Whether you are a manufacturer, a wholesale distributor, or any other modern business owner, accepting credit cards can radically benefit you. Advantages range from boosting your sales to alleviating your workload. If you haven’t already begun accepting credit cards at your business, then you may be inhibiting your company from growing to its full potential. Listed below are only a few of the reasons why credit card acceptance is vital for any business:
1. Boost sales and increase average ticket size
Studies show that consumers tend to spend more with credit cards than they would with cash. When a customer pays with cash, he has to forfeit something tangible. Paying with a credit card reduces the sting of payment because the entire transaction is unseen. The invisibility factor of purchasing with credit cards gives consumers the sense of having greater financial freedom. Therefore, a business that begins to accept credit cards can expect to see an increase in their average ticket size.
2. Business owners can save money by accepting credit cards
Contrary to popular belief, accepting credit cards can save you money. Some merchants argue that they do not want to pay additional fees for merchant services, however, the cost is often offset by a.) increased revenue and b.) less money spent on labor.
a.) As mentioned earlier, consumers tend to spend more with credit cards than cash or checks. Alongside the heightened sense of financial freedom, credit card acceptance creates an opportunity to expand your market. By accepting credit cards, you are opening your business to a population of cardholders and reducing competition (see #3 below).
b.) Keeping a record of cash/check purchases requires manual tracking which can be tedious and time-consuming. With credit card purchases, software can automatically generate receipts and create a history report of all your transactions. This cuts time spent in manual tracking, and makes it easier for reconciliation at the end of the business day. Also, funds from credit card purchases are deposited directly into your business account. This saves you trips to the bank, and lost productivity.
3. There is an increasing demand for credit card acceptance
There are plenty of reasons why customers would prefer to pay with credit. It’s quick to pay with, convenient, and often times rewarding – many creditors offer cardholder rewards for making payments with their credit cards. In the B2B industry, numerous companies make purchases exclusively with their purchasing cards because it is critical to their business accounting needs.
Many wholesalers and distributors have already begun accepting credit cards due to the significant increase in demand. By accepting credit cards at your business, you can eliminate your competition, and preserve your customer loyalty by expanding their payment options.
4. Speed up receivables and get immediate cash flow
Many business owners will offer terms – such as 2% net 10 – to speed up their receivables. These business owners are paying the 2% out of pocket just to guarantee a payment will come in within an allotted amount of time. For roughly the same cost, credit cards provide instant cash flow that can be used to maintain the health of their business.
Credit cards also allow customers to completely pay off an invoice so that there is no lingering debt between a merchant and his consumer, thus helping to avoid any collection efforts.
5. Integrated Payment Solutions streamlines, records, and stores work
Some merchant service providers offer integrated payment solutions – credit card processing services integrated into accounting software, such as QuickBooks, Peachtree, or MAS 90. This means that you can process payments directly inside of your accounting software, and it will also automatically apply those payments to your invoices. This completely eliminates the traditional “double entry” routine of processing transactions and manually adjusting individual numbers of your inventory.
6. Easily service repeat customers and enable recurring charges
Unlike cash and checks, accepting credit cards gives merchants the option to conveniently service repeat customers. Most merchant service providers offer software that securely stores, recalls, and manages data for repeat customers. These programs also allow users to set up future payments, partial payments, and recurring charges — such as a monthly subscription. This can save time spent in labor, and ultimately save your company money.
Another advantage of scheduling future payments with a consumer’s credit card is that it guarantees a merchant will receive his money on a given date.