This content is sponsored by Plastiq
If you are trying to figure out how to help your small business increase revenue in 2021, it’s time to take a hard look at how money works in your business. After the ups and downs of 2020, one of the most important resolutions any business can make this year is to take control of their money.
It’s no surprise that the American Express Entrepreneurial Trendex found that 81% of small business owners say managing cash flow is their highest priority as the economy recovers. But contrary to the traditional path of reducing expenses and saving money, taking control actually means becoming more flexible without sacrificing what your business needs to thrive. Whether you prefer to use cash or credit card, it’s more important than ever to not get locked into a single way of paying.
There are many predictions for what the economy will do this year, but no matter what happens, you’ll need financial flexibility to come out ahead. So, let’s take a look at when your business could benefit more from paying with cash and when it’s more advantageous to pay with a credit card?
When Cash is King
Cash is simple. Everyone accepts it—whether it’s from an ACH bank transfer, a wire, or a check. There aren’t fees to use your own money, and the only limit you’ll run into is the amount of your available funds in your account. Using cash means you won’t have to pay interest like you might if you carry a credit card balance. And paying cash can also often buy you some negotiation room, like reducing rent on the office your employees are no longer using.
There are some negatives to paying with your hard-earned money though. Cash can be hard to keep track of, which means extra hours of bookkeeping that no one really wants. You’re not going to lose sight of your rent or your taxes, but smaller things can go unrecorded if you don’t have an all-in-one payment solution. And those “smaller things” can quickly add up to one big headache. And of course, in an uncertain economic time like this, when you’re trying to preserve your cash flow, the money comes directly out of your bank account the minute you pay someone.
When Credit Makes Sense
The opposite tactic is paying for things your business needs with a credit card. Credit cards help extend your cash flow. Purchase from a supplier today, and the money won’t come out of your bank account until you pay off your card 45 – 60 days later. Oftentimes a business can buy and sell products before the credit card bill comes due.
With some suppliers, you can even use credit cards to save money by accessing early pay discounts while holding onto your funds. And you can more quickly achieve higher credit card rewards or cash back.
However, there are potential interest fees if you carry a balance, as well as a limit to what you can spend. And yes, a lot of the suppliers you do business with still won’t accept a credit card.
Make it Easy
So, what to do? Cash is still used for more than half of all business transactions, while the use of credit cards continues to grow. The challenge is to be able to flexibly use what’s best for each situation in a way that also makes sense for your accounting.
This is where an all-in-one, intelligent solution like Plastiq comes in. With Plastiq, you can choose the best way to pay from a payment platform that tracks all your transactions and syncs them with your QuickBooks Online.
If you’re planning on paying mostly with cash, Plastiq lets you send electronic ACH payments straight from your bank for free. Then, whenever you want to keep more cash on hand, you can use Plastiq to make credit card purchases—even with suppliers who don’t take credit cards.
If you’re paying mostly by credit card, Plastiq makes it easy to pay anyone, and you can add in cash payments when you need the flexibility they provide. You can even split a payment between cash and credit. It’s the best of both worlds, regardless of the kinds of payments you frequently make.
If you’re paying by card, one huge advantage to using Plastiq is that you can use your existing credit card to pay for virtually anything—office lease, taxes, accountant and any suppliers who don’t take credit cards. You simply pay Plastiq with your card and your recipient receives the payment the way they want—check, wire, or ACH. The low 2.85% fee is even tax-deductible.
Your business can’t afford to get stuck without ways to pay for what you need. Now you can take control of your money by choosing a payment method that most benefits your business. And you’ll have everything together in one place for full visibility into your cash flow.
No matter what 2021 brings, your business’ success depends on how you manage your money. Making sure you get the most advantage out of every dollar you spend is a resolution for long-term success that you should resolve to keep.
Note: All of the views expressed in the post are those of Melinda Emerson’s, but compensation was provided to publish this post.
About the sponsor: Plastiq has revolutionized how its more than 1.5 million customers optimize working capital by providing an all-in-one solution that enables them to pay or accept payment for anything with cash or a credit card, even where credit cards or digital payments are not accepted. For more information www.plastiq.com