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In this article:\nWhat is cash flow and why is it often an issue for small businesses?\n6 common cash flow issues and how to solve them:\nMany businesses don’t make it past the first couple of years due to cash flow problems. Whether they are spending more than they are bringing in or simply can’t keep up with payments, it becomes a real problem for business owners everywhere. \nIf your business is having cash flow problems, it may be wise to hire a financial consultant or CPA to help you analyze the situation. We’ll also give you some recommendations for solving common cash flow problems that businesses face. \nWhat is cash flow?\nCash flow is the term that refers to how the money moves in and out of your business. (And the term “cash” here doesn’t necessarily refer to hard currency or paper bills… it just means “funds.”) It isn’t just about profits, but all aspects of the funds that come in and how that money gets spent. \nIf you are coming up short on payments for necessary business obligations, can’t afford to grow with customer demands, or find that you’re spending more money than you’re bringing in, you have a cash flow problem. \n6 common cash flow problems small business face and how to solve them\nIt’s good to address cash flow problems as soon as possible so you can take adequate steps to solve them and keep your business running smoothly. Take a look at these common problems and determine if your business needs to work on them. \nOverestimating future profits\nUnpaid invoices from clients/customers\nUnorganized books\nSpending too much\nScaling too quickly\nNot maintaining cash reserves\nLet’s go over each and discuss ways to address them.\n1. Overestimating future profits\nMany business owners are overly optimistic about their business and how much they are going to make, especially when starting out. While optimism is a healthy trait to have, too much of it can hurt your business. \nOverestimating future profits can hurt your cash flow in numerous ways. You may make justifications for spending too soon or purchasing too much inventory because you are anticipating a good sales month. It’s important to maintain realistic expectations, and even underestimate so you don’t find yourself in trouble later on. \nHow to solve it:\nKeep yourself from overestimating future profits by using a solid method for sales forecasting. Use your history of sales to set expectations for each month, or if your business is relatively new, use real data from other businesses in your industry, and be realistic about how much of that share your new business is likely to get.\nNot sure how to do this on your own? Talk to a financial professional to get assistance in creating an accurate sales forecast. You should have a somewhat clear idea about sales forecasting if you did \nproper research before starting your own business\n.\n2. Unpaid invoices from clients/customers\nPerhaps the largest cash flow issue for most businesses is clients that haven’t paid their invoices. Lack of payment means less money for your business. \nThis can happen for a number of reasons: your client is having similar cash flow problems, they spent too much and suddenly can’t afford the service, they forget about the invoice, or maybe they simply don’t want to pay. \nIt’s important to keep track of and address unpaid invoices right away so they don’t become a large problem for you later on. \nHow to solve it:\nThere are a few ways you can resolve your unpaid invoice problems with customers:\nRequire a deposit up front\nSend out regular reminders when invoices go out (email and text reminders with a link to a payment option are great)\nHire a debt collector to assist with problematic clients (unfortunately many people don’t pay on time unless they are threatened with “collections”)\nConsider using an invoice factoring company\n3. Unorganized books\nStaying organized is a huge factor in keeping good cash flow and knowing where your money is. Unorganized bookkeeping can and will hurt your company if it continues for too long. \nUnorganized books can result in late fees for invoices you owe, missing client payments that you haven’t received, unexpected costs, and more. It’s important to keep your finances organized from the start so these issues don’t build up and become a real problem.\nHow to solve it:\nIf you are not an organized person or you are too busy to keep organized records of your finances, consider hiring a bookkeeper to help you out. A bookkeeper can help you keep good records of your incoming and outgoing cash flow so issues can be addressed early and nipped in the bud. \n4. Spending too much\nSpending more money than you have coming the simplest definition of a cash flow problem. If you don’t have the money coming into your business, you shouldn’t be spending it. \nOf course, in most cases you do have to “spend money to make money,” so you need to find that balance and anticipate costs that are necessary so you can make good decisions about when it’s okay to spend money even if you don’t necessarily have incoming cash flow yet. \nHigh overhead expenses can become a huge problem here if you don’t have enough incoming cash flow because these are generally expenses that you have no matter what, like rent, utilities, phone and internet bills, and more. \nHow to solve it:\nThe best way to address this issue is to cut costs where possible and limit your spending. Here are a few ways you can do that:\nAudit your expenses to determine what you can cut. This may bring light to unnecessary payments or subscriptions that you have\nGet quotes from different companies for your phone and internet. Find more competitive rates\nAutomate tasks that you generally hire people to do \nGo paperless with your invoicing and record keeping\nGet lean on office supplies, luxuries in your business space, “expensed” meals, and wherever else makes sense \n5. Scaling too quickly\nTrying to grow your business at a too-rapid pace can hurt you in the long run. If you don’t have the incoming cash flow to support your growth, your business is likely to fail if you’re not smart about scaling. \nThink about this example: you land a huge client that will bring in a large payment and ongoing future business, but you need extra help to finish their project, which will still take six months. You hire three people to help with the project, but after the first month you don’t have enough money to keep up with their paychecks. Now you’re in trouble.\nHow to solve it:\nBe smart about scaling. Only take on projects and clients that you have the current cash flow to produce results. \nIf you are faced with an opportunity to scale more quickly, consider taking out a \nbusiness loan\n to help you address the cash flow issues that may arise. \n6. Not maintaining cash reserves\nEvery business should have an adequate amount of savings in store to address unexpected cash flow issues. Disasters occur, clients leave, and unprecedented events (like, say, a global pandemic) take place that we never could have predicted. \nIn these circumstances, the amount of cash reserves you have can make or break your business. Even with adequate sales forecasting, we can’t always predict the future. So, it’s important to make sure you have something to fall back on when unexpected events take place. \nHow to solve it:\nIt always a good idea to keep at least two months of operating expenses saved up so that even if you do have a slow sales month or disaster strikes, you are able to make payments to keep the lights on and pay your employees. \nIf the problem persists beyond your reserves, you may consider pulling out a \nbusiness loan\n and looking at ways to gain more business. 

