Construction Company Owners Need To Stop Lending Money

Jul 25, 2013

Contractors Are Not Bankers – Too many contractors suffer cash flow shortages because they get trapped into financing their customer’s construction projects.  Why use your cash, line of credit and supplier accounts to provide labor, material, subcontractors and rental equipment when you can offer your customers instant financing by accepting credit cards?

Accepting All Credit And Debit – Cards is like having an “Electronic Armored Car” on standby twenty four hours a day, seven days a week ready to take your money to your bank automatically.

The Most Common Complaint – We hear from contractors is they don’t want to pay the fees. Let’s review what it is costing you not to accept all debit and credit cards.

Cost To Accept Checks:

 1Spend time collecting a check, endorsing it, preparing the deposit slip, driving to bank, waiting in line, chatting with teller, waiting for deposit receipt, driving to your original destination, recording the payment in QuickBooks.

  • Total time spent = 1 hour (X) your billing rate $40.00 per hour = $40.00

2. Vehicle cost per mile in construction estimated $2.50

  • 4 miles (X) $2.50 = $10.00

3. Total cost of for one check = $50.00

4. For NSF checks double the time and money and add the cost of your NSF check charges.

5. Compare that with the cost of accepting credit cards.

 

Additional Sales And Profit Opportunities From Accepting Debit And Credit Cards:

1. From my experience as a construction company owner and monitoring the sales of our outsourced construction company clients accepting credit cards most of them appear to have increased sales from accepting credit cards between 10% – 40%.

2. Add on sales and the ability to offer “Instant Financing” are the two main drivers.

3. Fewer than 10% of the contractors appeared to have little or no increase in sales.

4. The biggest difference appeared to be in how well they advertise and promote it.

 

For Example – If Rock Bottom Construction (not a real company) could increase sales only 10% by accepting credit cards and paid a high cost of processing 5% which is higher than most merchant services providers charge the additional profit is $3,500 or 35% increase.

Graph

Having Owned And Operated – Several construction businesses I know how important cash flow is to the success or failure of any contractor.

We Have Construction Clients – Who understood the reason why we suggest most contractors accept debit and credit cards immediately and others that took a while longer.

 

Author Bio:

This piece was written by Guest Blogger Randal DeHart who is a QuickBooks ProAdvisor, co-founder of Business Consulting And Accounting in Lynnwood Washington and the leading expert in outsourced construction bookkeeping and accounting services for small construction companies across the USA. Visit Fast Easy Accounting to learn more.

Let us help you get a high risk merchant account today!

Get Started

Award winning.

  • 2012
  • 2013
  • 2014
  • 2015
  • 2016

Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

Live Chat