This month I moved out of the office space I had rented for the last 8 years! In the last year I have worked from the office, hotel rooms, airport lounges, my kitchen table, and anywhere else with an internet connection when I had to get work done. I found that the only advantage to being in my office was multiple monitors! For efficiency over the years I have moved more services and data to the “cloud” and this has significantly reduced my costs and increased flexibility!
Remote Access Software – This service allows me to log in with clients to work remotely on their desktop for training and problem resolution.
Webinar Software – This software gives me the ability to present webinars to large groups of people regardless of location.
Voicemail – This online service sends me an e-mail with my messages included in a sound file and a transcribed conversation that I can read easily.
QuickBooks – This software lets me e-mail invoices and estimates and the merchant services link allows customers to pay their invoices online.
Office 365 – This subscription gives me full Microsoft functionality anywhere any place. I also store my files using the SharePoint which is included in the service and synchronize the files with my desktop and laptop so I have all my files with or without an internet connection.
Internet Fax Service – This service accepts my faxes and sends me an e-mail with an attached PDF of the fax.
These services and software also allow me to more responsive and flexible to client needs. They have also made my business more convenient for my clients.
I have many clients who offer credit to their customers in their businesses and the only similarity the have to each other is that their Accounts Receivable has doubled over the past five years. They all have had many uncollectable amounts included in their Accounts Receivable for companies that can’t pay them, or are now out of business. A few of these past due accounts are good customers who have had financial issues and are working diligently on paying off their debts. Although the business owners want to help their customers, they need to consider the viability of the business so they can continue to employ the staff and have a profitable business.
I’ve been advising and all my other clients to limit or eliminate the amount of credit they give to their customers for the following reasons:
To reduce or eliminate bad debts in the Accounts Receivable
Most business owners and their staff do not have the time or expertise to evaluate a credit history or credit report and set reasonable credit limits. Therefore they give credit too often to those who cannot pay their debts.
Many business owners and/or bookkeepers are not good at collecting and following up on delinquent accounts, so a late payment often becomes a bad debt without any follow-up.
If you are not going to give your customers credit, there are several options that you should consider:
Have customers pre-pay for products and services.
Have customers pay upon delivery for products and services
Transfer the risk of loss to a 3rd Party
Accept credit cards – Merchant fees paid are usually less than bad debts and this method will also increase current cash flow.
Refer customers to a financing or leasing firm.
Although giving credit is the norm in many businesses, I have seen a shift in this policy over the last few years. As businesses change hands, new owners do not extend credit and they do not lose customers as a result of this policy.
Many of my clients accept credit cards for products and services and they often use their bank to provide this service rather than using other vendors. I think this is a mistake to go directly to any one vendor without comparing the different processors first. Since this can be a difficult decision and there are a lot of companies asking for your business here’s a strategy to help you through the process and compare competing offers.
Does this processor work with my billing and accounting software?
Can you use one process to make the sale and charge the customer’s credit card?
How will acceptance of credit cards affect your bank reconciliation process?
Do I need to purchase additional software to enhance the process?
The first vendor I would approach is your accounting software vendor. Many accounting software vendors provide additional modules or their own credit card processing that makes both the sale and the bank reconciliation easier. I normally look at the software vendor first and see what they have to offer. I sell & support QuickBooks (by Intuit) software and the clients using Intuit Merchant services spend less time processing a transaction and considerably less time reconciling their bank account. I also support Sage 100 (formerly MAS 90/200) and clients can save time using their credit card module but do not necessarily need to use Sage Credit Card processing to achieve these benefits. To insure full disclose I just want to mention that I do sell Intuit Merchant Services.
What are the rates that I should pay?
Credit card fees depend upon many variables including average sale, sales volume, credit or debit cards, type of credit card, annual fees, monthly fees… Rather than trying to compare this complicated billing scheme, most vendors will ask for a copy of your last few statements and do a price comparison for you. If they are not less expensive that your current provider don’t be shy and ask for a match of your current pricing, I’ve seen this reduce fees quite often. Don’t let the rates dictate your entire decision, consider the any additional accounting fees to reconcile the account and verify that you have received all your funds rejected cards. Lost revenue due to a lack of reconciliations and follow thru can offset the cost savings quickly. Also consider the cost of credit card terminals and additional equipment.
Do I rent or purchase the credit card terminal?
Some software packages do not require a terminal and the user can enter the credit card number directly into the software or smart phone so you may not need a terminal.
Renting a terminal can be quite expensive but if you have any technical issues, the terminal is usually replaced free of charge.
Purchasing a terminal is the most economical but you will incur the full cost at the time of purchase. Many processors will discount the terminal or offer cash incentive to offset this cost, so make sure you ask for any promotions available.
What length of Contract should I agree to?
Many processors will require a multi-year contract. I recommend that you ask for a contract with no minimum time required and no cancellation fee. Therefore you can change processors if you are not happy or you find a better fit with another provider.
I hope this helps in making your decision. Please contact me if you need additional assistance.