Payment collection has changed dramatically in the 21st century. Cheques and cash are out, electronic payments are in. But a simple web search can reveal conflicting and confusing information. It doesn't have to be that way! Collecting recurring payments electronically is easy, if you have the right start. We wrote this short and sweet guide to show you the basics of collecting recurring payments electronically, no matter the size of your business or number of monthly transactions.
Find a Company That Offers Pre-Authorized Debits
Your first thought when thinking about collecting payments electronically might be to contact your bank. Surprisingly, this usually isn't your best option. Big banks often have a systems that are cumbersome and expensive for small businesses.
So, what's your best bet? Third-party payment processors. These companies deal with the banks, cloud based system enables your business to process pre-authorized debits in a simple, easy-to-use and cost effective manner. This will make both you and your customers happy.
Obtain Authorization From Your Customer
Now you've found the perfect payment processor, but you can't start collecting payments yet! Before you can process pre-authorized debits, you must obtain your customers permission. A paper agreement is one way to do this, you can find the list of what your paper agreement needs to include on the Payments Canada website. Or, you can use an electronic form like the one we include here at Rotessa. As you research third-party payment processors, check to see if they offer electronic permission forms so you can cut down on paperwork.
Obtain Bank Account Details From Your Customer
Once you have permission, you need your customers bank account details so you can withdraw payments. They can provide this info by giving you a “void” cheque, giving it to you verbally, or, if they use an electronic form like the one we offer, they can enter these details themselves as they complete it.
Set Up a Transaction Schedule
With all the necessary information in hand, all that's left for you to do is use your payment processor to set up the amount, date(s) and payment schedule you have arranged with your customer. Payments will be withdrawn and settled to you, while you work on more important things, like building your business!
You can see that setting up a pre-authorized debit process to collect payments from your customers doesn't have to be complex or costly. So find the right payment processor today, and start saving your time.