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Credit Cards
There are two topics to consider concerning
credit cards: using and accepting them.
Using a Business Credit Card
As an alternative to paying by cash or check,
consider getting a credit card in your business's
name. Some credit card issuers offer rewards
programs to the holders of business cards
as well as to individuals. The best are "cash
back" rewards where a given percentage
of your annual purchases are paid back to
you. Thus, paying for supplies and services
(where you can) with such a credit card can
cut your effective costs by 1% or more (the
amount of the cash back reward) versus paying
by check.
Look for cards that offer no
annual fees.
Also look for cards that allow
linkage to
a bank account, automatically
sweeping payments
on the due date so that you avoid
interest
charges on unpaid balances.
Accepting Credit Cards
On the flip side, you must decide whether
to accept payment by credit card from your
customers. Accepting credit cards has its
advantages (you don't have to make change,
keep cash on hand, make cash deposits, deal
with bounced checks, and many customers find
credit cards a convenient method of payment)
that may attract more business in the long
run. However, on the downside, you must give
up a percentage of the sale to the credit
card company (called the transaction fee),
have credit card processing equipment, and
worry about charge disputes.
In the best of all worlds, all
your revenues
will come via cash, and all your
expenses
will be charged to a cash back,
no fee credit
card. |
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