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In today’s tough economy, waiting around for customer payments just isn’t an option anymore. For B2B businesses, quick cash inflows are essential to maintaining smooth operations and making strategic decisions. Your CFO likely stresses the importance of reducing collection times in every financial discussion, knowing that key business decisions cannot be made without adequate cash on hand. Evolve Payment understands these challenges and offers advanced payment processing solutions to our clients designed to accelerate cash inflows and optimize your financial operations. By adopting advanced payment processing solutions like the ones Evolve Payment offers, you can streamline your payment collection, pass on merchant service fees, and ensure your business operates smoothly without incurring additional costs. Here’s how to achieve this.
The Power of Cash On Hand
Having readily available cash is more important than ever. Here’s why maintaining a steady cash flow is crucial:
- Maintain Inventory Levels: With sufficient cash on hand, you can quickly replenish stock and ensure that you never miss a sale. This agility is essential for meeting customer demand and maintaining high levels of customer satisfaction.
- Seize Opportunities: Immediate access to cash allows you to take advantage of opportunities as they arise, such as bulk purchasing discounts or responding to favorable market trends. This flexibility can enhance your competitive edge.
- Avoid Costly Financing: Improved cash flow reduces the need for short-term loans, saving you money on interest and fees. By avoiding expensive financing options, you can allocate more resources towards growth and development initiatives.
Why Credit Cards Are Essential for B2B Transactions
A report by PYMNTS reveals that businesses accepting digital payments, including credit cards, reduce their Days Sales Outstanding (DSO) by up to 25% compared to those relying on traditional methods like checks and ACH payments. If you are not accepting credit cards from your B2B clients, you are missing a significant opportunity. Although the processing fees may seem high, the benefits far outweigh the costs. Here’s why:
1. Accelerated Payment Receipts
Credit card transactions are significantly faster than ACH payments and eChecks. While traditional methods can take weeks to clear, credit card payments reach your account within days, resulting in quicker cash inflow. In an economy where cash flow is paramount, encouraging credit card payments can reduce your DSO from 30 to 60 days to just 5 to 15 days.
2. Enhanced Security & Fraud Protection
Credit cards are equipped with robust security features that protect your funds. By processing credit card payments, you add an extra layer of fraud protection, safeguarding your bank accounts from potential threats. Adhering to PCI compliance ensures that your transactions remain secure, giving you peace of mind.
3. Cost Savings With Level 2 & Level 3 Processing
Level 2 and Level 3 processing can substantially lower your credit card processing costs. By providing additional transaction data, you qualify for lower interchange rates. With the proper infrastructure, you can achieve significant savings on processing fees, effectively offsetting the initial costs.
Pass on the Fees, Keep the Cash
One of the most strategic moves you can make to optimize your cash flow is to pass on your merchant service fees to your customers. This practice, known as surcharging, ensures that you are not bearing the processing costs. What may seem like an abrasive addition to the customer experience is actually quite seamless. A survey by the Electronic Transactions Association (ETA) found that 78% of consumers understand and accept the practice of surcharging when it is transparently communicated. By being upfront about this, your customers will understand, allowing you to maintain your profit margins while keeping prices competitive.
Does Surcharging Make Sense for Your Business?
Trust Through Transparency:
Transparent communication about surcharges builds trust with your clients. When customers understand why they are being charged a fee, they are more likely to accept it. Clear and honest communication can enhance your business reputation and improve long-term client relationships.
Cost Recovery:
Surcharging allows you to recover the costs associated with credit card processing. This recovery can lead to significant savings over time, enabling you to reinvest in other areas of your business and gain a competitive edge.
Competitive Pricing:
Adding a surcharge for credit card payments helps keep your base prices competitive. Customers who prefer to pay via check or ACH benefit from lower prices, while those opting for the convenience of credit card payments cover the associated costs.
Act Now or Fall Behind
In this volatile economy, you cannot afford to wait. Incorporating credit card payments and passing on fees can make a significant difference. A U.S. Bank study found that 82% of business failures are due to poor cash flow management or a poor understanding of cash flow.
At Evolve Payment, we’re committed to providing innovative payment solutions tailored to middle-market companies. With our advanced technology and expertise, we help businesses optimize their accounts receivable processes and enhance financial efficiency. Contact us today to learn more about how our payment processing solutions can benefit your business.