Video on Cost Saving using Credit Cards : LINK
Why Credit Cards are good Business - Executive Overview
Here are a bulleted list of reasons
- Cash flow - money is available in the bank in 1-2 business days
- Receivables clerk loaded cost $40K if your company does $500K at 3% the cost is $15K you save $25K /year
- Credit card process helps qualify a customer for service
- Paperless collections. Email and customer portal to further lower back office costs
Why Credit Cards are good Business - Issues with Check Payments that Costs
- Each bank has its own rules about business checks. Many have a per check deposit cost.
- If the credit card transaction is done electronically, there is no check to lose. If you have people pick up checks at customer sites, there is the possibility of losing the check (or having to get the check signed, or having it be for the wrong amount, etc.) There is human error in credit cards, too, just different ones.
- Then there is the time it takes to process the check by hand, either bundling it with others to take to the bank or converting them to electronic transactions. typically one hour loaded cost is $40.00/hr for a clerical person. Which translates to 52x5x40=$10.4K/year
- "Returned check" cost. If one in 50 checks gets returned, you have to pay the fees associated with that. Plus the time it takes to dun the customer again, reverse the posting in their account, etc.
- Payment cycle with invoices paid by check. Mostly, this has to do with the time things take. If the customer pays by check, they have 30 days to pay, and it has to be sent in through the receivables posting process and then delivered to bank and finally cleared through bank before you have any chance of getting your money
Reasons Service Providers do "Not to use credit cards"
Like any tool it has to be understood and trusted before you can accept it. If you are running your business successfully, trust your choice. But consider that when the internet first came out it was "I never let that into my business". Smart phones where meet with "my drivers will destroy them". Cashless business is just another change.
Bottom line, trust your choice, in the end you run the company, but keep an open mind to alternatives, things may change
- Our customers want to pay by check not credit card--primary reason many are long term repeat customers
- All checks are mailed to accounting department, not given to drivers checks rarely get lost in our operation
- We have minimal collection problems
- If we are suspect on credit of new customer we will require a credit card
- We try to stay away from potential high credit risk customers--don't have time, patience or desire to deal with them
- Our annual net credit write-offs have been minimal
- We don't pay any bank fees (remote deposit, per check or returned check fees or any other bank fees)
- Our total admin expense for collections is less than very low, way less than credit card fees if we did all credit card transactions
- We paid over a lot tin credit card fees which I hate (mostly big trailer rentals where customer wanted to pay by CC so they could get reward points)
Reasons Why Customers Do not Use Credit Cards
The main reason is they run the business by writing and tracking checks to control expenses. Even the federal government now pays via credit card, so as these business owners start using the more cost effective process, this will disappear. Even Dunkin donuts , mcdonalds, etc. have apps that work with credit cards to speed business process and reduce costs