For a typical business owner, the focal point of business is to make as much money as possible. So when starting out, many business owners rightly dwell on sales. They might not worry about things like taxes or expenses until later. Sometimes, that’s a mistake, because the cash that goes out has a big effect on the cash that comes in, and it can lead to serious cash-flow problems.
Accepting credit cards can help with this. For your business to accept credit cards, you need to open a payment processing account. These accounts are administered by third-party payment processors, and they can help you accept not just credit cards, but also cash, e-checks, and bank-to-bank payments via ACH.
Solving your cash-flow with credit cards
If you don’t account for expenses and taxes, your business may eventually run into problems, because by the time your expenses are due, you may already have run out of money, so you’ll be unable to pay your business bills. Then you’ll have to try to generate more money. Accepting credit cards can help you – both to recover the spent cash and to earn additional revenue.
When customers pay by credit card, studies show that they spend more on average than they would if they were paying in cash, so that automatically translates to more money in your bank account. You can also link loyalty programs to your customer’s credit cards, which helps to bring in repeat business. In terms of taxes, you will have an electronic log of every transaction, in a simple, user-friendly format.
This means even without the help of an accountant, your payment processor’s transaction report lets you assess your finances at a glance. You can then potentially calculate tax and expenses without being unprepared and without having to eat into your revenues or profits. This makes it easier to plan around your cash, see where you can trim down spending, and raise your bottom line. And with the right processor, this all comes at a pocket-friendly payment processing price.
Efficiency and convenience
The most important advantage is revenue collection. If your business accepts checks, you’ll spend a lot of time following up with delayed payments and chasing after bounced checks. Cash is more immediate, but it has limits because your customers only have so much cash on them, and can access only so much in a day from an ATM, so this puts a hard cap on your income. With credit cards, the cash moves straight from the customer’s bank account into yours, with no limits and no bounced checks.
Thus, by accepting cards, you can enhance accountability, shorten the wait for payment, and cause customers to spend more at your store.
For more information on how credit card processing can benefit your small-to-medium business, or to sign up for a merchant account, please call (888) 924-2743 or go to Charge.com.