Utilizing a Cash Discount Program For Your Business
Anyone that owns a business knows how important it is to have a payment processing solution that works for you. Without a proper payment processing provider or method, you might as well not open your doors each day. While many people assume that everyone wants to pay with plastic these days, credit card processing is not the only option available to you.
Cash discount programs are becoming increasingly popular and helping businesses circumvent expensive processing fees while also making sure that they provide the best service possible to their customers. If you have been thinking about implementing a cash discount program for your business, you might be wondering whether you are a good fit.
We’re going to cover all of the most important topics having to do with cash discounts and walk you through the various benefits of utilizing a cash discount program. With this knowledge, you’ll have everything that you need to decide whether to use a cash discount program for your business and why it is becoming increasingly popular by the day.
The first thing that you might be wondering is what exactly is a cash discount program? If you’ve never used a cash discount program for your business, you might be curious to know exactly what a cash discount program is and how it applies to your business.
It’s important to know exactly what a cash discount program is before you implement it into your business. Even though many business owners find it very helpful to use a cash discount program, it’s still important that you have a full understanding of the program and how it works.
A cash discount program is a payment structure that provides the customer with the option to pay by credit card or cash. If they pay with cash, they receive a discount price for their purchase. If they choose to pay with a credit card, however, they will pay the purchase price plus a surcharge that will cover the processing costs of your transaction.
The goal of a cash discount program is to offset your processing fees while also offering both payment methods to your customers. There are other benefits to be enjoyed by using a cash discount program, as well.
Though you might be wary of a program that asks your customers to pay more when they choose plastic, there is actually a lot to like about implementing a cash discount program for your business. The benefits that you can experience when you use a cash discount program for your business are extensive.
However, if you’re unfamiliar with cash discount programs, then you might be looking to learn more about these benefits. Here are some of the many benefits that you can enjoy for your business when you use a cash discount program.
The primary goal of a cash discount program is to lessen the burden that processing fees have on your business. While processing fees might sound like a very minor expense, they can actually add up over time and create a profit margin dent.
Providing customers an incentive to pay with cash without having to pay any fees is a way to claw some margin back while also providing them with the convenience of paying with plastic--for a small surcharge.
If there’s one thing that makes customers happy, it’s the ability to pay multiple ways. While a cash discount program certainly incentivizes the use of cash for your own benefit, it also leaves the door open to allow customers to pay with credit cards. They will have to pay a small extra fee, but they are usually happy to do so as long as they are made aware of it and why they are being charged a bit extra.
Most customers understand that the small businesses they patronize have processing expenses and are happy to help offset those costs.
Without a cash discount program, you could be left always guessing what you will be left with at the end of the day with regards to profit margin. That’s because, without a cash discount program, you’ll be paying credit card processing fees and lowering your margin on some transactions, and collecting the full cash price for other transactions. This can leave you scratching your head, wondering why your profit margin is so different each day.
If you want to make profit analysis easier and ensure you are meeting your margin goals, you could always implement a cash discount program so that the amount you receive is consistent regardless of the payment method.
Chargebacks may not seem like such a big issue, but they are actually a problem that affects businesses greatly. Because they are an electronic payment method, credit cards are susceptible to fraud and exploitation. This means that chargebacks could occur. Not only does remove money from your cash flow each month, but it also means that you must spend time and money battling various chargebacks. With cash, you will never have to fight chargebacks and if nothing else, it just tends to keep things much more simple.
We’ve established that cash discount programs are a force for good for your business and your customers, but you will never be able to enjoy the full range of benefits of a cash discount program if you don’t choose the right merchant processing company to work with.
A cash discount program is only as good as the company that is offering it. You want to work with a company that provides you with all of the knowledge, signage, and resources that you need to ensure that your merchant cash discount program initiative is a success.
If you want to achieve all this and more, then make sure that you choose your cash discount program carefully and place much value on the provider of your cash discount program.