Why B2Bs Should Accept Credit Cards
Are you running a company that works with other businesses and are not yet accepting credit cards? If so, you are prematurely cutting out a significant portion of your market before even getting started. In today’s Internet-based world, electronic payment through online accounts and credit cards is essentially the norm du jour. The idea of cash payments or even payments by standard warrant or check is now in danger of being relegated to museums. Even the federal government is now requiring vendors to take electronic payment to reduce their own paperwork and processing costs. So it’s not unreasonable at all for one company to expect another to take electronic payment, especially with credit cards.
If thinking about accepting credit cards for your business from other businesses, there are multiple benefits up front.
- First, there’s no 30 or 45-day wait for payment and extending credit to big customers. Instead, payment happens at the point of the charge, immediately putting cash flow in a company’s account in moments.
- Second, when dealing with customers who are wary of having to disclose too much information to a new transaction partner, a credit card payment tool provides customers a sense of protection, making the deal happen far easier than a traditional payment.
- Third, the related business accounting is recorded in a far easier manner with credit card payments. A business can immediately track all payments made, by whom, when, and for how much which transfers automatically from the credit card account to the business accounting software or records. This makes both the business’ accounting as well as tax filing preparation far easier when taxes are due.
A business will have to make some changes to deal with credit card processing. Any merchant bank that provides a system for a company is going to charge a fee per transaction, in addition to rental costs or charges for processing equipment. This cost either has to be absorbed by the business as an operating expense, cutting into profit, or passed onto a customer which raises prices charged. Only the business selling can decide which method will work better with known customers. For example, those who operate on tight profit margins will feel a serious pinch by processing fees taking 2 or 3 percent from a sale. On the other hand, companies with larger profit margins may decide they can absorb the cost for access to more customers and new business.
For those wanting to know how to accept credit cards, a traditional approach involves opening a merchant account with a bank. However, easier methods can involve using online third parties as middlemen transaction processors. This is particularly handy for higher risk companies, like home businesses.
With a tighter economy foreseen for the next few years, a business selling to other businesses will be under pressure to make a deal easier for customers who want to buy. Accepting credit cards is one way of doing this. With cash flow always an issue, getting payments faster makes a difference, and credit card acceptance allows a business to keep moving forward rather than waiting for payments.