What types of payments will you accept?

Payment for services is our livelihood, obvs - but you don't want to wait until you land a client to figure out how you will accept payments from them.

You are the expert and shouldn't rely on the client figuring out how to pay you or asking them how they prefer to pay - make sure you have it handled.

There are countless free resources to accept payments from clients. I say free as in the platform is free to use, but every platform will charge processing fees. The average processing fee range from 2% - 3% of the total invoice.

Best practice for payments is debit/credit cards and ACH transactions. I do not recommend ever accepting a check from a client regardless if it's a personal/business check or a cashier's check - cashier's check fraud is on the rise and is not as secure as they used to be.

So, let's break all the different payment methods down:

Debit/Credit Card: Your payment platform (ex. Waveapps, PayPal) allows your client to input their card details on a standard bank encrypted website. I say debit or credit because the client can use a debit card with a Visa/MasterCard logo or a standard credit card. This is by far the most popular option. I personally use Waveapps and love them. I'm a former Bank Auditor and I've used and have worked with most payment platforms and Waveapps really does it all. The overall payment platform is free and some features are: estimates, invoices, linking multiple business accounts & personal accounting, accounting, paying vendors & employees and so much more. The payment processing fee is 2.9% for debit/credit and 1% for ACH. They have recently rolled out 'Payout' where you can transfer an incoming payment to your bank account immediately instead of waiting 3 days for standard processing. To do so is an additional 1%. It is a good option if you need access to that money ASAP. Their processing fees is alligned with every other payment platform, I can almost 100% guarantee you will not find lower fees.

*Side note, we will talk about when, where and how you can have your clients pay the processing fee when they make their payments.

ACH: ACH stands for Automated Clearing House. This is the network that the payment is processed on and is also referred to as a bank-to-bank transfer. The client will enter their bank's routing number and account number and the payment will be debited directly from their bank account. ACH transactions typically have a lower processing fee, around 1% is standard. You may hear some refer to an ACH as a direct deposit, but a direct deposit is not the same thing as an ACH. Head over to our "Share The Love" page for a free ACH Authorization Form!

Personal/Business Check: A paper or laser check printed and signed and is typically mailed to you. Unless you have worked with your client for a while, I do not recommend accepting checks as a form of payment. If the check is returned (bounces) you are responsible for paying back whatever you spent from that check and the returned item fee your bank will charge you.

Cashier's Check: A bank check made payable to you. The client goes to the bank and transfers money into one of the Bank's general ledger account for holding, the client receives a check in return that they provide to you. When you cash/deposit the Cashier's Check the money comes from the Bank's general ledger account and not from the client's personal/business account. Cashier's Checks are often referred to and assumed to be guaranteed funds, but that is not the case anymore. The software scammers use nowadays are top-notch and there are countless Cashier Check scams out there. Aside from the scams, there are situations that can happen at the bank for that check to be invalid. Although this would rank #3 on my list of recommended payments.

Wire: The client goes to their bank and completes an outgoing wire form with all of their details and your details. You will have to provide your client with the name of your bank, routing number and account number. The client's bank pulls the amount from the client's account and places it in one of their general ledgers and submits the funds to your bank. Your bank accepts the wire in their general ledger account and further forwards and credits your account. Accepting a wire can be great, and very bad. The great thing is that when the wire has been placed in your account, the client nor the bank can take those funds back. Yes, the client cannot dispute the transaction as a charge-back. Well, let's back up, they can try, but it won't work. Legally the Bank has to obtain your permission to return the funds. The only time the Bank can hold the funds or debit your account is if it's suspected fraud. They'll conduct their due diligence and release the funds to you or conduct an in-depth investigation if it is fraud. Now, you are providing the client with your bank account and routing number and that is the only information they need to initiate an outgoing transaction from your account. Another great reason to have a separate business account from your personal account(s).

Money Order/Gift Card: Nope. Just nope, under no circumstances, consider yourself warned. No legit business/client would ever pay someone with a Gift Card - well, aside from a little 'thank you' to a nail salon or Starbucks. This is a newer scam, but it's still been around for a hot minute. These two methods are incredibly hard to track and depending on where they are purchased, cannot be tracked at all. They will either be stolen cards or the funds will be removed shortly after you receive them or they'll create a fake landing page for you to check the card's balance when in reality there is nothing on there. Again, don't.

Direct Deposit: Regardless of how you refer to yourself (freelancer, contractor, etc) you do not want a client to pay you via Direct Deposit. I mentioned above that a Direct Deposit is not the same thing as an ACH. They are processed on the same network, but their classification is different. Having your payment classified as a DD, can begin to blur the lines between Employees vs. Contractors and potentially cause legal issues in the eyes of the IRS. Your client should not be paying you in this manner as they are inputting you in their payroll system, just like their employees. In this situation they usually have you complete a direct deposit form that they use for their employees - those forms allow them to legally debit your account for any errors they have made (overpayment). They do not have to contact you first.

tl;dr -- Best practice for payments are debit/credit cards and ACH transactions. I do not recommend ever accepting a check from a client regardless if it's a personal/business check or a cashier's check - cashier's check fraud is on the rise and are not as secure as they used to be.

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