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4 WAYS TO ACHIEVE OPTIMAL CASH FLOW WITH A CASH DISCOUNT PROGRAM
Interchange fees, processing fees, high chargeback ratios…..OH MY! These are common challenges that small businesses deal with when accepting credit card payments.
More importantly, these challenges have a direct impact on your cash flow, profitability, and sustainability.
In this blog post, not only am I gonna show you how you can virtually eliminate credit card processing fees, but also the significant benefits of having a cash discount program. Here are 4 surefire ways to achieve optimal cash flow and boost profit for your small business through a cash discount program.
How Can I Avoid Credit Card Processing Fees?
If you are a new business owner and are looking for the best payment processing solution, or a veteran who’s frustrated with uncontrollable fees and are looking for a better alternative, availing a cash discount program may prove to be beneficial for your business in the long run.
As merchants, we need to shoulder the cost of processing credit card payments, known as interchange fees, as well as other small fees associated with it. Interchange fees are usually 4% while other processing fees vary.
On top of that, we find ourselves in the middle of chargeback cases with fees as high as 15 to 40% of the transaction value disputed. To add to expensive chargeback fees, a business’ reputation is at risk if it incurs high chargeback ratios. This will make it harder for a business to get their bank applications approved and will limit their negotiating power for better rates and terms.
That is why a legitimate and effective cash discount program proves to be an attractive and sustainable option for merchants today.
Cash Discount Program Explained...
A cash discount program, as the name implies, is a customer payment strategy that provides a 4% discount to customers who pay in cash.
This option allows merchants to avoid incurring processing fees associated with credit card payments and even decrease the risk of incurring chargebacks since cash payments are encouraged.
While some providers enforce surcharging (which is prohibited by credit card companies) I would, as your merchant account manager, ensure cash discount practices that are in line with credit card company regulations. Continue reading to find out exactly how a cash discount program helps you increase your cash flow, maximize your revenue and more.
How A Cash Discount Program Helps You Achieve Optimal Cash Flow
1. Significant Savings On Processing Fees
Besides interchange fees, merchants also see other processing fees included in their monthly bills from credit card companies. This is because of the variations of interchange prices.
With a cash discount program, you can save on operating costs since you can now minimize interchange fees and other fees imposed by card companies. You can now allocate your revenue to other crucial aspects of your business such as product development and marketing strategies.
2.Decreased Chargeback Cases
As mentioned, having high chargeback ratios risk the liquidity and reputation of a business. Since customers are encouraged to pay via cash through a cash discount program, your business can minimize chargeback cases, in turn, lowering your expenses and maintaining a good business reputation.
3. Immediate access to sales proceeds for growth and sustainability
If you are preparing for an aggressive growth strategy, you need immediate access to your funds to supplement your marketing strategies and enable new business capabilities such as additional manpower or upgrading of technology.
The problem with incurring mostly credit card transactions is that it robs you immediate access to your sales proceeds. It takes at least one to four days before customer card payments are transferred to your business account, depending on the risk level of your business.
Since customers are encouraged to pay in cash to avail of the discount, you can use your sales proceeds immediately to grow or expand your business when and how you want to.
4. Easy Implementation
Apart from saving on costs and maximizing profits, implementing a cash discount program is relatively easy.
Explaining to customers that each item in the store is priced with built-in card service fees and that they can enjoy a 4% discount if they pay in cash is the best way to go.
For your business to comply with credit card regulations, though, all your receipts need to reflect the service charges on your products and show that cash payments eliminate these charges.
This is where a merchant account manager steps in. Our 15 years of experience in the credit card industry will be invaluable when we help you jump-start and implement an easy and effective cash discount program.
Experience a significant decrease of costs in your monthly bills, rest easy with minimal chargeback cases and enjoy the convenience of accessing your profits anytime with a cash discount program.
Book a consultation with me to learn more!
