The Complete Guide to Managing Your B2B Credit Line

manage b2b credit line

The Complete Guide to Managing Your B2B Credit Line

The success of a B2B business rides as much on your cash management as your bright ideas. When you’re just getting started, you have to determine the simplest way to pay the bills you owe to your vendors. Meeting those deadlines is essential, even if money from your clients hasn’t made it into your bank yet.

What are you supposed to do, though, if you don’t have the means to pay off your partners right away?

Building a B2B credit line takes time and research, but it’s important, necessary, and achievable. A proper line of credit grants flexibility for small businesses to help them grow and manage their cash flow. A strong B2B credit line is key for helping you expand your business faster and safer.

Different Types of B2B Funding

B2B payments are payments between business partners and vendors as you support one another up and down the supply chain. You’ll need to make these payments on a regular and timely basis if you want to ensure that your supply chain stays healthy. Paying your vendors consistently also helps you retain a positive reputation in your industry. Often that means turning to outside sources to secure funding.

The most common financing options for small businesses are lines of credit, business credit cards, venture capital funding or equity investment, and small business loans.

While tapping VCs can be a great way to generate startup funds, it’s essentially trading away long-term potential earnings for short-term cash by giving up partial ownership and control. This is why many small business owners turn to loans and credit options.

Small business loans, on the other hand, tend to be a one-and-done type deal. They provide a lump sum of cash fast, which is then repaid over time with fixed or variable interest. Once a loan interest rate is set, you can’t adjust your balances or draw against the loan as you could with a line of credit. While it may be more predictable in terms of budgeting for repayment, it doesn’t offer the flexibility that many growing businesses need.

Credit lines are among the simplest ways for small e-commerce businesses to get up on their feet. It’s easier to secure a business credit line if you have a high credit score, but you don’t need to have stellar standing to start building your future. Instead, you can start paying off your debts with your business credit line, then raise your credit as you start to secure regular revenue.

Your supply chain is the bread and butter of your business. If you’re not expediting sales, then you’re limiting what kind of profit you can bring in. Establish a B2B credit line, and you can speed up collaboration up and down your supply line in little to no time at all.

Did you know?

Inc. Magazine cites 4 different lines of credit that every business owner should know about. Still unsure which is best for your business? We can help with that.

The Benefits of B2B Credit Payments

When you’re building a business, you’re carving out a reputation for yourself. That reputation hinges on whether or not you’re able to pay your supply chain in a timely manner. Failing to give your industry peers the financial respect they deserve can see your business lose opportunities for growth.

Want to get around the pitfalls of supply chain relationships? Set up at B2B credit line. With one of these lines in place, you can maintain good faith connections with your industry peers by paying for their goods and services when they’re due, regardless of your cash flow.

Some of the additional benefits of an effective B2B credit line include:

Limiting Your Extraneous Expenses

Running an office is expensive. If you want to cut costs, invest in B2B credit payments. On average, manually processing an invoice can cost you three times more than processing an invoice with a B2B payment solution. If you’re taking advantage of electronic payment methods to connect with your partners already, you can easily migrate your invoices into an online platform and lower your internal maintenance costs along the way.

Paying Business Partners Faster

Not only is it expensive to process a traditional invoice from one of your partners, but it’s time-consuming, too. Even if you process your invoice through a bank, you may not have access to the money you need for up to 24 hours. If you’re operating through a third-party platform like PayPal, your money may be tied up for several business days. This isn’t the kind of timetable you want to be working on if you have business partners who you need to pay.

Your supply chain can’t wait for the banks, and neither can your revenue. Business credit payments help you circumvent these delays. When you pay your partners with a credit payment line, you keep your production flow on schedule. You can even schedule automatic payments to keep the pressure of approving a new charge off of your plate. Your partners can maintain their production speed, too, meaning that the whole of your supply chain can operate at a higher level of productivity than it might otherwise.