6 common small business cash flow problems and how to solve them

In this article:\nBest free receipt tracking apps, with features, pros, and cons\nAny business owner’s receipt pile can quickly grow out-of-hand and become overwhelming to manage. And it’s important to make sure you have a good handle on receipts for business expenses and keep them well organized to ensure a smooth tax season (whether you’re the one taking care of your own taxes or not). \nThis article will cover some fantastic free options to help you organize and keep track of your receipts along with the pros and cons of each app.\n7 best free apps to track your business receipts (review of features, pros, and cons)\nEach of the following apps are free, however, some of them have additional add-ons that you can purchase or even desktop/in-browser solutions that you can subscribe to. \nExpensify\n(Image)\n\nExpensify allows you to scan in receipts by snapping a quick photo, making it easy to keep track of personal and business expenses. Sort and categorize your receipts or even send have the app email them to the right person who handles your expenses. \nExpensify also has a card that you can sign up for that can be connected to your business bank account. Using this card will automatically place your business transactions into app for easy management. (The card is part of the Expensify subscription plan which is $4.99/month per user and does not come free with the app.)\nFeatures of the app include:\nUnlimited receipt scanning\nExpense management\nTravel booking through Concierge\nApproval workflows\nMileage tracking\nReceipt integrations (Uber, Lyft, and others)\nAccounting integrations (QuickBooks, Xero, NetSuite, and more)\nCustom reports\nPros of the Expensify app\nEasy to learn and use\nSet regular reminders\nSaves time and money\nCons of the Expensify app\nConcierge pops up to give tips now and then, this could be annoying to some users (but it could also be super helpful)\nEmails from Expensify are sometimes duplicated\nAutomated receipt processing doesn’t always work, so make sure you check the categories when uploading your receipts\nWave\n(Image)\n\nPreviously Wave had an app called Receipts by Wave, but it has been incorporated into this Wave Invoicing app that provides an all-in-one solution for your business, from sending mobile invoices to managing expenses. \nYou can easily connect your bank accounts to the app to manage your transactions, and it has a Guest Collaborator feature that allows you to share access with an accountant, staff member, or business partner. \nPlus, if you need to send customer invoices, this is a free solution that you can start with. \nOther features of Wave Invoicing include:\nUnlimited receipt scanning\nAccounting reports\nInvoice data backed up and securely stored in the cloud\nPros of Wave Invoicing app\nFree\nEasy to use and understand\nProfessional-looking invoices\nAllows creation of new categories\nCons of Wave Invoicing app\nLimited capabilities with reporting\nPredictive categorizations aren’t always right\nFreshBooks\n(Image)\n\nFull disclosure: This app is only free for the first 30 days and no credit card is required to start using it. After that time, you will need to subscribe to keep using it. But that gives you a good amount of time to decide if you like it. FreshBooks has pricing options starting at $4.50/month.\nFreshBooks is another all-in-one accounting software for small businesses. The FreshBooks app allows business owners to take their invoicing, expense tracking, and even time tracking on the go.  \nFeatures include:\nTrack expenses by taking photos of receipts\nProfessional invoices\nAccept online payments\nClient conversations \nTime tracking\nPros of FreshBooks app\nEasy to learn and use\nReliable invoicing\nGreat customer service\nCons of FreshBooks app\nFreshBooks has multiple apps out there, the classic version and this newer one, and they each have some different capabilities. This newer app doesn’t have some features of the classic app\nDivvy\n(Image)\n\nDivvy touts itself as the world’s first free, fully-automated spending and expense management software. It allows you to track business expenses with real-time budget insights to help you avoid going over budget. \nYour entire team can have access to the app to be able to make quick requests and approvals for budgets, and it allows the accounting team to see and record expenses in real-time. \nFeatures include:\nAutomatically record and submit expenses\nItemize spending data\nGlobal currency compatibility\nOnline card generator\nIntegrations with accounting software (QuickBooks, Xero, NetSuite, and more)\nPros of Divvy app\nIncorporate budgets for individuals and departments\nGreat customer support\nEasy to use and understand\nCons of Divvy app\nLimited capabilities with accounting software integrations\nShoeboxed\n(Image)\n\nIf you need something simple to just keep track of receipts and mileage, this could be just what you’re looking for. Take a picture of your receipt and let the app automatically pull all of your data like vendor, transaction amount, payment method, and date for you. \nFeatures include:\nUnlimited receipt scanning\nCategorize receipts\nCreate and send expense reports\nSoftware integrations (QuickBooks, Wave Accounting, Excel, Xero, and more)\nPros of Shoeboxed app\nEasy to use\nInvite multiple users\nSaves time and money\nCons of Shoeboxed app\nCan take a little time to load new receipts\nLimited functionality\nSmart Receipts\n(Image)\n\nSmart Receipts is another simple expense and mileage tracker. It also has fully customizable reporting capabilities so that you can easily keep track of your finances and/or send reports to accounting and business partners. \nFeatures include:\nUnlimited receipt scanning – take photos, import existing photos, import PDF receipts\nCategorize receipts – credit, edit and delete categories\nAutomatic exchange rate processing\nGenerate custom PDF, CSV, and ZIP reports\nAutomatic backups with Google Drive\nPros of Smart Receipts app\nEasy to use and understand\nSave time and money\nGreat for capturing receipts while traveling\nCons of Smart Receipts app\nLimited sorting/filtering capabilities\nAutofill data from receipts isn’t free (but this can be purchased)\nClear Scan\n(Image)\n\nThis app is for the people that still enjoy the DIY aspect of managing their receipts. It is simply a document scanning app. So you can take a photo to scan a document (or receipt) and then upload it to your file managing system–Google Drive, OneDrive, Dropbox, etc. \nIf you send everything over to an accountant, this could also be a good solution for you. Just take a photo from the app and send it over. Then you have it stored in one place, rather than having to look through the photos on your phone if you need to resend it. \nFeatures include:\nCreate folders and subfolders for categorizing\nExtracts text from images\nBackup and restore data\nConvert images to PDFs\nPros of Clear Scan app\nQuick and easy to use\nGreat scanning capabilities for a phone\nCons of Clear Scan app\nContains ads in the free version\nScans aren’t always perfectly clear\nThere you have it! Good luck, and have fun tracking your receipts.\nSources:\n
\nhttps://www.trustradius.com/products/expensify/reviews\n
\nhttps://www.trustradius.com/products/wave-accounting/reviews\n
\nhttps://www.trustradius.com/products/freshbooks/reviews\n
\nhttps://www.trustradius.com/products/divvy/reviews\n
\nhttps://reviews.financesonline.com/p/shoeboxed/\n
\nhttps://play.google.com/store/apps/details?id=wb.receipts&showAllReviews=true\n
\nhttps://play.google.com/store/apps/details?id=com.indymobileapp.document.scanner\n

