Accepting timely payments is a must for your business to survive; however, in this ever-changing world where everyone is on the move, conventional methods limit a business' ability to collect on a timely basis. Businesses are forced to create solutions to meet customer demands while streamlining accounts receivables. Fortunately, electronic payment systems can save the day.
Electronic payments are available in several varieties and are accepted through different payment portals. As payment technologies have advanced, so too have the needs and expectations of customers. Traditional cash and check payments are now being processed with debit/credit cards or by direct withdrawal from checking or savings accounts—via the Automated Clearing House (ACH). These payments are made in person, over the telephone, or online through a secure website.
ACH processing utilizes the Federal Reserve's financial backbone. This is the process of transferring funds directly from your customer's checking or savings account to the depository account you designate during the set-up process.
The ACH system is simple and easy for businesses and customers to use. All you need is the routing number and account number located at the bottom of a check, and funds can be transferred from your customers' accounts. This eliminates paper checks altogether.
A good ACH service will provide you with control, reporting and reconciliation tools needed to track and monitor your ACH activity. Since the start of the 21st century, paper-check usage has been on a 5 percent decline annually, while ACH transactions have increased by more than 13 percent. In fact, in 2003, for the first time in history, electronic payments were used more often than paper checks, according to the Federal Reserve's spring 2005 report.
Modes of Capturing PaymentsThe Internet is increasing in popularity as a payment portal and the fastest-growing communication medium in U.S. history. Fading quickly are the fears Internet users once had about purchasing goods and services online. According to Internet World Stats website, more than 200 million Americans are surfing the web, a huge indicator that ecommerce is changing our lives. In fact, 65 percent of Internet users had purchased products and services online by the end of 2005, according to the Dallas Morning News. It's clearly time your self-storage customers had the option of online payment.
ACH payments also can be conducted over the phone. Many service providers offer a "phone-in" option to attract additional payments from customers without Internet access or who remain leery of it. Phone payments can and should be offered via a toll-free number and made available for use 24/7. By offering both phone and online transactions, you can capture the greatest number of timely.
Moving AheadChoosing the right payment provider from the crowd isn't as simple as picking up the phonebook. When evaluating potential providers, consider the following:
1. Pick a service that offers multiple payment options as well as portals for payments to be made. The ability to offer both ACH and credit-card payments is key to giving customers the flexibility they want. But don't stop there. Implement the options in as many places as possible. Allow tenants to come into the facility to make payments. This maintains face-to-face contact and keeps you at your best. At the same time, offer the telephone option for those who don't want to go online.
2. Don't overlook website integration, which enables customers to make payments directly through your website. Customers should be able to visit your site and access every payment they've made using the service, increasing your web traffic by as much as 15 percent. More visitors to your website means it has more merchandising and sales power. Don't use your site merely to advertise the facility: Use it to make more money.
3. You will need a provider who is offering great customer service, a company that will go above and beyond for you and your customers. Remember, a friendly, helpful customer service department should be there to represent you and your business.
4. Software integration allows all electronic payments to be imported directly into your management software. This saves huge amounts of time each month—time that can be used for customer service or focusing on marketing. Imagine, all those checks you once had to handle will now be automatically deposited into your bank account and propagated to your management software, eliminating manual data entry.
5. Keep an eye on security. Advanced Encryption Standard (AES) is the 256-bit encryption method adopted by the National Institute of Standards and Technology. AES is a federal standard and has been accepted by HIPAA and other agencies for use in securing sensitive information. Pass the responsibility of security onto your service provider. But first, be sure the provider is CISP compliant and uses the latest in 256-bit encryption.
Finding the right service provider to offer electronic payments can save your organization—and your tenants—time and money. Throughout the past three years, electronic payments have moved from a "nice-to-have" to a "need-to-have" service for successful self-storage operators. Electronic payments are a benefit for everyone involved.
Allowing customers to talk to a live representative or use a round-the-clock automated system ensures you've employed every tool available for your business. Never miss another payment or hear the dreaded "the check is in the mail" again. Let the ease and simplicity of electronic payments save the day for your business.
David Batterman is the regional sales director and Brent Hoffmann is vice president of sales for Payment Service Network (PSN), a provider of electronic-payment processing solutions for the self-storage and multifamily housing industries. PSN's solutions combine the latest in ACH and debit/credit card processing solutions together with phone-in, online and face-to-face processing environments. In addition, services work with organizations to streamline accounts receivables, increase the number of on-time rent payments and provide customer-preferred payment options. For more information, call 866.917.7368, ext. 5088; visit www.paymentservicenetwork.com.
Good vs. Evil
The top-three advantages of electronic payments are:
- They allow managers to concentrate on core responsibilities and increase productivity.
- They provide additional payment options to offer customers, increasing retention.
- As the first self-storage owner to offer the service, you might distinguish your site from the competition.
Naturally, there are drawbacks as well. The top-three disadvantages of electronic payments are:
- Fear of the unknown: Although electronic payments help to streamline accounts receivables, it's considered a fairly new way of doing business. As with all change, the unknown can be your biggest hurdle. Your new payment processor should provide training and support.
- No physical cash contact: There is a certain sense of comfort in knowing you have the payment physically in your hands. Still, a good service provider will provide you with reporting tools to receive instant-payment notifications.
- Less face-to-face interaction: Truth be told, customers who want face-to-face communication will continue to deliver their payments personally. Electronic payments offer managers more time to give personal attention to new customers and those tenants who prefer to come in.