Establishing an International Payment Plan

What about if you want to take your work international? If you try to manage one of these credit lines on your own, you may find yourself contending not only with varying international customs but with exchange rate fees, as well. Those fees may seem inconsequential at first, but they can add up and make a serious dent in your revenue if you let them.

Working with a B2B credit line that’s based online or through an existing B2B payment plan tool can help you better connect with your international peers while avoiding those exchange fees. These plans often come with integrated encryption, as well, meaning that you won’t have to risk your personal data by sending payments via wire transfer. If you’re savvy with your money and your connections, you can use these platforms and credit lines to get ahead of your competition, growing at a rate you might otherwise not have achieved.

Preventing Overdraws

Maintaining a business is an expensive endeavor. If there are larger purchases that you need to make, you can’t always wait until your clients’ payments clear your checking account. Similarly, if you’ve made a purchase and made an error while budgeting, you don’t want to have to pull back on a purchase or investment because you don’t have the funds to cover this new expense.

That’s where credit can serve you well. Instead of delaying a business-to-business purchase – for example, boxes for your newest product release – you can rely on your credit to both prevent overdraw fees and to help you maintain a positive business relationship with an industry peer.

Personal Versus Professional: Protecting Your Credit

Why build a new line of credit when you’ve got your personal one in place? There are more risks to the practice than you might expect. For starters, your personal credit line is tied directly to your social security number. If you find yourself contending with any instances of fraud, it’s your personal information that’s going to be at risk. Business credit, comparatively, is tied to your business’s EIN number, allowing the distance you need to protect your personal investments from widespread fraud or misuse.

If you find yourself in a position, however, where opening up a business credit line isn’t feasible, don’t worry. You can use your personal credit card to get your feet under you as you build up your business. It’s in your best interest, however, to try and keep your social security number private throughout this process. Avoid sharing this number at all costs, only giving it out if it’s deemed essential. You’ll want to be especially mindful of your purchases, as well. An errant business expense could make it more difficult for you to rent an apartment, take out a loan, or pursue your personal interests later down the line.

Finding the Right B2B Credit Line For Your Business

You know the benefits of a B2B credit line, but do you know which line is going to suit your business best?

You need a B2B credit line that doesn’t limit your purchases. An ideal B2B credit line needs to not only get payments out to your industry peers ASAP, but it also needs to make those payments worthwhile with credit benefits. At the same time, your B2B credit line needs to protect your business, your purchases, and your personal interests. As you’re looking for a new line, then, keep an eye out for:

  • Low withdrawal fees
  • Realistic and permissive credit limits for qualified borrowers
  • Industry-appropriate purchase repayments
  • Flexible budget payment plans
  • Rewards that you can use to expedite your business’s growth
  • Fraud protection

The sooner you’re able to implement your new B2B credit line, the sooner you can transform your loose network of professional supply connections into a tight-knit, high-functioning production line.

Don’t Let Payment Delays Stunt Your Growth

The success of your business is tied to your financial reputation. Don’t let beginner’s mistakes get the best of you. No need to rely on your personal credit when you have a B2B credit line working for you.

You don’t have to search for the tools to maintain your credit line alone, though. Instead, you can take advantage of a platform like Direct Payment Group. Direct Payment Group gives you the tools you need to set up an online payment program with your B2B partners, ensuring that all payments due through your supply line are received in a timely manner. This platform also provides you with the protective measures you need to keep both personal and business credit lines safe as you’re building your business.

SBA Loans for Women Meet a Rising Demand

sba loans for women

SBA Loans for Women Meet a Rising Demand

Women are killing it as entrepreneurs. Over the last 20 years, the number of businesses owned by women has increased by 114% and the trend continues to increase by 4 to 5% a year.

To address and encourage this trend, the Small Business Administration has started a number of initiatives to support women-owned businesses. The Office of Women’s Business Ownership exists to run Women’s Business Centers, and help women-owned businesses find opportunities and receive training.