7 best free receipt tracking apps (review, features, pros, and cons)

In this article:\nWhat is an alternative payment method?\nCommon types of alternative payment methods\nAdvantages to accepting APMs\nHow to get your business set up to accept alternative payments\n“Business” has at its core the process of buying and selling, or the exchange of goods and services for payment. Your small business isn’t going to be around very long if you give your products and services away for free, so you obviously need to get set up to accept payments.\nMost successful businesses (by far) are set up for \ncredit card processing\n. However, a growing number of consumers are looking for “alternative” payment methods to use, even when dealing with small, local businesses.\nLet’s look at some common alternative payment methods and why you should consider using one or more of them.\nWhat is an “alternative payment method”?\nDefinitions vary depending on context, but for our purposes here when discussing small businesses, an APM or alternative payment method is any method of transferring funds from consumer to business other than the usual payment by cash, credit/debit card, or check. \nSome popular APMs include prepaid cards, store cards, eWallets or digital wallets, mobile payments, money orders, bank transfers, and “buy now, pay later” instant financing programs. Some of the big names currently are APMs like Apple Pay, Google Pay, Samsung Pay, Fitbit Pay, Zelle, PayPal, Venmo, Square Cash, Alipay, Afterpay, and Affirm.\nPrepaid cards generally work like any other credit card, so for the business owner, you usually don’t have to get “set up” to accept this particular form of APM if you’re already able to accept credit or debit cards. \nAnd not many local businesses have the wherewithal to extend in-store lines of credit or “store cards” (anyone remember the old Sears card?). However, since many of today’s customers use mobile payment, digital wallets, or other payment services providers, you should consider discussing these types of payment with your merchant services provider or payment processor, or whoever helps you process digital payments or facilitates your POS (point of sale) hardware and software.\nAPMs came into being to reduce payment friction. Example: PayPal\nPayPal was the first widely accepted alternative payment method and gained popularity during the explosion of the Internet in the 1990s-2010s. PayPal was for a while the only practical way two non-commercial parties could pay each other online without getting a bank transfer involved, or sending a check, money order, or cash via the mail.\n(Image)\n\nPayPal got so popular on eBay (since it made the sending and receiving of funds between eBay buyer and seller so much simpler) that eBay bought PayPal for about 1.5 billion dollars in 2002, and the two companies grew together until eBay split PayPal off into a separate publicly traded company in 2015. PayPal is worth about $100 billion currently.\nPayPal payments can be sent online (via the website) or using the PayPal app, and funds can be drawn from a linked credit or debit card, or a linked bank account. PayPal has also issued its own credit card, just to confuse things further.\nVenmo (owned by PayPal) was intended to be a “social networking” app that allowed P2P (person to person) payments. They’ve (wisely) dialed back on pushing the social networking functionality over the years but Venmo has exploded in popularity because it’s very quick and easy to use, and is free for friends or acquaintances to connect their bank accounts to the Venmo app and pay each other, split a check, etc. \nHowever, there's still considerable "friction" for individuals or small businesses that want to accept payments via Venmo, since you have to have your buyers/payers sign up for accounts, download the app, and connect their bank accounts before they can make payments.\nWearables, “smart cards,” and other contactless payments\nWhile so-called “contactless” payments may certainly be considered “alternative” compared to the more traditional way of processing credit card payments, they may or may not fit into our definition of an APM, depending on how they are funded.\nContactless payments can be made via certain credit cards, debit cards, key fobs, smart cards, “wearables” (such as wristbands, watches, rings, etc.), or other devices including smartphones, that are capable of using radio-frequency identification (RFID) or near field communication (NFC). These cards and devices allow payments to be made without actually requiring any physical contact between customers or their devices/cards and your payment terminal or employee, and without forcing the customer to carry any other form of payment or ID.\ncustomer paying with a contactless payment wearable\nThis has obvious advantages in speed and convenience for both businesses and customers, and is particularly useful during a pandemic since there is no required physical contact between the device/card/wearable and the payment terminal, nor the exchange of any item between cashier and customer.\nSome well-known contactless examples include Apple Pay, Samsung Pay, Google Pay, and Fitbit Pay. Your bank’s mobile application may also support contactless payments, and you more than likely have a “smart card” in your wallet. These are simply standard credit cards with RFID chips embedded in them that allow near-field validation of your card at compatible payment terminals.\nWhy should local businesses consider accepting alternative payment methods?\nToday’s customers expect that businesses they like will move toward a more “omnichannel” business model for providing goods and services via multiple avenues, allowing for convenience and flexibility for their customers.