Dec 2, 2016
Contractors Accepting Credit Cards Make More
Money
*We do not provide merchant services. We suggest you start by
contacting you bank and doing your own research. I know from many
years while we were contractors it paid off handsomely so I am
simply passing on a mere "scrap of information" to help you get
more cashflow and profit.
Unplanned Emergencies - Are stressful now add "how am I going to
pay for this" to the mix and the anxiety increases exponentially!
For most people cash in short supply which leaves using a credit
card, getting a bank loan or selling something to raise cash as
their best options?
For Example - Homeowner with leaking roof is going to get it fixed
right away because rain water is damaging the interior of their
home including some irreplaceable sentimental treasures including
items passed down from parents and grandparents.
Who Will They Call? - You I hope! If you are their contractor and
you are actively working and the contractor they like and
trust.
Accepting All Credit Cards - Makes you the hero because they get
instant financing and your Electronic Armored Car takes your money
to the bank.
"Everybody wins, your client gets roof fixed, they earn airline
miles and other perks and you made a sale which you could have
easily lost to a competitor that accepts credit cards.
Add On Sales - Will more than make up for any fees you pay to
accept credit cards. Prove it to yourself by asking twenty
contractors that accept credit cards why they do and then ask
twenty that don't and make up your own mind. In our past
construction businesses when we accepted credit cards the profits
increased over 100% and if I told you how much I guarantee you
would not believe it!
Create additional cash flow by accepting credit cards. Why?
Everyone uses credit cards. When was the last time you wrote a
paper check? When you go to the Grocery Store, Drug Store, Office
Supply Store, Post Office, Gas Station or your Favorite Restaurant;
do you use your checkbook or your debit or credit card? How often
do you use an Electronic check when paying your bills? Do you even
have a book of checks for your checking account? Many of us would
say “No” – why do I need a checkbook when I have the routing
number, and checking number, or I pay all my bills using Online
Bill Pay. Not a problem, I setup automatic payments. I don’t write
checks because [fill in the blank with your answer].
It is the Holiday Season, time for Skiing, next is Spring Break,
then it is Summer Vacation full of fun, shopping, eating and
travel. Are you going to write a check, pay by debit or credit
card? More and more places decline to accept checks especially if
you are from Out Of Town. I want those reward points.
Credit Cards are here – Every year I write fewer paper checks than
I did the year before. I also know to make the system work
effectively there has to be a seller and a buyer.
Where would you be if you were out of town doing something special
and everywhere you went you were told: “We Don’t Accept Credit
Cards”? Oh, maybe you carry lots of cash – Just in case.
Perfect!
Comcast sent out a postcard expecting an increase in the use of
credit cards in 2017. Comcast was suggesting business need a faster
internet connection to deal with the increased Online Traffic. If
their information is true, then maybe the banks will be offering
credit to more people and raising the credit limits for their
existing customers. This suggests the economy may be
improving.
As a Contractor, don’t you want some of that new business?
Some contractors feel that taking credit cards costs too much, that
there is not enough margin to still make a profit. For years’
studies, have shown that a Client who uses their credit card they
will spend more money. Some American Express users will only
purchase using their American Express. Short Answer: Taking credit
cards has the potential of Plus Dollars that will increase your
Cash Flow to do the things you want. (Buying something new, paying
off something old, saving for future purchases)
Do you want to be deselecting your customers based on payment
method? Do you want to spend ALL THAT MONEY on Marketing only to
say No Don’t Choose Me because I refuse to accept your credit card
payment? By searching the various processors, you find a process
that will be a process at a reasonable rate. Depending on the
processor there maybe monthly statement fees.
Many invoice programs have a Merchant Services add-on. Apply for
it.
How much would you pay an outside sales person?
What is it worth to get a customer?
What is your marketing budget?
Isn’t Merchant Fees marketing?
Why I accept credit cards? The most obvious one. It’s Convenient.
You are across town, in a nearby city or located in another state.
Relying on the mail to promptly deliver mail is one of the reasons
that everyone uses their email (even if a paper letter follows)
Even faxes are now more in the form of junk faxes more that any
really important documents (except to your tax accountant at tax
time).
That was not the case 15 or 20 years ago (oops – showing my age) Of
course if you are local and come into the office I have a terminal
and can swipe your chip-enabled card otherwise I use a virtual
terminal.
Yes, I accept Visa, MasterCard, American Express, Discover Card AND
Paypal.
Yes, It is a higher rate when it is a personal designer rewards
card.
Yes, It is a higher rate when it is a Business Credit Card
No, I am not going to ask you to pick the credit card that will
have the cheapest processing rate.
Unless the card is swiped and a PIN number entered it is treated as
a Credit Card. You may have noticed other merchants who treat
Credit and Debit Cards all the time. The rate on a Debit card is at
the same rate as the Credit Card, but the Store Owner never has to
be concerned about employees seeing the PIN number.
Terminals are a great way to go.
Years ago, our terminal was wireless for onsite visits and
connected to cell phone towers and worked on all platforms. This is
the type of terminals you will see at Trade Shows, Home Shows, and
Conventions.