The SBA also has a number of loan programs, some exclusively for women business owners. For women entrepreneurs, SBA loans can be a great way to get the capital they need.

You can also register as a Woman-Owned Small Business with the SBA, which helps get more assistance. You can apply for this online or speak to an SBA representative about your eligibility.

So, what kind of loans are available for women leading small businesses?

7(a) Loans

Open to all businesses, 7(a) loans are the bread and butter of the SBA’s program. A 7(a) loan or 7(a) small loan (small means $350,000 or under) can be used for a variety of business purposes, including starting a new business, purchasing real estate, equipment, and fixtures, as well as increasing inventory or improving working capital.

7(a) loans generally have better interest rates than private loans, although they are obtained through partner organizations. The program reduces the lender’s risk, allowing banks to loan to startups and businesses they consider high risk.

Women's Business Center Loans

The SBA administers a number of Women’s Business Centers across the United States. Depending on your location, there may be a women’s business center near you.

The services they offer vary, but some offer loans directly. For example, the CEI Women’s Business Centers offer a variety of loans including regular business loans, a streamlined process for micro loans, specific funding for renewable energy products, and, for the center in Maine, sea farms.

Others will help you find appropriate loans for your business through partner lenders. As Women’s Business Centers also provide a variety of other services, it’s worth looking to see if there is one in your area.

SBA 504 Loans

SBA 504 loans are designed to provide approved small businesses with funds for fixed assets, such as buildings, land, renovation, furniture, etc. The proceeds are restricted and they are available through Certified Development Companies, which are nonprofits that promote economic development in specific communities.

504 loans are not reserved for women, but one of the goals of the program is to help expand small businesses owned and controlled by women. The goals of this program are to revitalize communities and help businesses move to areas which have a labor surplus or are affected by loss of Federal presence.

If you live in an area which has a CDC or are looking for a place to relocate to, 504 loans can be very helpful for purchasing “fixed assets.”

SBA Microloan Program

If you have a relatively small need, the SBA Microloan program can help you. Microloans in this context are defined as up to $50,000, but the average is $13,000. Money from these loans can’t be used to refinance debts or buy real estate, but is intended for things like inventory or supplies, furniture, and equipment.

Microloans are available through community-based nonprofits that often have specific missions and you may be required to do training or provide a business plan. Some of these nonprofits have a goal of supporting women-owned businesses, but the exact details depend on where you are.

SBA Express Loans

SBA Express loans are intended to serve as “bridge” loans in an emergency. If you’re having cash flow problems, these loans are typically approved within 36 hours. Like 7(a) loans, they are obtained through lenders that partner in the program. For loans up to $25,000, collateral is generally not required.

The maximum amount is $350,000. These loans are available to all lenders. The downside to the rapid approval is that the interest rate is likely to be closer to the SBA maximum.

SBA Veterans Advantage

More and more women are serving in the military. The SBA Veterans Advantage loan program is similar to SBA Express, but has lower fees. These loans are restricted to veterans, active-duty military and reservists, but are also available to spouses of any of those groups or to widows of service members who died during service.

If you fall into one of those groups, then you can get rapid turnaround with lower fees, and you can borrow up to $5,000,000. Your local SBA office will have more information, and will help you prove your eligibility for the program.


The CAPLines program is for small businesses who have cyclical working capital problems. If you meet SBA approvals and also fall into one of the four groups under CAPLine, you can borrow up to $5 million. The four programs are:

  1. Contract Loan: This is for contractors and sub-contractors who need to finance the cost of a contract before they are paid by the customer. You can use a loan to cover multiple contracts if needed.
  2. Builders Line: This is for builders who are struggling to get financing for a specific construction or renovation project. The loan is for a specific project and it must be a residential or commercial building for resale.
  3. Seasonal Line of Credit: This is not to help through slow periods, but to cover the costs of “starting up” at the start of the season before money comes in, and thus should be spent on inventory or labor costs.
  4. Working Capital Line of Credit: These loans are to cover short-term working capital and operating needs for businesses that sell on credit.