\nThe same thing goes when it comes to payments. The more ways you have for customers to pay, the better it is for them—and thus the better it is for you.\nIf you suddenly had a lot of people coming to you wanting to pay with, say, gold bullion, you’d probably quickly learn all you could about gold bullion, determine how to accept it and value it correctly, and convert it into a form of currency you could use.\nIt’s the same thing with APMs. Cash is falling in popularity, particularly among younger consumers, who may also be skeptical of traditional credit cards (and don’t even think about asking them to pay with a check).\n\nModern customers expect multiple avenues to pay, even from small, local retailers, and some customers don’t even carry wallets, cards, or cash anymore. A smartphone or even a “wearable” can be enough for a postmodern consumer to carry out daily life and typical in-person purchases.\nWhat types of alternative payments should I consider accepting?\nFor the purposes of this article we are going to treat all “mobile payments,” app-based payments, online payments, digital wallets, and digital payments services as functionally identical. \nWhether customers’ funds are sourced from a linked bank account, a credit card, a PayPal balance, or stored digitally on the device in question is not really the main point where business owners are concerned.\nWhat you care about is how complicated is it to accept these payments, how much is the fee (if any), and how easy is it to get set up with your current POS system (if you have one). The best way to get a relevant answer to these questions is to discuss them with your specific payment processor, merchant service provider, or business advisor familiar with the payments process. Or check out \nSolo.co\n and learn why it's perfect for small businesses, solopreneurs, freelancers, contractors, gig workers, and more!\nGenerally the fee (when a fee is charged) is similar to what your processor would charge you to accept a traditional credit card payment (perhaps around 3%) but in some cases it can vary, and it may be lower, which is another reason you might consider APMs.\nZelle is free for consumers and person-to-person transfers, but your bank may charge you a fee depending on several variables. Your business account will also need to be with a bank that offers Zelle if you wish to accept that type of payment.\nKnow your customers and tailor your APMs to them\nAnother thing to consider is your customer base. In some places and for some businesses it may make sense to go through the process to accept, say, Fitbit pay, and in other places it may not, due to lack of customer adoption. Talk to your customers and fellow business owners and see what people are using and what they want to be able to use.\nAlipay is a good example as well. Alipay is an online and mobile payments system that is huge in China and growing in popularity in the US, particularly where there are large Chinese populations or in locations where Chinese tourists frequently visit. \nIf this describes your business, you may want to get set up to accept Alipay, because it can greatly reduce friction for payments where communication is a problem and cross-border payments can be complicated. If you never deal with any customers wanting or expecting to be able to pay using Alipay (or WhatsApp pay or whatever else), it may not make sense for your business.\nDepending on what kind of store you run, you might consider partnering with an instant consumer financing company like Affirm or Afterpay that allows customers to get their purchases immediately (after a short approval process) and pay over time, sometimes without any fees. \nGenerally the merchant (you) get your full amount up front (minus the financing company’s fee), and the 3rd-party financing company handles any installments, fee collection, and the repayment process from there. This type of purchase is exploding in popularity and it might make sense for you.\nHow do I get set up to accept alternative payment methods?\nChances are, you already have the capability to accept one or more APMs. Many POS systems (depending on the processor) already come with the capability to accept mobile- or app-based payments.\nYou may need to upgrade your POS hardware if you don’t have the capability to accept “contactless” payments made with RFID/NFC enabled cards, phones, and devices, but since more and more customers are moving toward this type of low-contact payment, it may be worth it to you. \nBartering, trading, discounting\nWhile not technically part of the strict definition of “Alternative Payment Methods,” bartering or trading for goods or services is pretty much the O.G. of the payments world, and in some business models this “alternative” can still make sense, depending on the attitude and willingness of the parties involved.\nA dairy farmer might trade fresh milk to a local piano teacher in exchange for weekly lessons. A baker might barter a couple of dozen hot donuts for a local printer to make up some business cards. A tax preparing firm might offer free analysis and tax return preparation to all members of a local chamber in exchange for waiving annual dues. These are just a few examples of how this might work.\nOf course, be sure to comply with all regulations related to your industry and adhere to proper tax laws.\nSolo can help you accept APMs\nSolo is the easy way for small businesses, solopreneurs, freelancers, and sole proprietors to pay and get paid. Buyers can pay you using cards or APMs like Apple Pay or Google Pay, and they don't have to sign up for an account to pay you! Check out \nSolo.co\n and learn why it might be perfect for you.

