The Difference Between Billing Companies and Payment Processors

Q: What’s the difference between billing company “X” and companies like Easy Payment Processing?

A: Traditional billing companies invoice or electronically bill your accounts, and then call your clients if they’re late and attempt to collect. They used to be a good idea, since most offered useful business advice in addition to the billing services.

However, when you consider the 7-10% of gross tuition collections they charge it is painfully obvious you pay dearly for that advice. Compare that with using a payment processor for a gateway fee of just $20 – $30 a month (plus your CC processing fees) and you can see why I say it just doesn’t make sense to use them anymore.

Besides, good business information is everywhere – you really don’t need a billing company to tell you how to run your business when you can just read the information on sites like this (not to mention the conflict of interest involved).

The other issue is how poorly these companies can treat your clients when they are late… something you cannot afford, especially in this economy.

Easy Payment Processing is a payment processor, not a collection agency. Everything is handled automatically through an online control panel (completely secure and encrypted) and you do the calling if a client’s payment doesn’t go through.

The upside includes low cost, complete control over your accounts, and ease of use; plus, you don’t get a lot of bad blood between you and your students because no one is calling them to harass them about paying. The old fairy tale about “you don’t want to be the bill collector” that the billing companies tell is a crock. The truth is, NO ONE HAS TO BE THE BAD GUY.

Note: If you decide to handle your billing in-house (wise choice), my advice is to just be friendly and polite when you call and just let them know something went wrong with their payment – if they like you, people understand and appreciate your calling them personally and they generally pay as soon as they can.

Downside to some payment processors is that you might have to wait to get your EFTs in your account – we’re seeing a 5-10 day turnaround on ours; however, our CC pmts are processed and in our account in just 48 hours. My wife loves it though – she says her life is much easier since we started doing our billing this way.

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(Note: I wrote this post in 2008. Since then, the landscape of the billing industry has changed drastically. There are still a few full-service martial arts billing companies around, and they still charge way too much money, in my opinion.

However, eight years later it’s incredibly easy to do your own billing in-house. You can do this in several ways:

1. You can use your own merchant credit card account and an online billing console like the one Authorize.net provides to schedule recurring credit card and debit card billing (there’s an extra fee to process ACH payments, but the company allows you to do that as well).

2. You can use a service like Stripe to do your own billing and process automated recurring billing payments. Several of my clients do this now, and in fact it’s also the method I use myself.

3. You can bill using PayPal.

4. You can use a service like WaveApps.com to send out electronic invoices each month. However, I warn you that since it’ll be up to your clients to pay those invoices on their own volition, that your on-time payments will be very low, and you’ll have a lot of late pays.

5. You can use an SaaS (software as a service) company that specialises in martial art school managment software like Rainmaker, ZenPlanner, etc. Most of these have billing consoles included in their service that allow you to bill your own clients.

I also suggest that you do your due diligence and find the option that’s right for you and your school. And if you’re currently working on growing your school or you’re a new school owner, try to choose a billing solution that’s easily scalable.

Good luck!)