Invoices / payments for services

[Syneryder]

I'm taking my first baby steps into the services industry, and was wondering how others accept payments for their services (eg webdesign, programming etc)? How do your clients prefer to pay you? And how do you handle invoices if you use a "reseller" of your services (eg some credit card processors)?

I'm particularly interested in credit card processing, does anyone have any favorite processors they use for services? I don't think I'm ready for a merchant account yet, since I'm based in Australia and it appears to be very expensive here (I've seen annual fees quoted of around $US330 - $US660). Kagi looks promising, though their rates average out to around 7% per transaction. Paypal is far cheaper ( closer to 3% ) but I'm wary of their user agreement and I know of at least 2 people who had their accounts frozen by them :(

So, are there any other merchants/processors I should consider before going with Kagi, and any ideas how I should handle invoicing? Thanks for any help!

[phppete]

I do web programming and design, my clients pay me by Cheque (I think you US and AUS guys call it 'check').

I also run another business online where I accept PayPal, mainly because many people use it and the fees are OK. I am aware however of the problems some people have with PayPal, due to that reason I withdraw my money from it every 5 to 7 days so too much isn't left.

My brother and I also run another website where we have a Merchant Account for this business, you need to be doing a fair bit of trade to make it worthwhile though due to business bank charges and merchant bank fees.

I don't think there is one easy option that stands out, PaySystems www.paysystems.com is OK and apparently www.2checkout.com but both of these hold your money for a while.

As for invoicing, my one business requires anything from 5 to 40 invoices a day, I just use MySQL, PHP and MS Word combo locally to automate everything.

Maybe as other people let you know what they do you will get a better idea of which route to go down.

HTH

Pete

[dank]

I've been paid by check by all but one of my clients in the past 3 years or so. Only a couple have even asked about CC payment options. Checks seem to be regarded as a very natural form of payment for design-type work.

For billing, I keep track of hours manually, then copy them into a Word invoice file via a Symantec ACT template. If I ever get Account Biller (http://abledesign.com/programs/AccountBiller/) finished up, it will likely take over for at least some of the regular billing duties, especially for things like reseller hosting invoices.

Dan

[Syneryder]

Cool, thanks for the advice! Especially interesting to see the prevalence of cheques, so I won't stress over my choice of card processor. I checked PaySystems and 2CheckOut, both look good but they both have a $49 setup fee, which cancels out their better rates (since I won't be doing work for clients very often).

Do you get many cheques from overseas, or are they mostly in your local currency? Does your bank mind overseas cheques? (Mine seems to complain whenever I deposit a US cheque, but they do process it.)

I've still to work out how to handle invoices, but it sounds like I should send the invoice myself, and give the client the choice of paying by cheque or by Kagi. I think that's how FQ handles the Kagi/invoices thing anyway. Since Kagi is a reseller, if the client pays through Kagi they're technically buying services from Kagi and not me, that's what has me confused.

Incidentally, I use ProjecTrak (http://www.inertron.com/palm/) (formerly TimeTracker) on my Palm m100 for tracking hours. It's pretty cool.

[phppete]

I've had quite a few US cheques and my bank seem fine with them but obviously I pay the charges. These days due to my other businesses I limit my web programming work to a few regular clients/designers.

[JMT]

I use Quickbooks to handle all my financial stuff.

It has a built in timer for tracking time. You can set your labor rates by client. You can also give a stand alone timer to your associates and then import their time cards.

You can pass through or markup expenses. You can easily add hosting charges.

What saves me a ton of time is that it will produces invoices that can either be e-mailed or snail mailed. These invoices include expenses, charges, labor, etc.

I use the Quickbooks Pro 2002 version that I paid about $220. I also paid a friend who happens to be an accountant another $200 to set it up for me. Could have done it myself but it was more efficient to outsource it. Was a very worthwhile investment for me.

Come tax time it was a breeze as all the reports were canned in the program.

My clients all pay by check.