What are alternative payment methods and why should your business consider them?

For ordinary consumers, paying bills with a credit card can be a great way to rack up rewards points, build credit, and get more flexibility with payments. But can businesses get similar benefits by paying their expenses, vendors, and suppliers with a credit card?\nThe answer is yes, but with some caveats. The first is that not all vendors and suppliers (or mortgage companies, utility companies, internet providers, etc.) even \naccept\n credit cards. Roughly half of American businesses still need to pay at least 50% of their bills using paper checks. (More on this later.)\nAnother “gotcha” with using your business credit card to pay expenses and bills is that you have to be very careful to pay it off on time each month, otherwise you end up paying significantly more for your expenses, due to credit card interest charges (or heaven forbid, late payment fees).\nAlso, though using a credit card to pay business bills can help \nimprove cash flow\n, you have to resist the temptation to pay bills with a credit card if you don’t have the cash to pay the bill—or won’t have by the time the credit card statement is due. Never use a credit card to pay a bill if you don’t know how you’re going to come up with the money.\nBenefits of using a credit card to pay business expenses\nNow let’s go over some of the benefits of using a credit card to pay your business bills and expenses.\nMiles, rewards, perks, cashback, discounts\nNearly all credit cards offer special member advantages and perks, and for small business owners this can be a huge asset. \nBusiness owners who rack up lots of points or airline miles using one of these cards can pay for a significant portion or even all of their business travel expenses, get discounts for business expos, enjoy free concierge service, get free car rental insurance and discounts, and much, much more.\nSome small business owners use their cashback bonuses to buy equipment, pay for employee team-building events, or even pay utilities. The uses for rewards points/cashback bonuses are almost limitless, and the more you spend, the more rewards you earn.\n\nPaying by card saves time and can improve cash flow\nMailing a check can take quite a few days—or even weeks—process the payment. When you pay your expenses, vendors, and suppliers using a credit card, you speed up the process and free up cash for other business expenses.\nNow, please note: “free up cash” does not mean you can simply put those bills on a credit card and then forget about them. You obviously need to pay them off. \nHowever, You get a grace period, or effectively a 0% interest loan, when you use a credit card… as long as you keep paying off your balance on time every month. Since you haven’t spend that cash or sent it out as a check, you can use it to run your business or whatever else you need until your credit card statement comes due.\nRegularly using your card improves your business credit\nYour business has a credit score (from 1 to 100) just like you as a consumer do. The better your business credit is, the lower your rates for business loans, financing on essential equipment, etc.\nIf your credit card company finds you regularly pay your credit card statement on time and use much of your available credit, you can typically ask them to increase the credit limit available to your business which can further improve your business credit rating (and allow you more flexibility and more purchasing power).\nAgain, you need to make very sure you’re paying your card balance off on time to keep these benefits coming.\nPutting all your bills on one card simplifies bookkeeping \nWhen you have to keep track of expenses and bills for your business in addition to running your business, simpler is better. If you can move all of your monthly business expenses, rent, utilities, supplier payments, etc. to a single card, it’s much easier to keep track of.\nSolo makes it easy to pay and get paid\nSolo is not a bank, but is a financial super-app for small businesses, freelancers, sole proprietors, contractors, and more. Solo is the easy way to pay and get paid. Your customers don't have to sign up to pay you, and can use several payment methods, including Apple Pay, Google Pay, and cards. QR codes make it easy to get paid, and you can easily cash out your Solo account balance for free, or spend it using your Solo Cash Card anywhere Visa is accepted. Learn more at \nSolo.co\n.

Is it smart to pay business bills using a credit card?

