I’ve received a lot of business advice since I joined the business world 25 years ago. Some of it solicited, some of it not. There are a few words of…Continue reading
For the purchasing company, business credit cards are being used more often to pay for company’s expenses. Companies receive points, miles, discounts or cash back and most importantly a temporary bump in the company’s cash flow.
Business’ can receive up to 60 days or more to pay off an invoice when a business credit card is used as opposed to an invoice/bill that is paid within 30 -day terms. Businesses also save on employee time in ‘cutting’ checks, check costs and postage with mailing payments.
Look out— business credit cards can have a high interest rate (1-3 % over prime) when not paying the credit card balance in full by the due date
and a high penalty if not paid on the due date.
Fast-Forward to the Vendor/Supplier who is reluctant to take credit cards. Even though accepting credit cards can help suppliers with their immediate cash flow (payment is immediate instead of waiting on invoices to be paid), accepting credit cards is very expense.
In our own personal experience, accepting credit cards costs our company roughly 4% for every swipe of the customer’s card. Everybody along the way- Credit Card Associations, Credit Card Issuing Banks, Credit Card Processors, Payment Gateways and Merchant Providers…all want a piece of the “fee” pie.
Have you ever looked at your merchant provider statement &^&%%$#$%. It is head shaking.
For a $100.00 sales transaction, $4.00 fee doesn’t necessary sound earth shattering, however, if the profit in that $100.00 sale is only 10%, then you are talking about a net 6% true profit. What about a monthly summary bill for $25,000 being paid for with a credit card…It would result in up to $1,000 of fees. That is a huge hit to any size company’s profit. Some companies make up these fees by raising prices or they pass these fees onto the customer.
For us, Harris Technologies only accepts credit cards in extreme situations…. companies with questionable payment history or small onetime orders. Harris Technologies is committed to keeping waste/expenses down and prices affordable.
Supplier v Buyer- The Good and The Bad….. What side of the coin you are on.