The Business Case for Credit Cards: 10 Factors That More Than Offset Card Fees 

Even in today's electronic business environment, some credit pros remain leery of taking credit cards for customer payments. The most common reason given is the fees, which can run as high as 2%, charged by the credit card companies. Paying such fees on smaller invoices is one thing, but cutting into the bottom line by having the charge mount up on large invoices is another.

Unfortunately, for virtually all companies, accepting credit card payments is an all-or-nothing proposition. Despite the cost, accepting credit cards could make very good business sense at your organization—if the true, overall cost of collections is factored in. Each credit executive must make the call based on the actual situation at his or her company—for example, by doing a cost analysis based on the typical number and size of the invoices they issue. Such a cost analysis can take into account the potential time, expense, and labor savings that result from taking credit cards, enumerated below:

1) Lower costs overall. Collection costs are reduced drastically as additional letters, follow-up calls, and other collection measures are eliminated.

2) Simplification. There are no concerns about NSF checks and associated bank fees.

3) Aid to sales. Although your company gets its money immediately, the customer will not be out of pocket for as long as 60 days, depending on its billing cycle with the credit card company. This can be a huge sales incentive you might discuss with your counterparts in marketing.

4) Faster collections. DSO usually improves as the funds tend to come in quicker.

5) Less collection calls. Once you've accepted a credit card from a customer, by keeping track of that information, your collectors can suggest credit card payment the first time they call, hopefully limiting the number of phone calls they have to make.

6) Certain payment. Availability of funds is assured.

7) Improved customer satisfaction.

8) Flexibility. Partial payments, although not desirable, can be readily taken. Payment plans using the credit card can be easily established.

9) Cash application is easier.

10) Cash flow improves.

By factoring in the true cost of collections, many credit professionals have reached the conclusion that taking credit cards makes a lot of sense. The smaller the average invoice size is, the more likely a company is to be receptive to credit cards for their B2B transactions. However, even companies with invoices that average in the hundreds of thousands of dollars are today accepting credit cards based on the considerations listed above.