Will That Be Check or Credit Card?

As every Freelance consultant knows, it is our pleasure and privilege to perform interesting and often mission-critical projects for clients whom we like and respect.  However, getting paid is the endgame and without exception, we all breathe a sigh of relief when the check arrives.  One vital element of maintaining adequate cash-flow in your business is to invoice on time, a topic that I covered a while back  Invoicing Inertia: The Cure .

Invoicing is only half of the battle, alas; it is smart and proactive cash management to make payment of invoices as swift and seamless as possible for the client.  In good economic times and bad, every once in a while clients will experience constricted cash-flow, even if they are the larger entity.  The ability to use a credit card to pay one of your outstanding invoices can be a great relief to them and could get accounts receivable into your hands as many as a few weeks earlier.

Let’s explore the basics of accepting credit cards and how to get started as a merchant who accepts the cards.  Twenty years ago, I spent a couple of years as an independent merchant payment services agent, selling Master Card, Visa, Discover and American Express processing services and card terminals to small business owners, so this topic is a nice walk through history for me.

Let’s start with some likely good options for a Freelance consultant.  Along with credit cards, you will also want to accept debit cards and eChecks.  You’ll choose the card not present processing option, so that clients can call you when the invoice arrives and phone in payment.  You may also decide to accept mobile payments, meaning that you will be able to accept client payments through your smart phone or tablet while you are at their office, or other location and to make that possible, you’ll also select the card present option.  In all scenarios, 48 hours post-transaction, the payment will be deposited into your business bank account.  You may not choose to invest in a (costly) credit card terminal unless clients visit your office.  Your card present transactions, if you do them, will most likely be mobile device payments.  You may decide against accepting American Express cards, since its processing fees are at least a point higher than Visa, MasterCard or Discover.

Call your business bank to get information about processing fees (about 2.5% of the transaction amount and 3.5% for AmEx cards).  There is also a separate fee called a transaction fee.  Freelance consultants will process few credit card transactions in a month and your transaction fee will be higher as a result.  In addition, there will be a service initiation fee and maybe also an annual fee.  Finally, there will be a statement fee if you’d like to receive  the hard copy of card, eCheck and mobile payments that you accepted.

The merchant approval process will center around an evaluation of your credit history and credit score, so if you need to pay down/pay off bills to improve your financial picture, do that first.  The associated merchant services fees will probably be impacted by your credit score.

If mobile payments will be explored, I can almost guarantee that Square will offer good service at very competitive processing rates  https://squareup.com/  You can also call Discover, Visa and Mastercard directly and find out what they’ll charge for your chosen merchant services.  Your bank may be where you buy eCheck processing services but then again, you may be able to negotiate a good merchant services package with your bank and get all that you want in one place.

Then there is the matter of security during the age of hacking, phishing and data breaches. If you belong to a business networking group, find a colleague who does internet services and ask how you take security precautions on your end.  The merchant services industry stays on top of security matters, but they are not infallible.

To sum up, be advised that although the various merchant services fees are an issue and you’ll want to secure the most competitive processing rates, good service and convenience matter.  As much as the process of expert payment transactions, you must seek out a system that will be reliable and user-friendly for both you and your clients.  A positive, glitch-free experience and excellent customer support are usually worth somewhat higher fees.  Consider it the cost of doing business. Getting paid by clients ASAP is, after all, the endgame.

Thanks for reading,

KIm

 

 

 

 

 

 

 

 

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