[Rich]

I've still to work out how to handle invoices, but it sounds like I should send the invoice myself, and give the client the choice of paying by cheque or by Kagi. I think that's how FQ handles the Kagi/invoices thing anyway.
If you provide a service (like web hosting) that requires a recurring payment then paying by credit card makes sense. However, if you are providing a one-time service I would recommend establishing a policy of only accepting checks for payment.

You will also find many merchant accounts limit the amount of an Internet credit card purchase to the $500-$750 level. Since many design projects are higher than this amount, this is another reason why the Invoice/Check method is preferred. Also, this prevents a client from issuing a charge back for all your hard-earned work.

Also consider using credit card payments for deposits/retainers to allow you to get started on projects quickly and then follow up with invoices/checks for balances.

[Syneryder]

Thanks Rich (was waiting for you to show up! :)) My first jobs will be below the range you mentioned, but I can see that long term there will be higher amounts and clients would be less inclined to pay via credit card. Thanks for the heads-up.

I'm still amazed that cheques are so standard... whenever I deposit a cheque from overseas at my bank, my bank always reminds me "we don't normally accept overseas cheques" and "it is at the manager's discretion whether we accept the check or not". Weird, huh? Their official statement is:
If you are expecting money from overseas, we recommend you have the funds transferred electronically, direct to your Westpac bank account. You can arrange this by providing your bank account details to the sender.Of course, maybe they promote electronic transfers because the fees tend to be $US35 on the sender end, and an additional $US5 at my end? :D

[dank]

Rich, that's a good summary (put into words) of what I've observed.

The key difference here is probably overseas. If you are expecting a significant amount of your business to be international, then checks may present a problem. If you were in the US and likely having mostly US-based clients, then it wouldn't be much of an issue.

I think banks are becoming much less keen on converting international funds, probably going back 10 years or so to the beginning of heavy corporate mergers. It used to be a breeze (and no charge) to convert checks in Canadian funds, now I get nothing but blank stares and heavy fees...

Dan

[Rich]

Yes, accepting payments from International customers does complicate matters a great deal. Here are some tips:

(1) Be very careful using wire transfers directly into your bank account UNLESS you have setup a separate bank account exclusively for this purpose which only accepts deposits. When you give someone instructions for a wire transfer you give them: (a) your account name, (b) your account number and (c) your ABA or routing number--i.e., everything they need to fraudulently use your checking account online to make purchases!

(2) Make sure you have a business checking account and not just a personal checking account. You will find this step alone will help you get further with your bank in having them accept your checks.

(3) If your current bank gripes and complains when you present them with foreign checks, then find a new bank! There are many banks that will gladly accept your business.

(4) Remember that there are many additional complications with processing foreign checks. Don't assume that the check has "cleared" when just a few days have passed. Some countries have regulations that allow a check to be "stopped" long after it has been cashed!

(5) For maximum safety, you may want to consider establishing a policy of only allowing payment by International money order. These are available at nearly all banks world wide and are payable in U.S. funds. (If your business is not in the U.S. there may be other currencies available. You may want to check with your local bank about this.)

[Syneryder]

Wow, you're kidding me on #1? I've had several wire transfers from many different people in the past, and the bank always assured me it was safe to share that info - apparently they'd need more info to actually make a purchase? It's even being promoted as a convenient way to pay friends here.

#2 is probably what's causing the problems for me - I'm reluctant to go for #3 since generally my bank provides good service, and it's the only bank that doesn't charge fees! Banking system over here is crazy....

Again, thanks for the advice, really helpful.

[Wassercrats]

Don't assume that the check has "cleared" when just a few days have passed. Some countries have regulations that allow a check to be "stopped" long after it has been cashed!There have been warnings recently about internet scams in which a person receives a check, the bank says it cleared, the person spends the money and/or sends out the sold item, then the bank says it was counterfit and the money is taken away by the bank. Someday I want to look into the details. If a bank tells me that a check cleared, to me that means I'm intitled to the money, and the bank is responcible if they change their mind. I wonder if there is something that account holders sign that explains that "cleared" isn't definitive.

