Small Businesses and Cash Flow

One of the fundamental distinctions between large and small businesses has traditionally been the issue of working capital. Successful large company managers develop and execute business strategies with little thought to daily cash flow. For many small business people, nearly every decision involves a consideration of its impact on cash flow.  If you can accept credit cards, you can improve your cash flow.

 

The process of issuing statements and collecting accounts receivable presents a monthly headache to many small companies that are short on resources and cash. Even the acceptance of paper checks can create unacceptable risks to a small business. These constraints result in loss sales and customers.

Being able to accept credit cards changes this situation. With the Internet representing an increasing source of business for many companies, the necessity of accepting electronic payments is unavoidable. The ability to accept credit cards improves cash flow while keeping customers happy.

The Reality of a Cashless Consumer

We are not yet at the point of a totally cashless society. At the same time, many customers of all income levels increasingly depend on their credit and debit cards instead of cash. Many employees receive their paychecks by direct deposit. They handle very little cash, paying for most transactions with plastic.

Paper or Plastic?

The supermarket question now has added significance. Customers expect every business, large or small to accept credit cards. This process is actually a win-win for both sides. The merchants gain immediate access to funds that are transferred from the customer’s account to the merchant’s. The risks and hassle of handling cash is eliminated for customer and merchant. There is also a clear record of each transaction that doesn’t depend on keeping track of paper receipts.

A century ago a small business agonized over the necessity of adding a phone to its operations. The world of business is rapidly reaching the point where any small business without the ability to accept credit cards will be the same as one without a phone.

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