In this article:\nThe absolute least expensive way to accept credit cards\nWays to cut down credit card processing costs\nCheapest processing options for small business\nA big reason that many small business owners don’t accept credit card payments is because of the fees that are assessed as their customers make purchases. These fees can add up fast, but not having a credit card payment option can be a huge disadvantage to any business. \nToday’s customers expect even roadside carts and truly small businesses to accept credit cards, and the fees associated with that method of payment shouldn’t be enough to keep you from getting started. \nWe’ll talk about some of the cheapest options for credit card processing so you can find a good fit for your business. \nWays to cut down costs of credit card processing \nFirst, we have a few tips to help you reduce the cost of credit card processing. \nAvoid multi-year contracts\nWhether you opt for a third-party payment processor or not, try to avoid committing to any lengthy contracts. If possible, choose an option that either doesn’t require you to sign a contract, or sign for a year at a time. You may wish to switch services down the line as your business grows, and multi-year contracts often have heavy termination fees. \nHowever, be aware that you will most likely get the lowest rates if you opt for a traditional processor who offers “interchange plus” pricing. And if you want the absolute lowest-cost processing, you will likely need to sign a contract with a traditional processor. Plus, longer contracts can often result in lower overall costs because it’s beneficial for your processor to serve your business for as long as possible.\nWatch out for added fees for services you may not need\nBeyond heavy termination fees, there may be other fees included in your monthly invoices. As you are getting quotes from various service providers, ask for samples of itemized invoices so you can see the different charges that they assess. \nSome processors include potentially helpful add-on services by default (for an additional fee), and will automatically bill you for these services unless you specifically opt out before you sign a contract.\nThese services may be very useful for your business, so make sure you understand how these value-added services can benefit your business before you ask your processor to omit the services and any associated fees.\nAsk your processor or merchant level sales agent for discounts and other price breaks\nWhen it comes to credit card transaction fees, there are two main approaches: interchange plus and flat rate. Every credit card network (VISA, Mastercard, AMEX) charges an interchange fee that your service provider pays for each transaction. Because of this, most providers have some kind of markup on that cost so they get their cut. \nTraditional processors typically use “interchange plus” pricing, charging the current interchange rate plus their markup. Interchange rates are subject to change so you might not always be paying the same fees on transactions. \nHowever, the interchange rate is usually the smallest percentage of the fees you’ll likely be paying when you accept credit cards, so your final costs will likely not vary that much, even if you go with interchange plus pricing.\nIt’s in the processor’s markup and additional fees and services where you can negotiate a little wiggle room with your processor or merchant level sales agent. They obviously need to make a profit, but they also want to keep your business, and if you develop a trusting relationship with them you can often ask for preferred rates or get add-on services at lower costs, or even get “value added” services for free.\n\nA note on third-party payments facilitators or “aggregators” \nThird-party payment facilitators (i.e., Square/Block, Stripe, etc.) are potentially very straightforward to get small businesses set up and processing. Providers like the new third-party payments facilitators that use “flat rate” pricing charge a flat rate regardless of the fluctuation of the interchange fee. This can be somewhat helpful because you always know what you will be paying and won’t have to anticipate changes in costs as the interchange rate fluctuates. \nHowever, be aware that flat rate processing is nearly always more expensive than traditional interchange plus pricing, so make sure to weigh the costs against the needs of your business. Generally, a traditional processor can save you about 20% in processing fees compared to a third-party payments provider charging you a flat rate. \nRates and fees vary though, so be sure to check out all your options.\nWhat is the absolute cheapest credit card processing option?\nAs discussed above, if you want the absolute cheapest way to accept credit cards, you’ll probably want to sign up with a reliable credit card processor and negotiate a good “interchange plus” processing fee structure rather than using one of the new “aggregators” that uses flat-rate pricing.\nThird party payments facilitators currently charge between about 2.4% on the low end (if you meet certain requirements) to about 3% or more on the high end, plus an additional .$10-$.15 fee per transaction, to process credit cards. This may not sound like a lot, but for small businesses that sell a lot of low-dollar items, or those with very small profit margins like restaurants, these flat rate fees can make it actually unprofitable to accept credit cards in some cases. The ease of entry and convenience of use may make it worth it, though.\nIt does take more time to get set up to accept payments with a traditional processor. But your processor’s local merchant level sales (MLS) agent can be a very useful business advisor, particularly about new technology and offerings in the payments world. Not many small business owners have the time to keep abreast of all the latest technology and payments innovations, and your MLS agent is very interested in keeping you as a client.\nSo, you can typically get lower rates from a traditional processor, but you'll definitely want to shop around. 

