain about losses in exchange rate.
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