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How to accept payment from customers

I’m sure you’ve seen that first dollar framed or taped proudly to the wall in many restaurants or other small businesses. That first dollar bill earned by a business is a big deal. It, as Jake Molko points out in a LinkedIn blog post, is “… a reminder of the risk and personal sacrifice that business owner took on, and it’s a reminder of the reward that can follow.”

In today’s digital world, most businesses may never see a paper version of that first dollar. But, that doesn’t take away from the significance of the accomplishment.

A key factor to operating a business is to have some way to charge for the services or products offered and collect the payment that is owed.

The first question to answer is at what point in your interactions with customers or clients will you charge them. Next, you need to decide what kind of payments you will accept.

Step 1: When to Charge

One of this first steps in accepting payment is knowing when to ask for payment

Charging Upfront or Asking For a Deposit

Charging customers or clients upfront or asking for a deposit before any work has been performed has two main positives. First, there is less chance of clients or customers disappearing or shirking off their payment responsibilities. Secondly, it can help businesses keep their cash flow steady.

It can be tough getting payment ahead of time, so if this is something you are hoping for, offering a slight discount for upfront payment in full can help.

Charging at the Point of Sale

Point of sale payment is most used in restaurants or retail businesses. The customer is charged and is expected to pay as soon as they get their item. Think of a cash register at Target-the business is receiving payment as the customer is receiving their new purchase.

Sending an Invoice

If your business invoices its customers or clients, a traditional invoice is given in person, sent by mails, or delivered electronically. Then, the customer has a set amount of time, usually 30-60 days, to remit payment.

Step 2: Deciding on How to Accept Payment

Cash is still a good way to accept payment

You’ve figured how and when you are going to ask customers for payment, which means the next challenge is accepting payment. Long gone are the days of bartering cows and goats for eggs and hay, and even long gone are the days where the only way to pay someone is by pulling cash out of the wallet.

Today there are a myriad of ways for consumers to pay for goods and services.


Cash is pretty easy peasy and simple, but it still has its pros and cons.

Pros of accepting cash: the money is there right now, no credit card fees, no bounced checks.

Cons of accepting cash: break-ins and robbery are more of an issue, you have to make sure you keep enough cash on hand to make change.

As a business, you don’t have to accept cash as a form of payment, but Chron suggests that if you choose not accept cash that you have signs displaying your policy to customers in order to avoid awkwardness or embarrassment.


I clearly remember going to the grocery store as a child with my mother and watching her write checks at the cash register to pay for her purchases. Now, it takes me years to go through all of the checks in my checkbook as I use them so sporadically.

However, for some businesses–especially those that typically invoice their customers–receiving checks as a form of payment is a regular thing.

When you choose to accept checks as a form of payment, you need your employees to make sure each check has: the total amount due (written out and numerical value), the correct payee name, and a signature.

When it comes to depositing checks, do it quickly. Be aware that some banks don’t allow checks to be deposited after a certain number of months. Plus, when customers are working on balancing their checkbooks they want to see that everything was deposited successfully.

Credit Cards

We all know how ubiquitous that credit cards are today. That said, accepting credit card payments comes with strings–strings such as extra fees. However, you can increase sales by up to 40% simply by adding this service, and if you want to do any sort of online business, it’s imperative to accept credit card payments.

How to go about accepting credit cards?

The first step is opening a merchant account. Merchant accounts are separate from your business bank account and credit/debit card payments are initially deposited there before the funds move to your business bank account.

Accepting credit card payments looks different whether you are charging customers/clients in person or if the transaction is happening online. For in-store transactions, you will need a card reader that allows you to swipe cards or insert chips.

With online purchases you need to make sure that you have a payment gateway set up. Think of the payment gateway as a bridge that connects the online “cart” with the payment processor. The gateway encrypts and sends all of the customer credit card information to the payment processor which in turn deposits the funds into the merchant account.

This can be kind of confusing, but there are some “all-in-one” options such as Square and PayPal that include payment gateways, payment processors, and aggregated merchant accounts. Research all of your different options (all-in-one or individual merchant accounts, payment gateways, and payment processors) and the fees associated with each before making your decision.

Other Online Payment Methods

Other online payment methods include:

  • ACH check processing- The customer gives the bank account number and routing number and withdrawals are made directly from the customer’s checking account.
  • Digital Wallets such as Apple Pay– This allows customers to use their Smartphone or watches to pay for products or services.

Questions? Contact us at Lumen Advisory and Finance!