The SBA and partner lenders are not allowed to discriminate when providing loans. While there are few programs restricted to women, women can apply for SBA loans without having to worry about being turned down or held to higher standards than men. Thus, for women who are struggling to get financing for their business, SBA loans are a good option for getting loans at reasonable rates.

If you are still a little confused and are exploring your SBA loan options, Direct Payment Group can help. We can guide you to the financing you need for your business to thrive. Click on the button below to get started.

Cash Flow Problems? Is a Short-Term Loan Right for Your B2B Company? What Are the Alternatives?

short term loan

Cash Flow Problems? Is a Short-Term Loan Right for Your B2B Company? What Are the Alternatives?

Many businesses have short-term or seasonal cash flow issues that dip into operating capital. While setting money aside for a rainy day is possible for some businesses, many don’t have that luxury. For them, a short-term loan is an attractive option.

For instance, small B2B companies can develop cash flow problems when all payments come in at once, say the beginning of the month. If you’re running a fledgling SaaS company and all your clients pay on the first, you could be struggling by mid- or late-month. The opposite is true when clients habitually pay late, creating cash flow issues at the start of the month. This problem is compounded if you have annual subscriptions and an imbalance of monthly renewals throughout the year.

If your business struggles with these problems, should you look into financing options? Before you start filling out the paperwork, let’s take a look at the pros and cons of short-term loans and some funding or proactive alternatives that might make sense.

Pros and Cons of a Short-Term Loan

A short-term traditional loan is the most obvious answer for a business having cash flow problems; however, it’s not always the best answer. Here are some pros and cons of short-term loans for B2B companies:

Pros of short-term loans:

  1. Can actually have a lower interest rate (specifically a factor rate)  than longer term loans, especially in a down economy (when you’re most likely to need one)
  2. You get the money quickly, and can pay it back as soon as your immediate cash flow issue is resolved
  3. Many lenders care more about your income than your credit score
  4. To qualify, your business only needs to be operational for 3 months (though some lenders require a longer history)

Cons of short-term loans:

  1. Many short-term loans are charged by the factor rate, not the APR, which tends to be more expensive
  2. You need an excellent credit history or proof that your startup has excellent income potential 
  3. Payments can be expected weekly or even daily
  4. Many loan requests are not approved
  5. Alternative lenders may give you a loan even with crummy credit, but you will pay for the privilege

If you can get a short-term loan and know you can pay it off, they are not a bad idea. You do need to be careful; there are many sharks in this pool, and businesses get into trouble with predatory short-term loans almost as often as desperate individuals.

For young SaaS companies and other subscription-based services, short-term loans might not be an option as the worst cash flow problems tend to crop up in the early days of the business, before you have the income history and credit score needed to apply with a reputable lender. If this describes your situation, you might want to consider alternatives.

Incentivize Your Customers to Pay Faster

If your cash flow issues are caused by people paying their subscriptions late, then you can encourage customers to pay on time or even early. A good strategy might be to offer a discount on the invoice if the customer pays early. This can help spread payments out a little.

You should also follow up with customers who consistently pay late. One option in this case is to change somebody’s payment date to the middle of the month to solve their cash flow issues as well as your own.

If you sell annual and quarterly subscriptions, you could try offering a better rate for several months as an incentive to spread your customers out better through the year.

Some businesses resort to invoice factoring, where you sell your unpaid invoices to a factoring company in exchange for a lump sum of cash. This is only a good option if you have some seriously delinquent customers and you can’t track them down.

Additionally, make sure you can accept online payments and encourage your clients to move to auto-billing so they can’t forget to pay. Auto-billing generally means direct payments (a service we can provide).

Use a Line of Credit

A line of credit can help when cash flow is slow. This works more or less like a credit card – you have a limit that you can borrow from at any time and then pay back. Be careful though, since you pay interest on what you borrow. Interest rates tend to be high, but generally lower than consumer credit cards.

