It sounds like a contradiction, right? Getting paid and going broke don’t usually belong in the same sentence. But here’s the thing: you can go broke trying to get paid. You just probably won’t notice it happening.
That’s because going broke while getting paid doesn’t happen all at once. It’s death by a thousand cuts.
Here’s what I mean.
When you don’t get paid, you stress out.
While you’re chasing payment, you’re not doing the work that earns revenue in the first place.
While you’re waiting to get paid, you’re effectively fronting money to your customers. That’s on your dime, by the way.
The customer you’re chasing might never pay at all. That means you’re spending money to collect while still providing service to someone who won’t pay you.
And how you’re getting paid? You’re probably losing money there, too, whether it’s on the spread or on unnecessarily high SaaS fees.
Of the many ways to go broke trying to get paid, ask yourself one thing:
How many of these do you see in your business?
#1. When you don’t get paid, you stress out
Or at least, you probably should stress about not getting paid. Chances are you need that money for something: payroll, rent, or reinvesting in your business. Even if you don’t need it right away, you’re probably putting off that phone call, the one where you have to figure out how to ask a customer for the money they owe you.
#2. You’re not doing the work that earns you revenue
This is the opportunity cost of chasing invoices, reconciling payments, and everything else that comes with collections. You have a specific skill that makes you money. Unless you run a collections agency, your limited time and energy are better spent on that work, not on chasing clients for payment.
#3. You’re lending money to your customers
Repeat after me: “I am not a bank.”
You don’t want to be a bank. In fact, you want to be anything but a bank.
Here’s the thing, though. When customers pay later, even on terms you agreed to, you’re effectively lending them money. Net 30 is a thirty-day loan, and you’re probably not charging interest on it. It gets worse if you carry debt of your own. Now you’re paying interest to borrow money, then lending it to your clients for free.
No bank would lend money at a lower rate than it costs to borrow it, yet small businesses do it all the time.
#4. You waited too long to get paid
You’ve probably seen a story in the news or on social media about a business that shut down overnight. Employees show up in the morning to a sign on the door, followed by a trip to the unemployment office. It happens every day, in every town. If that business owed you money, good luck collecting it.
Remember: the longer a debt goes uncollected, the less likely it is to ever be collected.
#5. You’re using overpriced tools?
There are plenty of ways to make money in fintech. SaaS fees are one, flat fees are another, and then there’s the spread. The spread is the worst, because it’s a piece of your business. Some processor is taking a cut of your revenue while adding zero value.
You can have the best product in the business and fantastic service, without being penalized for your growth.
That’s Benji Pays. We believe getting paid should be the easiest part of doing business.