Wireless Terminals will work when individual cell phone coverage
may be spotty. As “Stuffy Accountants” we not a crazy using
the cell phone as a terminal. Cell Phones are too easily
stolen.
An alternative to a traditional payment processor is Paypal.
Almost everyone has a personal Paypal account. As a consumer –
apply for the Paypal credit. Typically, the credit line is not as
large the credit line with the bank. No harm if you never want to
use it. It is there if you need it and if you buy using Paypal, it
is easy to pay with Paypal credit instead of one your other credit
cards.
PayPal Credit has Special Offers emailed to everyone who has a
Paypal Credit Account.
Every business should accept Paypal to use when you want to; no
fees when you do not want to use it.
One of the features is that Paypal offers it the ability to send
electronic invoices to your clients.
Clients then can follow the link and pay. No chasing, to meet the
client and receive payment.
Works especially well for the Job Deposit or the final payment on a
job.
Fees only apply when you process.
Even if you do not intend to accept credit cards on a regular
basis, it is a good idea to setup a business Paypal account. It
will ready for when that One Client says YES if they can use their
credit card. Paypal is there if you need it. Ignore it when you
don’t. There are no Monthly Statement Fees.
Of course, your client has to be willing to pay you for your
services because they have to follow the link and submit
payment. Will the client pay this way – In many cases the
answer is Yes. Why, because it is easy for them; to take less than
5 minutes and pay then trying to connect up with you to give you a
check. Your clients have busy lives and may not be comfortable
leaving a check under the mat.
As a Contractor, you can now offer to finance.
Paypal currently offers a Paypal Credit with a special offer of 6
Months Same As Cash on purchases over $99.00 from Qualified
Merchants. (No, you are not waiting 6 months to get paid)
As a Contactor accepting Paypal; ask Paypal support to enable this
feature on your account. Then if your client is paying by Paypal,
this open will populate as a payment method. If Clients does not
have Paypal credit, it will give them an opportunity to
apply.
Think about all the projects that you can do that are around
$2000.00.
Are they Quick and Easy, and Profitable to do?
Would they lead to bigger jobs in the future?
Would they increase your Cash Flow?
Contractors - Anyone remembers having a relationship with your
local finance company. A packet of forms needed to be filled out,
sent into initial approval, even more forms to be filled out at the
end of the job. Then you had to wait for the check and make a
special trip to pick it up for the finance company. The key
word is WAIT, get signatures and WAIT some more. This type of
financing is for larger amounts and is still available (though
harder to find). Usually available to finance Windows or Heat
Pumps.
Leverage Your Credit:
Apply for a credit card at a Traditional Bank or Credit Card
company.
Apply for a Credit Card with Lowes and Home Depot.
Open a 30-Day account at your local Lumber Yard or Supply House.
Take advance of better pricing by using a couple primary suppliers.
They will treat you well.
The advantage of using 30 Day Accounts is able to effortlessly
assign a Job Name to your material receipts. All Construction
Suppliers have a place for a Purchase Order (PO). You do not have
to have an elaborate naming convention for jobs or issuing POs. Use
your Customer’s Name and Address.
This information will translate over to the priced invoice and then
can easily be added to QuickBooks
Beware Of Easy Credit When It Seems Too Good To Be True – It Might
Be!
Many merchant services have a division that offers easy financing.
This type of financing usually is “Factoring Your Accounts
Receivable.” We do not recommend you do this.
These lenders appear to offer an easy approval, but then it is
difficult to get the loans paid off. A few NonTraditional
Lenders have the payback terms similar to Pay Day Loans. If there
is No Cash Flow; another loan needs be gotten to make the mandatory
payments.
Sometimes talking to your vendors is a better
solution.
I could say more on the subject of credit or the lack thereof. Call
me, and we can talk more.
I trust this podcast helps you understand that outsourcing your contractors bookkeeping services to us is about more than just “doing the bookkeeping”; it is about taking holistic approach to your entire construction company and helping support you as a contractor and as a person.
We understand the good, bad and the ugly about owning and operating construction companies because we have had several of them and we sincerely care about you and your construction company!
That is all I have for now and if you have listened this far please do me the honor of commenting and rating podcast www.FastEasyAccounting.com/podcast Tell me what you liked, did not like, tell it as you see it because your feedback is crucial and I thank you in advance.
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This is one more example of how Fast Easy Accounting is helping construction company owners across the USA including Alaska and Hawaii put more money in the bank to operate and grow your construction company. Construction accounting is not rocket science; it is a lot harder than that and a lot more valuable to construction contractors like you so stop missing out and call Sharie 206-361-3950 or email sharie@fasteasyaccounting.com
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Need Help Now?
Call Sharie 206-361-3950
Thank you very much and I hope you understand we really do care
about you and all contractors regardless of whether or not you ever
hire our services.
Bye for now until our next episode here on the Contractors Success
MAP Podcast.
Warm Regards,
Randal DeHart | Contractors Accountant
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