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Grow Your Business Finances

Common E-Commerce Payment Challenges and How to Handle Them

Common E-Commerce Payment Challenges and How to Handle Them
Credit: William Potter/Shutterstock

The end of the calendar year is an important time for small businesses. According to research by WePay and Survata, small business owners earn 20 percent of their annual revenue in the last month and a half of the year.

But what happens when customers refuse to pay invoices or back payments? You might have to chase customers down – or even call in a collection agency – to get the payments that are rightfully yours.

The WePay survey found that most small businesses end their year with major payment challenges. Here's what the survey uncovered, and what you can do to combat common e-commerce payment challenges.

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According to the survey, late payments are the most prevalent issue.

"Small and medium businesses are not necessarily more susceptible; it's that they often lack the resources to protect themselves or follow up as diligently as large businesses," said Tina Hsiao, chief operating officer at WePay. "Still, it's disheartening to see how many and how much SMBs are affected. And it reinforces how important it is to put in place foundational tools and processes to nip late payments in the bud rather than letting them persist or grow over time."

The holidays aren't the only time that small businesses see payment challenges. The survey found that fraud and chargebacks are also common, and that SMBs face these payment and accounts receivable challenges all year long.

Nearly two-thirds of respondents said that at least 10 percent of their customers don't adhere to their payment terms.

"Small businesses are a big boost to the U.S. economy, providing financial independence, encouraging innovation and creating employment opportunities," Hsiao told Business News Daily. "But it's clear late payments and issues around fraud continue to be a serious burden for these businesses and need to be addressed."

Fifty-nine percent of small business owners follow up on late payments more than once, but even that doesn't always secure the payment. So, how can you ensure you get your money?

Refine your system. Late payments are often a lagging indicator of opportunity to refine how payments are handled more broadly.

"We've found, first and foremost, they are often a sign to make it easier for customers to pay," said Hsiao. "Software with integrated payments can make it simple for clients to pay immediately."

Accept credit cards, ACH or online payments. While there are fees associated with these payment types, accepting them often means getting paid faster and more often.

In a previous WePay survey, small businesses reported a 15 percent lower incidence of cash flow management issues when they processed all of their customer payments directly within the same software they use to manage their business.

Be clear about payment terms. This communication alone can go a long way toward making late payments a nonissue.

"When you take on a new client or project, it pays to invest the time getting clear on details of the deliverable timing and payment timing," Hsiao said. "Going one step further, capture it in an estimate or invoice. The extra effort will go a long way in ensuring there's no disputed charge later, nor any surprise like you expecting to be paid immediately upon service delivery while your client is planning to pay later."

For more tips on what to do when a customer won't pay, visit this Business News Daily guide.

Jennifer Post

Jennifer Post graduated from Rowan University in 2012 with a bachelor's degree in journalism. Having worked in the food industry, print and online journalism, and marketing, she is now a freelance contributor for Business News Daily and business.com. When she's not working, you will find her exploring her current town of Cape May, New Jersey, or binge-watching "Pretty Little Liars" for the 700th time.