For Your Small Business

What’s the best payment method for small businesses? Some say cash is king, while others swear by credit cards. But in light of the coronavirus, small business owners may have had to forgo their preferred payment method and switch to online payments.

But ultimately, the best small business payment method will depend on a variety of factors. As you think about the best method, consider the size of your transactions, who’s handling the money, and your accounting system.

Let’s explore the payment options and payment processing tools that may fit your company.

Types of small business payment methods

The first thing you’ll need to decide is which types of payment your business can accept. Generally speaking, there are five payment options to choose from:

  1. Cash payments
  2. Check payments
  3. Credit card payments
  4. Online payments
  5. Mobile payments

Cash payments

Consumers make cash payments with bills and coins. Typically, you manage cash payments from a point-of-sale system. Until recent years, cash had been a primary form of payment, but digital payment options have steadily increased in popularity.

The benefits of accepting cash payments include receiving payment immediately rather than waiting for a transaction to clear. Cash payments also cut down on overhead costs because there are no fees associated with accepting cash from customers. For small businesses with slim profit margins, credit card fees can be costly.

Running a cash-only business may help some small businesses improve bottom lines and simplify responsibilities. But it’s important to note that this type of payment comes with drawbacks. With a cash-only business, you may run a higher risk of theft and mismanaged money. There’s also a chance you could also lose business by inconveniencing customers who only have a card.

Regardless of your industry, if cash is your preferred payment method, you can avoid an audit with diligent accounting.

Check payments

Checks are documents that authorize banks to transfer funds from your customer’s bank account to your business bank account. Checks document the payment amount and date and the payer’s account number and signature to authorize payment to the recipient.

Paper checks piqued in the 20th century, but they have lost some of their popularity with the widespread adoption of electronic payment systems. EChecks, electronic alternatives to paper checks, are now commonly used to make online payments.

But checks aren’t entirely outdated. They’re common among small business owners who own rental properties and lawn service companies, for example. All you need is a business account to start accepting check payments. But the SBA suggests creating a policy for your protection.

Standard practice is to accept check payments written in the exact amount and issued by major banks in your state. A third-party company can help verify the legitimacy of each check. But if a check bounces, you could wind up in small claims court or using a collection agency to recover your losses. Both results can be expensive and don’t guarantee repayment.

EChecks have become increasingly popular, along with ACH transfers from one financial institution to another.

Choosing the right payment method for your small business

Ultimately, the payment methods you accept at your business will depend on your business model and your customers. The best payment solutions for your small business should be affordable and capable of integrating with your accounting software. Offering a variety of payment options to customers may help boost your cash flow,

You can back your business with powerful tools using QuickBooks Payments, paired with Intuit’s best-in-class accounting software.

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