Where’s my payment? If you’ve ever asked that question, you’re not alone. “Outstanding receivables and cash flows are common pain points for many businesses in the construction industry, based on the merchants I’ve worked with,” says Beth Baker, a payment processing specialist at Infintech.
Cash flow projections are often based on agreed fee payment schedules. The problem occurs, however, when your customers don’t abide by them. You may end up using your own credit card to keep up with the day-to-day purchases. As a result, you’re not only short on liquid funds, but you’re paying interest charges.
Here’s three ways credit card acceptance can help you solve these problems:
1. Reduce Payment Terms
Businesses are more willing to reduce their payment terms if given the option to pay by credit card. So you may be able to add shorter payment terms to contract agreements moving forward, thus increasing your cash flow.
Additionally, when you accept credit cards, you can expect faster funding – usually within 24 to 48 hours, which means you’ll have more capital available to grow your business and pay your vendors on time.
2. Help Alleviate Outstanding Receivables
If you deal with outstanding receivables, transitioning your customers to credit card payments, especially high-risk customers, can help alleviate this issue.
“When accepting check payments, if your customer doesn’t have enough funds in their account, it can take five to seven days before you even know funds were not available to cover the check,” Beth explains.
When checks bounce, your bank can charge returned deposit and overdraft fees that eat into your margins. Plus, your customer may be experiencing similar cash flow issues. With the convenience of using a credit card, it will allow them to float the payment on their end, while satisfying their outstanding payment to you.
3. Create Business Opportunities
More businesses than ever expect to pay by credit card because it’s secure and – furthermore – it’s convenient. According to a report by Forrester Research Inc., United States business-to-business credit card sales have more than doubled from $304.91 billion to $780 billion from 2014 to 2015.
“Additionally, accepting credit card payments provides options. When choosing between two potential companies, if all factors are the same, they may choose the company with the best payment option,” Beth says.
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For more information, contact Beth Baker at firstname.lastname@example.org or 513-338-8477.