Overcoming customer resistance to online payment portals

As more credit department functions transition to online platforms, credit professionals may find themselves working with customers to find the best way to transition away from traditional payment methods towards more streamlined online platforms.

Why it matters: While the advantages of electronic payments may be clear from a credit manager’s perspective, with more efficient payment methods cutting down on delayed payments, customers accustomed to paying a certain way may require a bit of convincing before making the switch.

By the numbers: Only 11% of credit managers have all of their customers paying through electronic payment methods, according to an eNews poll. Additionally, 53% find that most of their customers have moved to electronic payment while 35% only have some customers paying electronically.

“From a credit manager’s perspective, the advantage of online payments is that they are often automatically applied as entered by the customer, without the risk of the customer forgetting to send remittance with the payment,” said Amanda Buskill, account manager for Gexpro (Smyrna, GA). “Payments also arrive faster than with traditional methods.”

Each credit department’s approach to encouraging customers to switch to online payments is shaped by the demographics they serve. As creditors, the best way to promote online payment is finding ways to make the transition easy for customers so that they can see the benefits without getting bogged down in the details.

“We have a multi-prong approach to transitioning customers to online payment portals,” Buskill said. “New customers are encouraged to take advantage of our online web portal to review invoices and make payments from the start. Our Automated Clearing House (ACH) information is also provided on the face of all invoices right next to the traditional remittance address. Credit managers and salespeople discuss the option with existing customers still paying via traditional checks whenever an opportunity comes up. We also occasionally work with our statement vendor to include additional language on the face of the statement, or an ‘insert’ (both in paper and emailed statements) touting the benefits of electronic payment methods and how to contact us to discuss or make arrangements.”

For certain customers, convincing them to transition to online payment is an uphill battle. Smaller companies often appreciate having a bit of ‘float time’ or a cushion of time between mailing a check and the accounts receivable department receiving said check. Furthermore, longstanding customers are often more comfortable with paper checks and may be more hesitant to embrace online payment options.

“The biggest challenges are customers intentionally using mail float and getting them to change,” said Jennifer VanLanduit, CICP, staff vice president of credit for LP Financial Services Company (Carthage, MO). “For those customers, I think having to change how they manage payables internally makes them more apprehensive, given their existing processes. Also, many just have more of a comfort level with the paper process.”

Outside of offering discounts for online, timely payments, some companies win customers over by stressing the safety and financial benefits of electronic payments compared to mail. “We always point out the security aspects as well as the costs saved by not paying for envelopes or postage,” said Buskill. “Sadly, one of the most persuasive ‘arguments’ we have for switching from paper checks to electronic payments has been when a customer’s check has gotten lost in the mail, or worse, stolen, or they have been the victim of fraud. I’ve had customers who were reticent about adopting electronic payments suddenly see some of the security benefits after a bad experience.”

As check fraud becomes increasingly complex with innovations in technology and artificial intelligence, online payment portals might be more appealing to concerned customers. “There are so many layers of protection with online payment portals,” said Nancy Behrenshauser, credit manager at JL Building Materials (Frazer, PA). “The portal has protection, the issuing bank has protection, our bank has protection.”

The bottom line: Throughout the process of transitioning customers to online payment portals, it is critical that credit managers maintain open communication so that if any issues arise, customers feel they can rely on credit managers to help them work it out.

“It is important to educate your customers when discussing electronic payment options, especially on the potential for fraud by third parties,” Buskill said. “A little education can help prevent issues that can damage a customer relationship. For example, we have many smaller companies that will still cut a physical check in their system and then process the payment on our website – we have to make sure they are aware that they should void or destroy the paper check and not mail it to us to avoid a duplication of payment.”