How to Receive Studio Owner Payments

Regardless of the nature of your business, payment processing should never be treated as an afterthought. The way you handle payments has a substantial impact on your cash flow and operating expenses. To help you effectively manage studio owner payments, here is a simple and comprehensive guide to the process.

Choose the infrastructure you need to collect studio owner payments

The infrastructure you will need to collect studio owner payments will depend partly on your business structure and partly on the payment method(s) you accept.

Your business structure

If you are running your studio as a sole trader, it might be possible to accept payments into your personal bank account. It is, however, highly recommended you review your account's terms and conditions to confirm this. 

If your personal account does not allow business use or if you are operating as a limited company, you will need to open a specific business bank account. It's important to note that this process can be time-consuming. It is therefore advisable to initiate it promptly to avoid any delays.

The payment methods you accept

Cash and cheques are both highly unlikely to be a suitable way of taking studio owner payment.  Both need to be deposited physically in banks and cash raises security issues.  Ewallets may be an option but they tend to charge high fees.  This means that payment cards and bank-to-bank payments tend to be the most suitable options.

Payment cards

If you want to take payment cards, you will need a card-acceptance agreement.  If you’re taking them in the real world, you will also need at least one card machine.  

Payment cards can be useful for taking one-off payments.  They are, however, unlikely to be the ideal option for recurring payments.  Firstly, their fees tend to be relatively high (especially for credit cards).  

Secondly, the fact that they expire (and get lost/stolen) means that they need to be updated relatively frequently to avoid failed payments.  This creates extra administration and that creates extra labour costs.

Bank-to-bank payments

Bank-to-bank payments come in two forms, namely direct debits and direct credits.  Direct debits are pull transactions.  This means that the payee sets up the payment (with the payer’s authorisation).  Although they are commonly associated with recurring payments, they can be used for one-off payments.  Direct debits are sometimes known as BACS payments.

Direct credits are push transactions.  This means the payer sets up the payment.  They are commonly associated with single payments but can be used for recurring payments.  When they are, they are often known as standing orders.

Direct debits are often the ideal way to manage studio owner payments.  This is because they are both affordable and easy to manage.  You might also want to look at secure direct credit options such as Instant Bank Pay from GoCardless.

Decide how you will manage your payments

Options for managing payments fall into two broad categories.  These are free options and chargeable options.  In the context of studio owner payments, the chargeable options can be further divided into two broad categories.  These are general accounting packages and sector-specific tools.

Free options

Some payment systems offer free payment-management tools.  There are also free invoicing and billing-management tools available online.  These may be absolutely fine for very small studios.  They are, however, likely to be way too limited for studios with more than one or two rooms and perhaps half a dozen instructors.

General accounting packages

Studios that are a bit too big for free software may be perfectly fine with general accounting packages such as Xero, Quickbooks and Sage.  These packages are used across a huge range of sectors (including studios).  They also integrate with many popular payment services, including GoCardless.

Sector-specific tools

Another option is to use sector-specific tools.  These are general management tools that also include payment-management functionality.  Many of these also integrate with popular payment systems such as GoCardless.  The fees for these tools are likely to be higher than the fees for general accounting packages.  For larger, busier studios, however, this can often be justified by the reduction in their administration costs. 

We can help

GoCardless is a global payments solution (with award-winning customer support) that helps you automate payment collection. It cuts down on the amount of financial admin your team needs to deal with and helps improve your bottom line. Find out how GoCardless can help you with one-off or recurring payments.