-----
Now my website icon is to the left of this page's address....Can't ANYTHING work out right!

[dank]

I've had several wire transfers from many different people in the past, and the bank always assured me it was safe to share that info
Ditto. I asked a Wells Fargo manager about that, and she couldn't think of any way sharing that info would increase the likelihood of fraud. It makes sense that it could, but I don't know how that stuff works internally...

Dan

[Syneryder]

The way some banks work with overseas checks is that they do an overseas negotiation while you wait - involves them confirming details with the overseas bank and initiating the transfer. At the end of the negotiation the bank "clears" the funds to you immediately, but they'll stress that this is only in good faith. It actually takes longer for your bank to get the money from the overseas bank, and if the check bounces they'll not only grab all the money back from your account, they'll also charge you pretty hefty penalty fees.

[Wassercrats]

Oh, that makes sense. If the victims I heard about had that stressed to them, then it's their own fault, along with the fault of the thieves. I like banks again. But I still hate bad news reports and computers.

[Rich]

I've had several wire transfers from many different people in the past, and the bank always assured me it was safe to share that info.
Well, here is a link to the paybycheck.com demo:

https://paybycheck.com/?id=00000000&i=Special%20Purchase&a=19.95&m=Special%20Order

Now ask yourself how many of the requested fields your "wire" customers would be able to complete.

[Randall]

Originally posted by JMT:
I use the Quickbooks Pro 2002 version that I paid about $220. I also paid a friend who happens to be an accountant another $200 to set it up for me. Could have done it myself but it was more efficient to outsource it. It's a very good idea. I can tell by our clients' files that QuickBooks is very easy to use -- but also very easy to use wrong. I learn a lot about accounting from the way people screw it up.

And occasionally from the way I screw it up. :o There have been warnings recently about internet scams in which a person receives a check, the bank says it cleared, the person spends the money and/or sends out the sold item, then the bank says it was counterfit and the money is taken away by the bank. I remember reading about that. But I think there was some special circumstance that made it possible.

Maybe this was it: http://www.prweb.com/releases/2002/12/prweb52153.php

Another reason to be careful about overseas transactions.

Randall

[Wassercrats]

Just read it. Badly written first paragraph, but that's what I was talking about. It sounds like one of those cases in which we just have to enforce the current laws. When that happens, call the bank again and record or have a witness to what the employee says. If it's false and you lost money from the same type false information, SUE THE BANK!

[Syneryder]

PayByCheck won't work for Australian residents. The only way that someone could withdraw money from my account with those details is if they and the bank have received a signed (handwritten) document from myself authorizing the bank to do so, or if I turn up in person at the bank and provide enough ID before authorizing the wire transfer, or if they log into my internet banking account and make a transaction directly. As the site says:
Does PayByCheck work internationally?
No, not at this time. PayByCheck service works only with U.S. checking accounts and all transactions are denominated in U.S. dollars drawn and on U.S. banks.There was a discussion on the shareware newsgroups (http://groups.google.com/groups?hl=en&lr=&ie=UTF-8&oe=utf-8&threadm=6gde9.486596%242p2.19331733%40bin4.nnrp.aus1.giganews.com&rnum=1&prev=/groups%3Fq%3Deurope%2Bbank%2Btransfer%2Bgroup:alt.comp.shareware. authors%26hl%3Den%26lr%3D%26ie%3DUTF-8%26oe%3Dutf-8%26group%3Dalt.comp.shareware.authors%26selm%3D6gde9.486596%2524 2p2.19331733%2540bin4.nnrp.aus1.giganews.com%26rnum%3D1) about this, and the verdict was that wire transfers are completely safe - as long as you're in a European or Asian/Oceanic country. Apparently those banks have a layer of security that US banks don't offer (and that's why US software authors were so aghast at the idea of sharing their account details). Steve Lee from SWREG (http://www.swreg.org/) put it most clearly:It [bank transfer] may be the only way they can pay you.The United States banking system is extremely weak when it comes to allowing third parties to illegally draw funds out of accounts so I understand your concern but in other countries it is a normal way of doing business.Highlights from the discussion also included a claim that in Finland and Norway cheques are extremely rare, and that the United Nations refuses to pay by any method other than wire transfer. Not that I'm expecting many Finnish, Norwegian or UN customers! (Though I have made one sale to Norway previously.)

