One question that niggles at every small B2B business owner is: can/should you handle credit card payments?
It bears a lot of thought, as setting up a credit card processing system carries larger implications.
Once you begin paying suppliers or receiving payments via credit card, this could spell larger and more frequent transactions. If your small business starts getting requests for payments via credit card (from customers or suppliers), that’s a good sign you’re about to break into the big leagues. A Gallup poll in 2014 showed that 67% of Americans own at least one credit card, so making transactions easier can easily boost your sales.
But don’t light any celebratory cigars yet– there are a few things you should know before signing up for a B2B credit card.
Should I Still Take Checks?
Three words: money is money. A better way to deal with check-paying clients is to accept the payments for now, but eventually ease yourself (and them) into switching to taking credit card payments, or, as the finance industry calls it, B2B credit card processing.
Market trends will likely push you into this practice, as that’s where some banks and financial tech companies have steadily been moving business practices towards. It costs on average $2 to process each check. This may not seem like much, but hundreds of transactions can mean thousands of dollars in transaction costs. This cost is one of the reasons why check usage has been steadily decreasing for years. A study by the Federal Reserve Bank of Philadelphia forecast that checks will probably be completely phased out by 2026.
Credit Cards Manage your Cash Flow
What kills 82% of all small businesses and is the #1 killer of businesses in general? Cash flow problems. By using a B2B credit card for your transactions, you’ll have better cash flow since you’ll simply be able to manage your cash reserves better, track your budget and ensure that you have the money available to meet payment requirements as they arise.
Credit Cards Improve Time Management
Business owners, even small ones, know more than most people that time is money. By hanging on to the dated practice of issuing checks, a lot of time and effort can be wasted by the outdated process of opening envelopes, matching checks to Purchase Orders, filing away the check, recording the transaction, waiting for the issuing bank to clear the check, poring through files to recover invoices, the list of tasks goes on. Thanks to the quick processing of credit card transactions, money can change hands more quickly, transactions are recorded more efficiently and filing or accounting errors can be avoided.
Should You Sign Up?
Getting your business ready to transact with credit cards means you’ll be opening up your enterprise to a potentially huge market, one that’s projected to reach $1.13 trillion by 2020 from online transactions alone.
Ultimately, the answer to the B2B credit card question is up to you. To help you with your decision though, perhaps you can rephrase the question: Just how much success can my small business handle?