You want more ACH payments from your customers because ACH:
- Costs less;
- Requires less labor to process than checks and you can’t increase hires (or have to decrease head count);
- Improves cash flow and DSO (days sales outstanding);
- Provides customer convenience with an option for credit (i.e. “push”) and/or debit (i.e. “pull) payments;
- Reduces fraud exposure;
- Carries a boatload of remittance details for easier cash application, particularly for B2B payments.
But it’s hard to get customers to change payment behavior. We hear that all the time. In many instances, it’s the customer that chooses how to pay. And billers/suppliers, well, you don’t want to inconvenience customers. That seems like good business sense.
Guess what? You can influence customer payment behavior without causing any ill effects. In our research of payment receivables, the suppliers/billers with the highest rates or ACH payments have these activities in common. So do what the “super drivers” do for success:
- Define a “payments mix” strategy and goals. Best practice likely still dictates that you need to offer payment options to customers. Still, you can set end-of-year, year-over-year goals for what that mix (check, ACH, credit card, wire) should look like.
- Provide a budget (I know, you can’t get budget --- we’ll get to that soon!) for messaging campaigns, incentives, service rep training, sales rep compensation for including “pay by ACH” in the sale, etc.
- Promote ACH during onboarding. It’s hard to change habits; get your new customer to pay via ACH by default in your contract/service agreement, so they have to “opt-out” to pay by another method.
These recommendations imply that the organization is behind the strategy to grow ACH payments, and is willing to commit resources to accomplish the payment mix goals.
A lot of times, though, getting commitment throughout all the affected business lines within a company can be tough. Meanwhile, your receivables/credit/accounting/finance department is drowning. What can be done?
- Pick up the phone! This really works. A lot business customers want to pay you via ACH because it benefits them too. Stratify customers to identify which companies send you the most checks, and have a couple of employees take a one to two day “holiday” to call these customers. Or, use an intern.
- Answer the phone! For consumer and business customers alike, leverage “teachable moments,” like when they call the billing department about a late payment or related issue. Let them know how the problem can be avoided with an ACH payment.
- Leverage the one communication your customer probably pays attention to: the bill or invoice. Lobby to have clear ACH payment instructions provided on bills/invoices, and your website.
Want to learn more? Listen to the recording of our, “ACH Payment Payables and Receivables Basics for Businesses” Webinar. Learn more about the ACH Network and ACH payments, and how they can work for your business.