PS Here's another interesting newsgroup discussion (http://groups.google.com/groups?hl=en&lr=&ie=UTF-8&oe=utf-8&threadm=bb4stc%24l7k%241%40online.de&rnum=2&prev=/groups%3Fq%3Deurope%2Bbank%2Btransfer%2Bgroup:alt.comp.shareware. authors%26hl%3Den%26lr%3D%26ie%3DUTF-8%26oe%3Dutf-8%26group%3Dalt.comp.shareware.authors%26selm%3Dbb4stc%2524l7k%25 241%2540online.de%26rnum%3D2) on why Europeans tend not to pay by credit card. I'm just trying to compile all my payment method info into one helpful post for future generations ;)

[Rich]

Kohan, thanks for the additional country-specific info. I guess I should have clarified my comments as only applying to transactions within the US.

[Syneryder]

Is cool. I didn't realize that was the situation at first in the US (I always wondered how eChecks worked, is that the same as PayByCheck?) so your post has helped me understand things a lot more clearly.

One more question - an invoice is like a bill for goods or services rendered, isn't it? I asked some Kagi suppliers how they handle invoices, and one said they would be reluctant to send an invoice before the client had paid. But I thought that was the whole point, that you send it to the client before they pay to tell them how much they owe and when it's due? [And then use it as part of their tax records?] I so confused, as always :)

EDIT: too many smilies

[Rich]

I always wondered how eChecks worked, is that the same as PayByCheck?
Yes, paybycheck is using echeck payments. I referred to them only because they had a demo on their web site.

an invoice is like a bill for goods or services rendered, isn't it?
That is what I had always thought. However, some people think an invoice is a receipt, so I wonder if its meaning varies from country to country.

You don't need anything too fancy to generate invoices. I use the mysoftware.com's invoice sofware and then print this to an Acrobat pdf file and mail it to the customer as an attachment.

[dank]

I think "invoice" has a few very different meanings. I know it is commonly used in place of either "bill" or "receipt."

Er, looks like Rich just beat me to that...

Dan

[Wassercrats]

Calling a restaurant bill a check makes things even more confusing. A check should be an IOU payable by a bank, a bill should be hard, flat lips and a UO me, a reciept should be a payee's notification of payment received, and there should be no such word as invoice.

[Syneryder]

Yeah, seems there are some quite radical differences in meaning... so maybe I'm being waaayyy too pedantic about this, perhaps it doesn't matter so long as I'm consistent and can document & explain my methods. I was planning to use FinePrint pdfFactory (http://www.fineprint.com/) to create my invoices, printed out from XHTML or an OpenOffice document.

Oh, and MyDeluxeInvoices (http://www.elibrium.com/mysoftware/Clearance_Center.htm) appears to be on clearance sale if anyone is interested.

[dank]

I could be wrong, but I believe the restaurant version of "check" is properly written "cheque." Anyone know for sure? Doesn't help phoenetics, at any rate...

Dan

[Syneryder]

Well, what is called a "check" in the US is called a "cheque" here in Australia, just to complicate it even further....

[dank]

I think that's a general Commonwealth thing.

Dan

[Wassercrats]

Definition 8 c for check: a slip indicating the amount due : BILL
From http://www.m-w.com/cgi-bin/dictionary?check

[kitchin]

An invoice is a one-time instrument you present for payment. A statement is a list of invoices and payments. Some accounts payable people will get very upset if you present the same "invoice" twice, even if it wasn't paid the first time. You should submit a copy of the invoice (marked "copy") and a statement. That's why invoices are numbered, and in good accounts receivable departments, back in paper days, blank invoices were ennumerated and protected almost like checkeqes or vouchers, since they represented money.

How's that for a pedantic post #1000?:P