Of course, you can also just use your personal credit card, especially if you have a card with rewards. They are definitely a useful thing to have around, but are only recommended for extreme cash flow situations.

Get a Microloan

If the amount of money you need is small (35k or less), microloans can be a good option. They are often offered by non-profits, making them much more affordable, and you don’t need a pristine credit score to get approved.

Microloans are particularly easy to get if your company is owned by a woman, a minority, or a veteran. Banks generally don’t like to lend such small amounts of money to businesses, so look online for products offered in your area.

Offer to Pay Your Suppliers Early for a Discount

If getting early payment from your customers helps you, rest assured your vendors feel the same way. By offering to pay early in exchange for a discount, you reduce your costs and also get a bit more control over when you pay a bill. This of course doesn’t produce a revenue stream, but it is an effective proactive measure to help counter cash flow problems, should they occur.

Keep in friendly, regular contact with all of your vendors and suppliers. That way, whether you’re trying to balance your inflow of cash or if you do need to pay late for a different reason, they’re more likely to be understanding.

Proper Invoicing

Last, but not least, having a proper system to send out your invoices is essential. Make sure that your invoices have the date on which payment is due in multiple places. Also include clear instructions on how to pay, and prominently display late payment fees if you charge them.

Electronic invoices tend to be clearer and easier to read than paper (and also save you the cost of the paper and a few trees). They are also less likely to be lost.

Dealing with your cash flow issues, especially when you are dependent on subscriptions, can be a challenge. You might be in a position to take out a short-term loan, but I wanted to lay out some other methods for managing cash flow during those times when it slows to a trickle.

Direct Payment Group can help you with invoicing and managing cash flow. Reach out today to find out how we can help.

SBA Loans Can Help, but How Long is the Wait?

sba loans

Need Cashflow? SBA Loans Can Help, but How Long is the Wait?

SBA loans are like unicorns – if you can catch one, do! Catching one, however, requires a little patience and planning. SBA loans are a good option for anyone looking for working capital to expand their business. The Small Business Administration authorizes lenders to provide capital and thus reduce their risk, allow lenders to lower their requirements, and process applications more quickly.  As attractive as this may be to your cash-strapped business, you should not wait until the 11th hour to apply, as qualifications, the application process, and wait time vary from loan to loan.

First time applying for an SBA loan? Not sure which one is right for you and your business? Don’t panic. We’ve got you covered. In this article, we’ll look at four common types of SBA loans, their average approval time, and qualifications. The right one for you depends on the amount of money you need, how quickly you need it, and what you are attempting to fund.

Express Loans

Avg. Approval Time: 36 Hours

SBA Express Capital L Loans, often called bridge loans, have the fastest approval time. These are loans of up to $350,000 with a streamlined and expedited process, which can put cash in your hand in as little as 30 days.

These loans are intended for emergency funding needs. The Community Advantage (CA) program is similar, differing only by a lower limit ($250,000) and an interest rate ceiling of Prime +6%. The SBA developed the CA program to promote economic development in underserved areas.

NOTE: These loans are meant to be facilitated ONLY by banks your business has an established relationship with. Your bank should have most of the necessary information needed to apply, so approvals tend to be faster.

The SBA can help you find a lender in your area who can offer you a good deal for your specific requirements in terms of loan size and term. If you need quicker answers to your lending questions, use the chatbot in the bottom-left portion of your screen or click here and we’ll get back to you ASAP!

CDC/504 Loan Program

Avg. Approval Time: 30 - 45 Days

CDC/504 loans typically take around a month to approve, though it’s not unheard of for approval to take up to 6 months. These are dual-approval loans, involving both the SBA and a Certified Development Company (CDC). Since both parties play a role in the approval process, the wait for funds could be extended.

