Big Payment Processing for SMB’s Little Guys

Size matters in business, especially when large corporations leverage their network effect to cut costs as they keep track of their financials. Small businesses have to handle their financials manually or with consumer-level accounting applications such as Quicken.

Not any more, at least where financials are concerned.

PaySimple, a software as a service (SaaS) company that provides accounting functions online, wants to give the little guys big company tools for managing their financials.

PaySimple lets small businesses bill, collect, and manage their customer payments. Functions include recurring billing, e-mail invoicing, Automated Clearing House (ACH) direct-debit, credit card processing, e-check processing, Electronic Funds Transfer (EFT) and online payments.

The company is one of a growing sector of companies that are leveraging one of the laggards in the software as a service sector: accounting and merchant payments beyond what has long offered. customers rave about the time they save, but when it comes to costs, they differ: Some say it has saved them money while others don’t.

Show Me The Money Online

Using PaySimple’s solution “makes me much more liquid,” said Nick Perez, president of Multiflor, a high-end florist focused on larger corporation and social events. “We used to process credit card payments once a week when we were doing things manually because it’s time consuming, and now we do it every day because it’s very much easier; so I have better cash flow.”

Another customer, the San Diego Better Business Bureau, said the company makes it easier and faster to collect money from member subscriptions, deal with bounced checks and manage sales commissions.

If “somebody bounces a check, we can re-run it through the PaySimple system and learn in a couple of days whether it has bounced again; otherwise, I’d have to wait a few weeks for the information from our bank,” said Jennifer Halbirt, director of finance and human resources for the bureau.

Also, she no longer has to battle with salespeople to retrieve their commissions if a sale doesn’t go through. “Salesmen would get paid before we ran their customers’ credit cards and, if the sale fell through, we had to spend a lot of time retrieving their payments,” she said. “We’ve eliminated retrieving commissions; if the customer’s card isn’t approved, we don’t pay out.”

Other Benefits

Using PaySimple has also saved both customers a lot of time. “I don’t have to thumb through paperwork and credit card receipts any more, and processing credit cards is quicker and simpler, I just put in the amount, hit a button and it’s done,” Perez said. For Halbirt, “I used to manually enter every credit card number for transactions, swipe them on that little machine and attach slips. I don’t have to do that any more.”

Perez has seen his costs of credit card transactions come down. “We used to pay about five per cent for each transaction as they were ‘card not present’ charges, and now I pay something like 2.5 per cent, so I save money that way,” he said. ‘Card not present’ charges are where the customer is not physically present when making a purchase with a credit card, and retailers are charged higher fees for such transactions.

Cash savings aren’t a factor for Halbirt: “Moneywise, I think it’s pretty even with what we were paying for the last system; the credit card fees are about the same as well, you’re still going to the same credit card companies,” she said. “They’re really about convenience and saving time.”

Dealing with PaySimple had its ups and downs for Halbirt, though, because “they made a mess when setting the system up.” However, the company admitted their mistake and took care of things, for which Halbirt commends it: “I liked that they said ‘We made the mistake, we’ll eat the cost and pay for it,’ because other companies might not do that,” she said.

About PaySimple

Admitting its mistakes and paying for them is in line with the philosophy of PaySimple’s CEO, Eric Remer. “Our focus is, we simplify things for small businesses and we empower them,” he said. “We provide them the same tools and technology for collecting electronic payments that any Fortune 500 company has.”

The company has 1,600 customers nationwide, is “growing by 200 customers a month” and Remer expects to have 2,000 customers “by the end of this quarter.” It sells direct to customers, through partnerships, and is “close to some real big partnerships that could change those numbers rapidly,” he said.

PaySimple is privately held, and has just closed a Series B financing with strategic private investors. Remer does not look to venture capitalists for funding and “turned down a couple because we could,” he said. “You always get better terms and better placing without going to VCs.”

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