Numbers don't make sense for me to accept CC, Why do you do it?

Discussion in 'Business Operations' started by Az Gardener, Jul 23, 2008.

  1. Az Gardener

    Az Gardener LawnSite Gold Member
    Posts: 3,899

    We were almost resigned to accepting credit cards and we just ran some numbers and it seems we would be just giving $$ away. Why do you guys do it?

    I calculated and if we went to cc it would cost us over 12-K per year conservatively speaking. I avg. less than 2-K in write offs per year and my cash flow since I pre bill is probably good in most peoples eyes. We are always looking for improvement but I really can't complain. I have about 35% of my July money still out and I will begin Aug billing tomorrow.

    Am I missing something? Never too smart to learn something new.
  2. PTP

    PTP LawnSite Bronze Member
    from Tulsa
    Posts: 1,383

    If what you are doing is working, keep at it.

    I require credit cards because of the simplicity of billing, the reduced write offs, and the overall convenience and control that I have. I operate a mowing only business and we have a relatively high turn over. We also are billing small amounts every week. I really don't want to chase 150 people every month for payments. I know that I wouldn't have to chase all of them but the problems of a few would make up for the cooperation of the many.
  3. lawnjocky

    lawnjocky LawnSite Member
    Posts: 184

    Once upon a time I accepted CC. It was because of a Post Office contract and a large commercial customer. I used Quickbooks and if I remember correctly the cost was about 4.5%. Once the customers changed payment methods I dropped it.

    I am strongly debating going back to accepting CC's and here's why.
    1. On average I loose 1% of gross revenues due to nonpayment. Using a CC or at least securing each customers account with a CC should eliminate that loss.
    2. A CC would make for faster payment giving me better control of my cash flow.
    3. I believe I could reduce my billing cost's (labor mostly) while giving the customer's more payment option's.
    4. I have had requests for it. Accepting CC's might give a slight competitive edge.

    The big question is can I not only offset the cost's of CC's but actually improve profits. I think it will but I need to study the issue more.

    AZ Gardener I don't know if any of this was useful to you but I thought I would post my thought's with your's to see what people say.
  4. Scagguy

    Scagguy LawnSite Bronze Member
    Posts: 1,522

    We accept them for several reasons. 1. If we are doing a landscape job for a new client and they want to pay with a CC, fine by me. I add 2.5% to my estimate. I do the same thing when estimating mowing service. It cost me nothing to accept and the customer gets to self finance his landscaping and/or mowing. 2. If, a customer goes past 30 days on his billing cycle, then we debit his CC. It's spelled out in our agreemant that we can do that. If a new customer wishes not to place a CC on file with us, then it's 2 months prepay. No exceptions. If they balk, I walk. 3. Sometimes people fall short of money in a given time of year. Things happen. So, rather than chase my money, the customer will pay by CC. I just looked a last months receivables. Out of 198 clients, 154 paid by EFT, 21 paid by check, 7 by CC, 16 have outstanding balances. Out of the 16, 12 of those are original customers that are not under contract and are typically 45 day payers. The rest....well, they ain't late yet.

    HOOLIE LawnSite Gold Member
    Posts: 3,981

    I switched to (almost) all customers paying via CC this year, this was in response to last year, "2007...the year of Slow Payers" For whatever reason, all of a sudden previously prompt payers were missing months and there was no predictablility at all regarding my cashflow. Everyone would pay eventually. The summer was the worst, I think it was August where by the middle of the month I had received something like only 25% of the July receivables.

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