A CDC is a special non-profit that provides funding and assistance to businesses in their area. These loans have narrow limits on their purpose, but often offer a better deal if what you are trying to fund falls in those areas and your region or town has a CDC. Key details include:

  • Loan amounts range from $25,000 to $5.5 million (note that it is still $5 million if you are not a manufacturer)
  • Interest is fixed
  • Loan terms range from 10 years for equipment to 20 years for real estate
  • These loans can be refinanced
  • Loans may only be used to purchase or renovate capital assets such as buildings and equipment

This loan program is intended to encourage investment in local communities, hence the limit. It’s a good option if you need to purchase or renovate a building or if your business has unusually high equipment needs. CDC lenders will also take into account whether your proposed project will benefit the local community in terms of improving land use and creating jobs. Because of this, these loans can be harder to get, but often offer a better deal in terms of interest and can be refinanced later when your business is considered less of a risk by lenders. These loans are a hybrid between funds from the CDC and funds from a financial institution.

Microloan Program

Avg. Approval Time: 30 - 90 Days

The SBA’s microloan program connects businesses with approved intermediary lenders. The typical approval time is around 30 days, but both the SBA and the intermediary must approve the loan, which could delay the process by up to 60 days.

This program is intended for smaller loans for specific purposes. Microloans can be a good option if your concern is an immediate shortfall in cash flow caused by specific purchases or situations where operating capital is affected by payment and billing cycles. Key details include:

  • The maximum loan amount is $50,000
  • The maximum term is 6 years
  • Interest rates are negotiable
  • Loans may be used for working capital or to purchase equipment only; they cannot be used to purchase real estate or refinance existing debts

Microloans may be for very small amounts and can be beneficial for small businesses or even sole proprietors. The intermediary sets the requirements. Microloans are also available for not-for-profit childcare centers. Because microloans spread the risk amongst multiple lenders, they are often easier to get for very small businesses or startups that might be struggling to buy, say, computer equipment to get their business moving forward.

7(a) Loan Program

Avg. Approval Time: 60 - 90 Days

7(a) loans are the closest to traditional funding, and therefore require a more extensive application and approval process. Generally, you get the loan from an approved bank or credit union, who partners with the SBA. The SBA monitors these institutions and ensures they meet certain ethical requirements. Some key details:

  • Loan amounts range from $50,000 to $5 million
  • Loan terms range from up to 25 years for real estate to 5 to 7 years for working capital; mixed-use requests are weighted
  • Loans may be used for most business purposes, including buying real estate, building locations, or acquiring a business
  • Loans can be used to refinance existing debt
  • Interest rate is negotiable
  • Interest rate is limited but can be as high as 25% a year
  • Requirements vary by the size of the loan, with a cutoff of $350,000

Is an SBA Loan Right for Your Business?

If you’re fortunate enough to qualify for an SBA loan over other financing options, congratulations! Now starts the application process, which can be extensive. It’s worth it though, since the terms and conditions are reasonable, down payments tend to be lower, there are limits on interest rates, and term lengths are negotiable. To qualify, your business needs to fall under the size requirements for small businesses, which vary by industry, and show some kind of a profit. Remember that not everyone who applies for a loan is accepted, so if you make it this far the unicorn is within your reach.

You are also expected to provide the lender or intermediary with details about your planned use of the funds. Additionally, owners of the business may face personal risk. In some cases, personal property may be put up as collateral to the loan. You will also need to provide the required data to allow the lender to assess your cash flow and ability to repay the loan. You will need to do projections for a startup or a total change of ownership. Your personal credit score may also be taken into account.

Don’t let what might seem to be strict criteria deter you from applying. An SBA Loan is an accessible funding solution for your business as long as you prepare in advance and prep your application before submitting it. Want to know how your business can qualify for any SBA Loan? Direct Payment Group can help! Start your SBA Loan application process today by clicking the button below.

What’s Better: Paying Cash vs. Credit

cash or credit

What's Better? Paying Cash vs. Credit

“Cash vs Credit” is a tale as old as time. Well, not that old. But it’s been around for a while. It probably started a short time after credit cards gained popularity. The debate has only heated up as credit cards become more and more available. 

