Accepting Credit Cards

Accepting Credit Cards

Making it easy for the customer to pay is often a goal of the business.  Accepting credit cards often helps to increase cash flow by reducing the age of Accounts Receivable.  If credit cards are accepted they should be processed quickly.  The reason is three-fold:

1. There is less likely to be a dispute or charge back if the credit card is processed soon rather than the charge appearing on the customer’s statement several months from now. 
2. If there is a problem with the credit card, it is handled immediately, to eliminate collection issues later.  
3. And finally, the faster the credit card is processed, the sooner the business has use of the money. 

TRICK: Accepting credit cards is an additional expense, so the decision to add credit cards to the accepted method of payment will need to be weighed carefully.  Credit card discount fees to merchants vary greatly.  Be sure to shop around to get the best deal and factor in the fee into the budget and profit planning.

TRICK: Occasionally, a deposit is required to be held for some length of time by the credit card processing company (called a reserve).  Be sure to mark on you calendar when it should start to be returned to permit follow up if it is not.

TRICK:Once a business has established a good record with the credit card company and the volume of transactions has been confirmed, it may be possible to have the discount rate reduced and/or reserve requirements removed.

More information on this topic

Cash Flow Overview