Getting paid without hassle or delay is pretty fundamental to the smooth running of your self-employed business.
It sounds easy, right? After all, there are far more ways to get paid today than ever before – from PayPal buttons on personal websites to iPads in pop-up shops.
But if you choose the wrong payment option, you’ll struggle with paying high fees or with delays in receiving payments – or both.
Cash is no longer king
Once upon a time, almost all self-employed people were paid either in cash or using cheques – methods that guaranteed you always received the full amount for your work.
Today, however, you’re far more likely to be paid digitally, which will make it harder to keep hold of everything you’re owed.
Card and digital payment providers charge fees that typically range from 1.5% to 3% on every single transaction. This might not sound like much, but it quickly adds up. If you earn £33,000 per year (the pre-Covid average for a UK self-employed worker), you could lose around £990 of your hard-earned income on third-party transaction fees.
Nor should you expect the digital transaction to be completed straight away.
Cards and digital payments platforms offer surprisingly slow settlement times. It usually takes at least two to three days before the customer payment shows up in your account.
If your cash flow is tight for any reason, you could be facing an anxious wait to see if the money comes through in time.
Out of sight, out of mind
It’s much easier to guarantee payment if you’re asking customers to pay there and then.
But, unfortunately, most self-employed people can’t do this. Maybe you do most of your work remotely, or perhaps you don’t want the hassle of carrying around card readers wherever you go.
If you’re relying on your customers to pay you after the event, there’s always the risk that a payment won’t be made. In fact, our research shows that one in two self-employed people struggles with overdue customer payments. This can cause a lot of stress and anxiety.
And if you’re spending all your time chasing late payments, you’re probably investing less time in growing your business.
Making bank-to-bank account transfers easier
The answer lies in bank-to-bank account transfers. This approach offers instant payment with zero transaction fees – perfect to avoid the digital dilemmas we’ve described.
However, the current online and mobile bank transfer methods are clunky and make customers nervous. It’s easy to make an error or get confused by the multiple security checks. You have to text or email over sensitive banking information to customers.
Thankfully, at Osu, we’ve solved these problems for you.
Our mobile app enables instant account-to-account transfers between you and your customers, without any complexity or security concerns, and crucially, without any transaction fees.
The app generates a payment weblink or QR code every time you need to take a payment. No one needs to share any sensitive information – the app plugs into your bank’s existing technology (and your customer’s bank) to make the instant, fee-free transaction possible. All you need is your customer’s phone number to send them the link.
Understanding how customers want to pay
This might approach not be suitable for every customer. Some won’t have smartphones. If your customers are large businesses, they may have established payment processes that you have to follow.
Getting paid on time and in full isn’t easy, but if you start thinking about it right at the beginning, you’re more likely to find an approach that works for both you and your customers.