In a cash discount payment processing program, customer payments are discounted from full prices at a certain rate. This is very different from a standard credit card processing program where the entire price of an item is charged to a customer’s credit card at the time of purchase.
Cash discount programs have been around for years and have grown in popularity with small business owners since they can help boost revenue.
How can cash discount programs help my business?
Cash discount programs are beneficial to small business owners because they increase the amount of sales revenue collected in a period of time. This translates into higher profits for you, as well as increased cash flow within your business.
A company’s cash flow is crucial to its success. It dictates the discounts you can offer, how much inventory you can purchase, and whether or not you can make payroll.
Making sure customer payments are processed quickly is essential to a cash flow system. This is where a cash discount program comes in – it allows your business to receive money faster from customers by offering them an incentive for paying early.
How is a cash discount rate determined?
Cash Discount payment processing programs are based on a per-transaction fee instead of the traditional credit card processing method, which charges a percentage of total sales or an additional flat rate per transaction. This means you pay for your cash discounts monthly rather than at the end of each month when you receive your credit card statement.
What are the benefits of a cash discount program?
The biggest benefit of a cash discount is that you receive money from your customers faster, by offering them discounts for paying early. This gives you the opportunity to reinvest the funds into your business, such as purchasing more inventory or investing in marketing.
Another significant advantage to a cash discount program is that it saves you money by allowing you to avoid the fees associated with standard credit card processing contracts.
The lack of a monthly fee can help your business save significant amounts of money when compared to traditional credit card processing services, which charge a minimum monthly fee in addition to carrying a percentage rate per transaction.
One drawback of cash discount programs is that customers are not allowed to purchase items on credit. This means you will miss out on receiving the full amount of money from an item sold because a portion of it was deducted as a discount for early payment.
How do I get started with a cash discount program?
The first step in setting up a cash discount payment processing program is to contact a credit card processing company. The representative you speak with at the company will be able to assist you in setting up your cash discount system and find the best solution for your business.