How to Accept Payments as a Small Business: Cards, ACH, Invoices and Deposits

Doing great work is only half of running a business. The other half is getting paid: on time, in full, at a reasonable cost. Many small businesses lose money to slow invoices, high fees and avoidable disputes. This guide covers the main ways to charge customers, what each costs, and how to set terms that protect your cash flow.

The main payment methods

Most businesses need two or three methods, not all of them.

Choosing a payment processor

Common options include Stripe, Square, PayPal, and the payment tools built into invoicing, booking and field service software. Compare:

• Rates: percentage and fixed fee for online, in-person and international cards.
• ACH support and its cost.
• Payout speed: standard and instant payouts, and instant payout fees.
• Invoicing features: reminders, partial payments, deposits, recurring invoices.
• Integrations with your accounting software, website or booking tool.
• Hardware costs for card readers.
• Contract terms: monthly fees, cancellation fees, minimums.

Flat-rate processors are simple and predictable for small businesses. As volume grows, interchange-plus pricing from some providers may be cheaper; ask for a quote with your actual mix of transactions.

Understanding processing fees

A typical card fee has a percentage and a fixed amount. On a $1,000 invoice at 2.9% + 30¢, the fee is $29.30. On a $10 sale, the same structure takes $0.59, nearly 6 percent.

Ways to manage fees:

• Encourage ACH for large invoices.
• Set minimum order values for small online sales.
• Build processing costs into your prices.
• Use surcharges or cash discounts only where legal and compliant with card network rules.

Deposits and upfront payments

Deposits protect you when you buy materials, reserve dates or start custom work.

Put the deposit amount, what it covers, and when it is refundable in your written agreement.

Payment terms that get you paid

• Due on receipt for consumers and small jobs.
• Net 7 or Net 15 for small businesses.
• Net 30 is common for larger companies, but negotiate shorter terms when you can.
• Milestone billing for projects: for example, 40 percent to start, 40 percent at a midpoint, 20 percent on completion.
• Late fees stated in advance where allowed, for example a percentage per month on overdue balances. Check state rules on maximum interest and fees.

Sending professional invoices

Every invoice should include:

• ☐ Your business name, address and contact details
• ☐ Customer name and billing details
• ☐ Invoice number and date
• ☐ Description of work or products, quantities and rates
• ☐ Taxes, if applicable
• ☐ Total due and due date
• ☐ Payment methods and a payment link
• ☐ Late fee terms, if any

Send invoices immediately after work is completed. Every day of delay pushes payment back.

Automate reminders

Use automatic reminders before and after the due date. A friendly sequence works well:

1. Three days before due: a courtesy reminder with the payment link.
2. On the due date: "Your invoice is due today."
3. Seven days late: a polite follow-up.
4. Fourteen days late: a firmer note referencing late fees.
5. Thirty days late: a phone call and a decision on next steps.

Subscriptions and memberships

Recurring billing turns one-time customers into steady revenue: maintenance plans, memberships, retainers and software subscriptions. Use a processor that handles automatic retries for failed payments and lets customers update their cards easily.

Refunds and disputes

• Publish a clear refund policy and follow it consistently.
• Refund promptly when you agree a refund is due; it costs less than a dispute.
• Use a recognisable statement descriptor so customers know the charge.
• Respond to disputes quickly with evidence: agreement, delivery proof, communication.

Security and compliance

Use reputable processors that handle card data for you, so card numbers never touch your own systems. Never ask customers to email or text card numbers. Your processor's hosted checkout or reader keeps you within PCI requirements more easily.

Record keeping and taxes

Connect your processor to your accounting software. Record gross sales, fees and refunds separately. Processors may issue Form 1099-K when IRS reporting thresholds are met; report all business income regardless.

Mistakes to avoid

1. Waiting days to send invoices.
2. No written payment terms.
3. Card-only for large invoices, paying high fees unnecessarily.
4. Surcharging without checking the rules.
5. No deposit on custom work.

A worked example: a small contractor

A remodelling contractor bills about $40,000 a month across eight jobs and accepts only cards. At 2.9% + 30¢, fees are roughly $1,160 a month, nearly $14,000 a year.

The contractor makes three changes:

1. ACH for invoices over $1,000. Most homeowners are happy to pay by bank transfer when the invoice offers it clearly. If 75 percent of revenue moves to ACH with a low capped fee, card fees drop sharply.
2. Deposits on every job, within the state's rules for home improvement contracts, so materials are paid for before purchase.
3. Milestone billing for jobs longer than two weeks, with invoices sent the day each milestone is reached.

The result: lower fees, fewer unpaid materials, and cash arriving weeks earlier. None of these changes require new software beyond a processor that supports ACH and invoicing.

Choosing methods by business type

Questions readers ask

Do I need a merchant account?

Payment facilitators such as Stripe, Square and PayPal let you accept cards without a separate traditional merchant account, which is ideal for most small businesses. Higher-volume businesses sometimes move to dedicated merchant accounts for lower rates.

Is it safe to take card details over the phone?

Enter them directly into your processor's secure virtual terminal or send a payment link instead of writing them down. Never store card numbers in emails, notes or spreadsheets.

How fast will I receive the money?

Card payouts commonly arrive within a few business days, ACH can take a few days to clear, and instant payout options are available for a fee with many processors.

Your next step

List your last 20 payments, how customers paid, how long they took, and what fees you paid. Then set one change: add ACH for large invoices, require deposits, or automate reminders.

The full guide, How to Price and Charge Customers, covers payment methods, processor comparisons, invoicing and terms, deposits, subscriptions, surcharging rules, refunds and disputes, with templates, for $0.99.