The hidden costs of NOT accepting credit cards
We are all too aware of the operating burden of doing business. The costs of electricity, payroll, building maintenance, material fees, software fees and taxes. These are all known as costs of doing business and they are realized as something that we all need to pay in order to conduct business. We all have to take on these costs and the phrase “grin and bear it” comes to mind.
Of all of the costs of doing business, there is one cost that some businesses choose to opt out of although there are many benefits of taking on this cost, and ironically it is one of the few that actually brings in money to the business. In this blog post we will be discussing the cost of accepting credit cards, and why the benefits of accepting them outweighs the cost of the burden.
How to Receive Payments Quickly
We are all aware of the different circumstances that the last few years have brought to our doorsteps and if there is one thing that we all need to take into consideration is flexibility. We have seen many times that businesses have struggled to collect on fulfilled orders or purchase orders from clients because cash is tight and the other costs of doing business doesn’t allow flexibility of your client’s cash. When your business accepts payments through card transactions, you allow your customers to pay via credit card which allows you to collect payments faster, reduce your DSO (Day Sales Outstanding), and have a stronger relationship with your customers. This allows you to continue to conduct business and keep your other costs of doing business minimized and creates flexibility.
Another flexible option for your business is for your customers to pay through a method that they would prefer. Many businesses are realizing the power of using business purchasing cards. Our friends over at American Express state that, “Most business owners assume they’re doing a disservice to their supplier by asking to pay with a card vs. check. However, it’s many times just the opposite as most businesses today are looking to drive improvements to their working capital and also efficiencies within their back-office processes.”
“Many times, there can be a very fair value exchange when the buyer is willing to accelerate payment to the supplier. More and more merchants are noticing their A/R aging with work from home and their customers trying to stretch things out to better manage their working capital. The win-win is the buyer, when properly set-up on a charge card program such as American Express can often still receive 30-45 days of a float benefit while the supplier can often reduce their pays sales outstanding by 15-20 days. Working with the right merchant partner can also create the right set-up where accepting these transactions on larger amounts can be done the right way.”
As you can tell, if you allow your customers to accrue points, you as well can benefit from using the right type of credit card. To learn more about this, send us an email to let us know you’d like help optimizing your purchasing cards.
How to Pass Along CC Processing Fees
Even when accepting those cards, if you are not interested in paying the fees, there are other options available so that you do not need to take on the burden of that cost. If you are not aware of the term surcharging, Investopedia defines a surcharge as, “An extra fee, charge, or tax that is added on to the cost of a good or service, beyond the initially quoted price.” As a merchant, you are able to opt out of consuming the cost of accepting a payment and have your customers pay the processing rate that you would have taken on. After all, they want to accrue points, let them accrue them! Surcharging is a relatively new option for B2B companies and the team at Evolve Payment would be more than happy to assist in introducing this service.
When you start to accept credit cards, it can help you collect payments faster, improve your relationship with your clients, and reduce your DSO. And through surcharging, you can pass along the fees of credit card processing to your clients. By paying invoices using their P-cards and business cards, clients also are able to create their own business benefits. If you are considering bringing on merchant services as a way to get caught up on POs or have your customers use their preferred method of payment, the team at Evolve Payment is here to answer your questions and get you set up for success.