But wait….. there’s more – how to implement payment plans for your product
We get enquiries from many different business owners about our payment solutions. They suspect that we might be able to help them but don’t really know where to start and what the adoption of a payment plan type set-up might look like. The truth is, payment plans have been around for years. From placing a surfboard on lay-by when I was young to buying a set of steak knives from Tim Shaw, payment plans have been a simple and easy to implement strategy to make products more affordable. PeopleHub’s direct debit system can make payment plans a real option for your business. Below I’ll tackle some of the regular question.
How do I make sure I get paid?
You will note from a previous post on avoiding the pitfalls of direct debit that there are some risks of providing direct debit to your clients. There are a couple of strategies that you implement as part of your payment plan or lay-by system.
1 – Don’t provide the product until you have received full payment. This is obvious I know, but with the proliferation of rent to own products, many products are provided upfront with payment collected over a period
Customer Relationships – what are “terms of trade?”
There are a multitude of small business transactions carried out daily without a piece of paper being signed. These are small exchanges where the goods or services are provided and payment is made at the same time. In most cases, these transactions pass without event. There may be instances where the product has a fault or the consumer believes the product does not meet its advertised standard. The Trade Practices Act provides the legislative tool to manage these instances when they arise.
At PeopleHub, most of our clientele are either providing a service at a discounted price in return for the consumer guaranteeing their custom for an extended period of time (for example a gym membership) or alternatively they have provided a physical product and are collecting payment for this product over time (for instance a coffee machine). These long term customer relationships, while also covered by the Trade Practices Act, generally involve some form of contract or terms of trade.
What are terms of trade you might ask? It is simply a contract between you and your customer which sets out the rules for the purchase of the goods or services. It spells out the obligations of each party
The unofficial top 5 tips for starting and growing a business
As PeopleHub enters its adolescence as a business, we thought we’d reflect on some of the key things that have got us to this stage and share them with you to assist you in your business.
The mechanics of starting a business are well published on several Australian government sites. So rather than reproduce some already excellent information and advice, we’d thought we’d provide you with our top five considerations when starting a business.
- Do something you love – This is one old chestnut that gets trotted out by everybody who has written a motivational or self-help book. It is almost a cliché, but the simple fact is there is no such thing as “Mondayitis” if you are doing something you believe in and are passionate about. In all honesty, PeopleHub was not founded to be a payment business, we are passionate about helping small business and by providing a reliable and flexible direct debit solution we are achieving exactly what we set out to.
- Map out your business model – I cannot believe how helpful this is to a start up. The business model explains how you take the inputs to your business, convert them into a product
Direct debit – A great tool for your business (Part 1)
Direct debit is not a new payment method. In fact it is a proven and reliable means of collecting fees and payment instalments across a number of industries. In fact the number of direct debits has increased 10% annually for the past decade with approximately 2 million direct debit transactions being process daily in 2008 (Ref APCA).
So why is direct debit so popular and why are businesses using it?
- Direct debit gives you more control over your debtors. Often small business owners issue invoices, nominate payment terms and on the date they expected the funds the payment is not made. Obviously people are busy but these delays in payment can seriously affect the cash flow of a small business.Direct debit significantly reduces the time it takes for your business to be paid. Payments are made on the agreed date between you and your customers.
- Direct debit can also increase the attractiveness of your high value products. Many of our retail customers use PeopleHub Online to sell their products by accepting instalments over time. In this way they make their products more attractive and thus easier to sell.
- Direct debit can assist in automating the collection of regular payments
Avoiding the pitfalls of direct debit (Part 1)
While it may seem strange for a payment company to spell out the risks of direct debit, we believe it important to provide a balanced view of some of the difficulties that can arise. By understanding some of these issues, your business will be able to better navigate the traps of what is otherwise an excellent method for collecting your regular payments.
The first and most obvious issue with direct debit is that the account you are attempting to debit may have insufficient funds. This is logical given direct debit is a biller initiated transaction; it is not possible to know whether sufficient funds exist prior to debiting the account. Not only does a default require some action from you, it can also mean your customer has incurred a fee from their financial institution.
As a business there are several things you can do to reduce this risk, but they all essentially relate to communicating with your client:
- Ensure it is clear in the contract when payments will be debited and then provide a copy of that agreement to your client for their future reference,
- Send reminder messages to your client when a payment is about to be debited,
- Provide