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Get Paid Faster With Credit Cards

by Norm St. Onge

As a small-job contractor, I do everything from home repairs and seasonal maintenance to larger projects like decks and kitchen updates. A fair number of my customers are vacation-home owners whose primary residence is several hours away.

The traditional challenges of working with nonresident customers — material choices, status reports, and documentation — have largely been overcome with e-mail, faxes, and digital photos.

The only other major obstacle is getting deposits and payments in a timely fashion.

Typically, my vacation-home clients are around only on the weekends, so I'll generally stop by on a Saturday morning to discuss their project. Then I'll put together a tight proposal during my office time the following week and send a contract via e-mail or fax.

Unless there's some sort of crisis, I might not see the homeowners again for several months, so in addition to getting a signature on the contract, I get their credit-card number.

My contract has an addendum page where the customers provide the pertinent credit-card info; the page also contains a signature line authorizing me to charge their credit card for the work specified (see example).


Big Benefits

I decided early on to accept credit cards simply because I wanted to make it as easy as possible for my customers to pay me.

Mail is slow — and seems that much slower if you're waiting for a check to arrive — and cash is impractical for large jobs. Depending on my schedule and where I'm working, I might have checks and cash in my briefcase for days before getting to the bank.

Once deposited, checks that don't bounce take several business days to clear. Before I started accepting credit cards, I generally had to wait 10 to 14 days after receiving a check for the money to be available in my account — longer if there was a problem with the check.

Floating several jobs with this scenario was nerve-racking, to say the least. That's why I now prefer credit-card transactions (though I still accept checks and cash). It's the fastest way to get paid — especially when the homeowner lives somewhere else.

While the ease of payment is certainly a big benefit for me, that's not necessarily what I emphasize when I discuss credit-card payments with the customers. Often, I describe using credit cards as a form of protection.

These people live hours away. They've just met me for the first time, and 15 minutes into the conversation I'm informing them that I need a sizable deposit to purchase materials and reserve time in my schedule. I can see the hesitation on their faces: They know that they're unlikely to have any recourse if I disappear once the check is cashed.

But if they pay by credit card, all it takes is one call to Visa or MasterCard to put the brakes on.

Repeat customers are more willing to give me a check, but I still encourage credit cards. I explain to them that for a small one-man shop like mine, cash flow is paramount; prompt payment keeps me in business.

How It Works

My credit-card process is fairly low-tech, but for the few transactions I do per month, it works perfectly — without running up the extra fees associated with card-swipe terminals, cellphone readers, and custom-printed signature slips.

If necessary, instead of the contract addendum I can use the old-school carbonless form; the customers' credit-card info can be written in by hand or I can make an imprint of the card using the trusty "knuckle-buster."

Both the card imprinter and the forms are provided to me free of charge by my service provider.

To process a charge, I call an 800 number and an automated voice guides me through the sequence, which involves entering the credit-card number, expiration date, and charge amount via the phone keypad. Within seconds I have an approval number — or, on the rare occasion, a "decline."

The beauty of this process is that it can be done from the customers' driveway via cellphone, if needed.

Payment is generally credited to my bank account within 24 to 48 business hours.


So all this must be expensive, right? Wrong. There are many payment processing firms and their fee structures vary greatly.

The basic service fee that I pay to accept both MasterCard and Visa is $10 per month (regardless of the number of transactions) plus a discount rate of approximately 2 percent (that is, $2 on a $100 charge is retained by the service provider).

Discount rates can also be called transaction fees or interchange rates, depending on the service provider.

I also accept American Express, which charges $15 per month and a 3 percent transaction fee.

Transaction fees change periodically; typically, the more transactions you process, the lower the fee.

Other variables that may affect your transaction fee are your type of business or industry and how a cardholder's information is taken. An Internet-based mail-order business often pays a higher rate than someone conducting face-to-face transactions.

Altogether, I process six or fewer transactions per month, and all of these fees are factored into my overhead — so I'm certainly not losing money in order to accept credit cards.


I keep copies of work-in-process contracts in my briefcase so that specific information about jobs is at my fingertips. However, I keep the contract addendum with the credit-card number and signature locked in my office file. The last thing I want to do is explain to my customers how their credit-card info was stolen from my truck.

Also, I don't treat the customers' credit card as a blank check.

If additional materials are required or a payment draw is scheduled, I always call or e-mail the homeowners before I make charges on their card. This provides them with a measure of control and gives those who use their credit cards extensively an opportunity to switch credit cards to avoid overcharges or to accumulate airline miles.

While I believe it's always wise to have the customer sign off on the original scope of work, change orders, and so on, this precaution takes on added importance when dealing with credit-card customers.

As mentioned earlier, one "dispute call" to Visa or MasterCard and the disputed charge is frozen. It's imperative that the lines of communication between me and the customers stay open and clear, and that my work is fully documented in case there is a dispute — I'll need all of the information at hand to present my case to the credit-card company.

I have never had a disputed charge, but I always have sufficient documentation just in case.

Getting Started

If you find yourself intrigued by the benefits of accepting credit-card payments, but you're unable to decide whether it's right for your company, look at your business and ask yourself the following questions:

• Do you spend more time than you would like chasing customers for payment?

• Do you have a higher-than-usual rate of bounced checks?

• Do you think you can tap into a new market or an enhanced demographic by accepting credit cards?

• Or do you just think that since even the fast-food joints are taking credit cards now, maybe you should, too?

If you answered "yes" to any of the first three questions, perhaps you should consider pursuing a low-tech, low-fee approach to accepting credit cards — as I have — just to see how the process works for you.

Your first step should be to talk to your bank. Chances are it's already working with a number of credit-card-processing companies and can point you in the right direction.

One word of caution: The number of optional services these companies offer can be dizzying. Just remember that optional services come at a price and can quickly add up to $100 a month if you're not careful.

Norm St. Ongeowns St. Onge Renovations and BackYard Tractor Works in North Bennington, Vt.