Credit card next to phone with bar graph

Table of Contents

Managing & Maximizing Your Cash Flow

Cash flow management is paramount for businesses across all industries and sectors, particularly for middle market enterprises. In order to sustain and grow operations, it is a part of due diligence for businesses to have a steady stream of income that can support a range of business activities. However, payment collection can be a complex and laborious process that involves a range of stakeholders, including suppliers, processors, and customers. The challenge for businesses is to reduce the time spent on payment collection while minimizing the potential risks of delayed payments and missed collections.

Streamline Your Payment Process With Credit Cards

One of the most effective ways for businesses to improve payment collection is by accepting credit cards. Although there are associated fees, credit card acceptance can streamline the payment process and allow businesses to collect payments more quickly and efficiently, leading to a much healthier balance sheet. By providing a fast and secure way to pay, businesses can reduce the potential risks associated with delayed payments and minimize the chance of missed collections.

Credit Cards Bring Speed & Convenience Into Accounts Receivable

One of the key advantages of credit card acceptance is that it can significantly reduce the “out of sight, out of mind” phenomenon that can impact payment collection. With credit card acceptance, businesses can process payments quickly and securely, reducing the amount of time customers have to make the payment. This can increase the likelihood of timely payment and reduce the risk of missed collections. Additionally, by accepting credit cards, businesses can provide a more convenient payment option for customers, who will appreciate the added convenience and ease of use, building to the brand credibility of your company and partnership with that customer.

Businesses may have to devote significant resources to tracking and reconciling payments, which can be a drain on time and energy. By accepting credit cards, businesses can automate the payment collection process, reducing the need for manual intervention and minimizing the error potential of their transactions.

Credit Cards Build Customer Loyalty & Trust

Moreover, accepting credit cards can help middle-market businesses maintain strong relationships with their customers. By providing flexible and convenient payment options, businesses can build trust with their customers, which can lead to repeat business and increased customer loyalty.

Additionally, by integrating customer relationship management tools, businesses can better understand their customers’ preferences and behaviors, allowing them to create more targeted and effective marketing strategies.

Two credit cards

Business Costs & Risks of Accepting Credit Cards

Of course, there are some factors to consider when implementing credit card acceptance. For instance, businesses need to be aware of the fees associated with credit card processing and ensure that these are factored into their pricing strategies. This includes a cost/benefit analysis of how a company may be able to take advantage of surcharging to pass this fee to their customer. If you want to learn more about surcharging and how it can help your bottom line, you can read Part 1 and Part 2 of our Surcharging guide. In addition, businesses must maintain PCI compliance with regulatory requirements and ensure that their payment processing systems are secure and reliable.

Business Costs & Risks of Not Accepting Credit Cards

On the other hand, collecting payments without using credit cards can be risky. Checks can be fraudulent, and businesses may have to wait days or even weeks for the check to clear before funds become available. Additionally, cyber scams can be a major threat, with criminals using sophisticated methods to steal payment information and personal data. This can result in significant financial loss and reputational damage for businesses. In addition, collecting payments manually can be time-consuming and error-prone.

What About Commercial Cards for B2B Transactions?

Some merchants hesitate to offer credit cards as a payment method for their B2B clients because of the high processing fees. However, the B2B space continues to evolve and shift away from traditional B2B payment methods like eCheck and ACH payments towards commercial cards and virtual cards because of a few key reasons.

B2B Merchants Get Paid Faster With Credit Cards

A B2B credit card transaction is an extremely fast payment method. Credit card payments generally clear faster than ACH payments and eCheck, which means the funds will appear in your merchant account sooner. If your business has cash flow concerns, encouraging your customers to use credit cards for their future purchases will reduce DSO from 30 to 60 days for non-card payments, to as little as 5 to 15 days.

Credit Card B2B Transactions Are Secure & Mitigate Fraud Risk

Credit cards provide an extra layer of protection from fraud, while also acting as a barrier between the bank accounts and the fraudsters. Merchants are offered certain security measures and protections with credit card processing that isn’t possible with traditional B2B payment methods. By bringing credit cards into your payment process while staying PCI compliant, you can have peace of mind knowing that you’re drastically increasing the security of your system.

B2B Credit Card Payments Are Eligible for Level 2 & 3 Processing

B2B merchants have the added benefit of qualifying for Level 2 and Level 3 processing, which will dramatically reduce the costs associated with processing credit cards. With the proper payment infrastructure in place, businesses will achieve significant cost savings that will offset a lot of the costs associated with credit card processing.

person holding coin next to graph

Is Accepting Credit Cards a Good Choice for Your Business?

At the end of the day, accepting credit cards can help middle market businesses improve payment collection rates and optimize cash flow management dramatically by implementing business best practices. By providing a secure and efficient payment option, businesses can reduce the potential risks associated with delayed payments and missed collections, as well as build strong customer relationships. While there are some factors to consider when implementing credit card acceptance, the benefits are significant and can have a long-term positive impact that far out-weighes the costs.

The team at Evolve Payment has been in the payment processing industry for over twenty years and can attest to the strength of companies that use a strategic approach to accepting payments via credit card and the dramatic influence that reducing the time of cash outstanding can have on the bottom line. The question changes from “how much is credit card processing costing us?” to “how much are we losing by not collecting payments strategically?”.

If you would like to learn more about how the team at Evolve Payment can not only reduce the cost associated with accepting payments, but more importantly partner with you to strategically influence your collection on payment rates, we’d love to hear from you and partner with you to drive not only positive return on investment, but more importantly return on time.