Many business owners report a sharp increase in profit when they begin accepting credit cards as a means of payment. Credit cards allow customers who do not have the money on hand to make purchases from you despite their personal shortage of cash, and they also open the door to customers who simply make all of their purchases by credit card or debit card each month- as there are many people who prefer to make a single payment for all their monthly expenditures when their statement arrives.
Online businesses greatly benefit from accepting credit cards, as payment can be made immediately over the Internet and your business can quickly ship their purchase without having to wait for a check to arrive by mail, and then waiting for the check to clear the bank before sending orders out to customers.
Service oriented businesses will notice a large decline in the number of past due accounts when they start accepting credit cards for payment. A business that sets up a merchant account not only has the ability to accept credit card payments for their professional services, but it also allows them to accept ATM and debit cards as payments, and of course the traditional methods of check or cash payments. Basically, you’ve increased the ways in which a customer can provide payment and increased your business methods for billing and collecting. Accepting credit cards for payment reduces your business overhead and can greatly improve your cash flow.
Using Merchant Accounts to Lower Overhead and Increase Cash Flow
If you have several outstanding receivables that are past-due, you are likely to be experiencing a problem with cash flow. When you offer customers the possibility of making payments by credit card, ATM or debit card, you will clear up the past-due receivables faster.
For large purchases or services you provide that might be considered expensive to the majority of your customers, you may need to offer your customers the ability to make payments on their account. If you do not accept credit cards, you have to extend the credit to the customer yourself- and hope that they will keep making their payments over time. You can minimize your risk by allowing the customer to make the payment to you in FULL, by credit card- while at the same time the customer has the ability to pay for their purchase in monthly payments to their credit card.
Accepting credit cards lowers your overhead. Consider this: it will cost you less money in transaction fees to accept a $60 payment from a credit card than it will to create and print an invoice, and mail it to the customer. (This is not even considering a customer who needs to be reminded to make the payment several times once the invoice has been sent!)
When a business provides the ability for customers to pay using credit cards, the number of bad debts the business has is decreased. That increases the cash flow and reduces overhead costs- both necessary in improving the profits of a business.
Merchant Accounts are Accessible to All Size Businesses
There was a time in the not so distant past that it was very difficult to be approved for merchant accounts. In previous years, a business would need a high volume of credit card usage in order to make the fees for having the ability to accept electronic payments affordable. Currently, it is very inexpensive to set up merchant accounts whether you are a large business with a physical location, or a small business operating only online thanks to the increase in merchant account providers available to businesses.