What would you do? - Page 2

Of course it's easy, but it's also expensive. Thanks to fees, accepting credit cards is equivalent to guaranteeing that 2-3 out of every 100 checks will bounce with no possibility of recovering the funds.

I'm not even going to touch the generalization about people who write checks.

...yeah, and we all know credit cards NEVER get declined. LOL

Geez...this comes up a lot doesn't it?

Kara (costumeczar) is correct. Read her blog and learn. These are basic business principles. Lets all grow up and start treating our businesses with the gravity we should! (NB: not directed at anyone in particular, so please don't get all defensive on me).

I am in Australia, and as a microbusiness, I have to say I much prefer our way of doing business. My clients pay me cash. They do it online or in person using their OWN bank account and transfer the money electronically directly into my account. Its called 'direct transfer'.

Its very simple. If the money is not in my account (one month before for weddings, two weeks before for other cakes) then nobody gets a cake. I can check my account ANY time to see in almost real time what has been put into my account by the client (who has their own reference number of words). Best of all, I have a copy of the transaction, and the CLIENT has an instant copy of the transaction. So IF there is some kind of dispute, we have the records. The client can choose their savings, cheque OR credit card (cash withdrawal) to pay me. Its all cash in my account and it costs me nothing.

I've asked this before, but why in the USA is this sort of business payment model not used?

I also have a Paypal account if the client wants to definitely pay me that way - usually using their CC - but I am yet to have a client use that option. Hearing what I have heard about Paypal practices of late, I am not keen to be on the 'seller' side of any transaction, so I might stop offering that!!

Evoir, it can be done here, and it is. I think some people aren't comfortable giving out bank account information. Even though it's on the front of every check that is written. lol

But, yes we can do that here in the USA as well.

The problem is not credit cards getting declined, it is customers disputing charges. It is trivially easy (and free) for a customer to dispute a credit card charge, and the credit card companies tend to give customers the benefit of the doubt in these disputes.

Probably because banks in the US make so much money from credit and debit cards (especially debit cards).

There is a multi-bank P2P ACH solution called Clearxchange scheduled to be rolled out this year. Chase has its own solution called QuickPay, only one party needs a Chase account and your account info is secure.

http://clearxchange.com/
https://www.chase.com/online/services/quickpay.htm

Evoir, it should be easier for people to transfer funds from person to person here in the US but it's not. Every bank has their own little rules about it, so if you are with one bank and I'm with another, it gets tricky to set up.

I have preached the Gospel of Google before, but I'll say it again... I use Google Merchant for everything. Everything. All I need is a client's email address and I send an invoice thru Google with a link. Customers click on the link and pay with a credit card. Every transaction. 2 days later Google deposits into my business account. It's not that hard and it costs me nothing. Zip. Zero. Nada. Takes me less then 5 minutes. No payment, no cake.

I have zero fear of chargebacks because Google has merchant protection. So even if someone claims fraud, I still get to keep the money I earned as long as I maintain proof that product was delivered. Hence I have my clients sign for every order. (This makes them a billion times better then Paypal, who makes it hard to send invoices, then holds onto your money until you transfer it, and has no seller protection).

If I take a check from a customer I take it to the customer's bank and cash it, then then deposit it in my business account if I think they are being shady. If someone is trying to float a check then I'll know right away.

I 100% agree with Kara, you must run your business like a business. If you have terms in your contract you need to stick to it, and if you don't have a separate business account at your bank you are asking for trouble!

1) Costumeczar is completely right

2) as a small business, I prefer checks and cash to credit cards because of the fees. I pay about $450 a month in cc fees - that's an Audi payment

3) if you are worried about it, just take the check right to the bank it's drawn on and get the cash immediately.

4) I also try to write checks for small businesses when they will let me (even though I can get miles or whatever by running it through a credit card) because I want to try to save them the fees too - NOT because I don't have money.

Do you mean Google Checkout? If so, they charge 2-3% of each transaction depending on volume.

http://checkout.google.com/seller/fees.html

Wow. Statements like these make me wonder...

Kara is 100% correct.

Thanks.

Part two is up today, and ironically is about this exact topic even though I wrote it about two weeks ago. So I guess it does come up a lot

If this topic makes people get heated (I don't know why it should, though) wait until the guest post I got from the former IRS agent about paying your sales tax goes up, hahaha!

Im going to look into Google merchant...I'm not against paying 2-3%, that's just the price of taking electronic payment through a third party, but I do like the idea of google not being so stupid about the pullbacks like paypal does. I hate that. The only time that I've ever had paypal pull anything back was when they did it on their own, no complaints from the client, they just decided that something looked strange. It didn't make any sense and neither I nor the client ever got a good explanation about why they put a hold on it.

Kara,

You did a great job with the article, but the whole time I read it I was thinking...this is common sense. No wonder why most businesses fail within the first five years. Some more good reading:

http://usgovinfo.about.com/od/smallbusiness/a/whybusfail.htm

http://www.businessknowhow.com/startup/business-failure.htm

http://www.home-business-expo.com/wiki/SmallBusinessesFail.asp

This reading will also address the commonly asked question of "I just watched Cake Boss and took a cake decorating class and now I want to open a cupcake shop. What should I do?"

You're absolutely right. Half the time when I write blog articles I'm thinking to myself "this is pretty basic" but then I remember the number of businesses that I personally know who complain about the basic stuff like this. I can think of four or five businesses (wedding-related, not all cake) that have either gone out of business or that have owners who constantly complain that they don't have any money to pay for this or that. It's rather amazing.

They make me wonder too...but they don't surprise me.

I accept cash and checks and sometimes Paypal but don't want to pay the fees so as of now, cash and checks work well for me. It would be great if there was a fee-free option to accept credit cards!

FromScratch, Google checkout does charge fees and it is the same as Paypal's - 2.9%+$0.30 per transaction under $3000. Look it up.. you might be paying fees unknowingly!