Reasons To Take Credit Cards
If you sell your product directly to customers, taking cash and cashier’s checks are the safest way to insure you get paid. They are also quick to get your money, usually they are available funds right away when you deposit them in your bank, and you can spend the cash without depositing it. Although depositing all of your receipts does give you a record of the revenue for later when it’s time to fill out your tax forms.
The problem with taking only cash or cash-equivalent payments is that it is inconvenient for the customer. They have to make a visit to their bank or ATM to get money to pay you, as often people carry very little cash. You can accept your customer’s personal check to improve the convenience a bit, but ultimately you are going to have to be as flexible as possible so that it’s easy to do business with you. Accepting all means of payment possible is the best choice, which means accepting credit cards.
Credit cards have fees associated with them, but your customer’s payment will be in your bank account in about 3 days. For remote orders, either internet or telephone, accepting credit cards reduces accounts receivable significantly, as you don’t have to send out a bill and wait for payment. You just take the numbers over the phone and run the credit card right then. You can imagine this is a much safer way to take payment remotely also, as you know you are going to get paid.
One other major advantage of taking credit cards that you may not know is that many people will balk at making a $50 purchase, but putting a $50 on their credit card is not as big a deal. For some reason people don’t associate a credit card payment with spending money. For this reason they are likely to spend more.
In our business, we did everything we could to avoid taking credit cards but one thing made it unavoidable: Our business ramped up quickly and we could not afford to wait for money from our customers, often for 30 days or more. We were selling around $10,000 per week to customers so our accounts receivable was around $50,000, which was unbearable. I carried a very large balance on my American Express and was fearful of the day I couldn’t pay it.
To take credit cards, you must contact a company that specializes in merchant services. You fill out some paperwork, get a credit card machine or software for your computer, or connect with your provider through your website, a little set up and then you’re taking credit cards. Make sure you price your products so that you can afford the fees… they can vary so you may want to shop around a bit.
Do you accept credit cards in your business? What have you found the advantages to be?