Timely customer payments are essential to a company’s operational success. However, despite efforts to improve payment collection, 60% of small and mid-sized businesses report struggling with cash flow and payment collection.
One of the emerging trends helping businesses get paid faster is SMS billing, which enables customers to pay bills via text message.
This article will walk you through everything you need to know about SMS billing and how to leverage the mobile payment method to help your business modernize customer payments and improve inbound cash flow.
Table of Contents
- What is SMS Billing?
- Is SMS Billing Secure?
- What’s the Difference Between SMS Invoicing and SMS Billing?
- How Does SMS Billing Work?
- Is SMS Billing Secure?
- Benefits of SMS Billing
What is SMS billing?
SMS billing is a payment method businesses use to charge customers for goods or services through text messages. With SMS billing, businesses send a record of costs due to customers via text message. Often, SMS bills are accompanied by a secure link that allows customers to pay online using their credit card, mobile wallet, or other preferred payment methods.
SMS billing is commonly used in local service industries, including personal services, home services, and utilities.
Is SMS Billing Software Secure?
Yes! With the right text-to-pay software, SMS billing is a highly secure method of payment. For example, Textedly’s SMS payments tool protects your sensitive information with multiple layers of security. The Textedly platform offers two-factor authentication and utilizes the industry's best encryption technology. Plus, our payment processing company, Stripe, encrypts all payment information.
What’s the Difference Between SMS Billing and SMS Invoicing?
While often used interchangeably, the distinction lies in understanding the difference between a bill and an invoice.
A bill is a straightforward payment request, most commonly used in business-to-consumer transactions. A bill is used to inform the recipient of the amount due and is typically due upon receipt or within a shorter payment timeline. An invoice is a detailed payment request that outlines payment terms, client information, and is most commonly used in business-to-business transactions.
This means that SMS billing is typically used in B2C transactions when fewer details are required and prompt payment is necessary, while SMS invoicing is more commonly used in B2B transactions when explicit details and future due dates are necessary.
Both SMS billing and SMS invoicing are statements of costs owed and are delivered via SMS.
How Does SMS Billing Work?
Here’s a quick breakdown of how SMS billing works for businesses.
- Business sets up SMS payments. Before collecting bill payments via text, businesses must set up text-to-pay functionality. You’ll need to have a registered phone number for business texting and a platform that offers a feature like Text-to-Pay.
- Business sends a text with a payment link. A text message gets sent to your customer’s mobile phone with a secure payment link. Stripe or Square often runs this payment link.
- The customer clicks the link and makes a payment. Next, the customer taps the link, enters their payment details, and completes the transaction.
- Payment is processed. Now, the payment processor handles the transaction and notifies the business.
- Confirmation text is sent. Finally, the customer will receive a text confirming that they have made a payment for their records.
Benefits of Using SMS for Billing and Payments
There are several benefits to using text messages for sending billing requests. Here are just a few of them.
- Preferred payment method. Cash payments made between peers and to businesses are dwindling. Most customers want to pay with a credit card or their digital wallet. SMS billing allows customers to pay using their preferred digital payment methods.
- Faster payments. SMS is one of the fastest ways to reach customers. In fact, the average text is opened 98% of the time and read within 3 minutes of receipt. These stats show that SMS is an effective way to get your payment request in front of your customers.
- Generate more sales. Studies show that businesses offering multiple payment options, such as digital wallets, credit cards, and payment links, earn more revenue than those with fewer payment options. Make it easy for customers to pay, and you’ll see better results.
- Request payments from anywhere. Some businesses don’t operate at a single physical location. This means it’s important to have a payment method that moves with your company. Text message billing allows you to send a bill quickly to clients, no matter where you do business.
- Low administrative burden. SMS payments and payment reminders can be automated with the right text-to-pay service. Additionally, payments are sent directly to your company bank account, resulting in fewer administrative headaches.
How Different Businesses Can Thrive With SMS Billing
While businesses across various industries can improve payment collection with SMS billing, here are a few specific businesses that can benefit from it and achieve significant results.
Home Services
Home service companies, such as plumbers, cleaners, roofers, and painters, can benefit significantly from using SMS billing. You can simply text your clients the final bill with a payment link the day your service concludes. This payment method offers your clients a convenient way to settle their bills immediately after you complete the service at their home.
Utility Companies
Utility companies manage payments from thousands of households. Use an SMS billing link to encourage customers to pay their bills on time. Set up a text message to request payment a week before the due date, the day before, and on the day of to encourage timely payments.
Personal Services
Businesses in the personal services industry, such as seamstresses, tutors, or personal shoppers, can utilize SMS billing to streamline their payment collection processes. Many of these workers see clients at multiple locations or don’t have a point-of-sale system to collect payments. One of the easiest ways to encourage clients to make a payment is by using an SMS message to direct them to their payment link.
Pet Care
Pet boarding facilities, dog walkers, or groomers can use text messages to send clients their bills and receive payment. One of the benefits of SMS billing is that you can track exactly when you receive payment and the amount. This is easier than conducting payments via Venmo.
Beauty and Wellness
Makeup, hair, and spa services can collect payments via SMS. Often, makeup artists, hair stylists, and massage therapists work at different locations. One way to streamline payments altogether is to use SMS billing to request and collect payments.
How to Set Up SMS Billing
Here are the steps to set up SMS billing on Textedly.
- Create a Textedly account. The first step is to create a Textedly account. Our plans start as low as $26 per month.
- Click Get Started on the Payments tab. Next, you’ll navigate to the Payments tab in the Textedly dashboard.
- Verify your identity. You’ll need to verify your identity to request payments via text message. You need a government-sponsored ID.
- Link your bank account. Once the Textedly team verifies you, you can link your bank account.
- Start collecting payments. Now you’re ready to send your first bill pay request via SMS.
It’s a straightforward five-step process to start receiving payments via text message.
Start Getting Paid Faster With Textedly
Textedly helps small and mid-sized businesses collect payments from customers faster. Utilize the Textedly platform to notify customers of new bills and encourage timely payments. Textedly’s Payments feature enables businesses to send secure payment links via text, allowing customers to pay in real-time with their credit or debit cards, ACH payments, Google Pay, or Apple Pay.
Start improving cash flow with Textedly, your all-in-one tool for mobile payments, marketing, and online reviews. Get started today for free.