What’s the cheapest way to accept credit cards?

In this article:\nHow small business funding can pay for itself\nHow you can get better rates on business capital\nWhy even large businesses still use business lending\nHow a small business loan can improve your business’s credit rating\nWhen economic, environmental, or medical disasters hit, small businesses are often hit hard. During the COVID-19 pandemic, millions of businesses signed up for Paycheck Protection Program (PPP) loans issued by the authority of the Small Business Administration (SBA) under the CARES Act, due to the devastating economic effects that resulted.\nPrevious disasters, recessions, and weather events have similarly driven local businesses to acquire emergency funding, but physical and economic disasters aren’t the only reason small businesses need a reliable and ready source of small business capital.\nLet’s go over a few reasons why you shouldn’t be afraid of taking out a small business loan, and then we’ll talk about some potential sources of funding.\nNote:\n this article is for informational purposes only. Consult your business attorney and/or financial counselor to make sure a business loan makes sense for you.\nMost businesses need funding, financing, emergency loans, or other capital during their lifecycles\nIf you are reluctant to take out a business loan because you think it means you’re somehow lesser than other businesses, get that thought out of your head right now. Many businesses can’t even get started without the help of a small business lender, especially if the owner doesn’t have a lot of support from family and friends for start-up costs. \nAdditionally, most, if not all, small businesses find themselves in need of business capital multiple times throughout their life-cycles, for expansion, improvement, new equipment, repairing damage from fire or flood or vandalism, hiring, paying down higher-rate loans, and many other reasons.\nEven huge, enterprise companies with lots of cash reserves are constantly borrowing funds to maintain cash flow, upgrade equipment, start new divisions, acquire other businesses, or for other financial purposes. \nSo, forget any supposed stigma related to borrowing money to save or improve or grow your business. That’s what the lender is there for.\nYou can theoretically make money by borrowing business capital at a lower rate\nOf course you should only borrow money if you can pay it back on time and in full. This is the first lesson in Business Loans 101. That said, there’s the possibility that you can actually make money by borrowing. \nLet’s say you see the potential for growing your business, offering a new service, or selling a new product that brings in significantly more profit, but you need a business loan to make it happen. You can secure business financing at a reasonable interest rate, invest that funding in your improvements in facilities or services or products, and potentially make enough profit that it covers the cost of the interest on the business loan… and then some.\nIf you theoretically borrowed at 7% and you earned 10% more than before, you basically got paid 3% for taking out the loan when all is said and done. And the improvements and increases in revenue don’t go away after you’ve paid the loan off.\nUsing small business financing can improve your business credit rating\nSimilarly to how your personal credit rating can be improved by maintaining a line of credit or other type of loan and paying regularly and on time, your business credit rating can be improved if you borrow funds and pay regular, on-time payments. This shows creditors and reporting agencies that you are a responsible business owner who pays your bills on time, and you can be trusted with larger loans. \nIt may seem contradictory that borrowing money (and paying as agreed) seems to show lenders that you don’t actually have any real \nneed\n to borrow money (and thus can be relied upon to pay it all back as agreed), but that’s how it works.\nRegular small business loan customers can ask for lower interest rates and other perks\nSimilarly to how an improved business credit rating can improve your chances of getting a better/bigger loan, once you’ve established a trusting relationship with your lender for a business loan, you can sometimes get better rates, lower fees, or other perks that are reserved for “elite” customers.\nSome lenders will offer 0% origination fees on your next loan, waive any prepayment penalties, lower your interest rates, and offer other perks that can save you a lot of money. But they usually only offer these benefits to current or former borrowers. So, you need to borrow money in order to save money (next time).

24 articles found in “Business finances”

6 common small business cash flow problems and how to solve them

7 best free receipt tracking apps (review, features, pros, and cons)

What are alternative payment methods and why should your business consider them?

Is it smart to pay business bills using a credit card?

What’s the cheapest way to accept credit cards?

Why you shouldn’t be afraid of small business loans or financing

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