Let’s dig in to it!

On the consumer side, there isn’t too much to worry about here. Most of your customers will use the method they prefer, or whichever is more convenient at the time of purchase. There are certainly reasons to stick to one over the other, though. And in the business world, both cash and credit have plenty of nuance to them.

While cash has become increasingly phased out, it still has it’s benefits. Without meaning to create a false dichotomy – you should accept both cash and credit if you can – these are the benefits of each side.

person paying with credit card

In The Right Corner: Cash

Cash is a classic, but it plays out a bit differently in 2020. When talking about cash, we’re of course also referring to ACH Payments, checks, and bank transfers, as well. If you have less money right after buying something, you are paying with cash. 

Cash is especially relevant for low margin and low product cost businesses, where it’s the most likely to change hands. Accepting cash is simple and convenient for most in person purchases on the consumer side, which can help to reduce friction. especially in underbanked areas

paying with cash using USD

Advantages for Your Customers

First, nearly every business accepts cash in some form. Cash also incurs no interest charges like a credit card, as long as you don’t overdraw your bank account. Many people find that tangible currency is easier to manage. It’s easier to count down from the amount of money you currently have than figure out how you’ll pay your bills in 30 days.

Advantages for Your Business

As a business owner, completing a large sale or getting paid on a project always comes with a bit more satisfaction if you get the full amount in your bank account. Cash gains a lot of momentum in the “cash vs credit” fight because of little to no transaction fees for accepting it as a payment. Cash also reduces a businesses exposure to disputes and chargebacks, which is welcome protection in the current landscape.

In The Left Corner: Credit Cards

Selling at scale is made easier with credit cards. Credit Cards should include debit cards, charge cards and corporate cards. Credit offers more flexibility and protection than cash, with some tradeoffs because of it. With prevalence mostly in well banked areas and all over the internet, understanding credit is important to surviving the current business world.

Advantages for Your Customers

Depending on the type of purchase, customers may utilize credit limits extended by their card issuers. People are rarely dipping into their credit limit for a cup of coffee, but there are plenty of purchases where this is more relevant. Credit cards can help a lot when your computer breaks, when the engine in your car won’t turn over, or if you’re upgrading equipment in your office. 

Beyond that, credit cards have a few perks I think we all enjoy. Airline points, cashback rewards and status are a huge benefit of paying by credit card. Some card issuers even offer purchase protection in the event you’re not happy with your purchase. This is especially useful when buying products online or from new businesses. 

Advantages for Your Business

One advantage the both customer and business owner benefit from is access to credit. The more your customer can spend, the more they can spend…with you. 

While accepting payment by check is free, it can also take 2-3 business days for the funds to settle in your account after you deposit it. Deposits from card purchases can be in your account next day (depending on your service provider). 

This is especially useful if you sell a service or a product with recurring billing. Imagine owning a gym and following up with members every month to pay their membership dues. Not fun!

Processing credit cards does incur fees beyond those for processing cash but are often a welcome trade-off. Most businesses categorize it as a cost of doing business. 

The Verdict: Cash vs Credit

Cash and credit both have a bevy of benefits and don’t need to be exclusive to each other. Most physical businesses should accept both, and online businesses can consider accepting ACH Payments alongside credit cards. 

Major pitfalls of cash are mostly related to the lack of flexibility and vulnerability, which credit cards cover. If an emergency should arise, being able to say “this money needs to go here first”, is a valuable ability. However, so is getting paid as soon as possible.

To say one or the other is empirically better for a business isn’t reasonable. For eCommerce and high risk businesses, you’ll want to go with credit. For low margin brick-and-mortar businesses, you’ll want to go with cash. It really comes down to which works for your cash flow and other needs. Stay tuned and follow us on Facebook and LinkedIn for some tips on how to get your customers to pay the way you want them to.