Forget the Checks: 5 Reasons Why Your Construction Company Should Accept Credit Card Payments

Why your construction company should accept credit cards

When you’re considering whether your construction company should accept credit cards, it’s essential to understand the pros and cons for both your customers and your business. Here are the benefits of accepting credit cards at your construction business.

It’s convenient for your customers.

Most people don’t carry enough cash to cover a large expense. Chances are, they seldom use checks but have at least one credit card in their wallet.

Paying by card also means that, rather than dropping off an envelope of cash or mailing a check, customers can quickly pay you in person, over the phone or online.

“Modern construction companies must offer credit card payments, as customers increasingly expect this convenience,” said Rodney Hakimi, owner of Maryland-based general contracting company Prime Renovations.

Construction projects can be costly, and sometimes, customers may not have the full amount available yet. Allowing them to pay via credit card lets them pay it back over time. Plus, your business gets paid sooner because you won’t have to wait for them to obtain the funds.

It conveys credibility.

Card payments are ubiquitous, and your customers likely expect you to offer this option. Failing to do so may make your business seem less credible, resulting in a lack of trust.

Furthermore, consumers are often told that credit cards are the safest way to pay contractors. Paying by credit card offers consumer protections as well as proof of the transaction. It helps businesses avoid bounced checks, check fraud and other risks.

Clients trust a company that allows more than one payment method. Displaying credit card logos on your website and at the location can increase trust with clients and show that your business is legitimate. 

It’s fast.

When you process a card transaction, you know immediately whether it goes through. This allows you to start new projects faster because you don’t have to wait a few days after depositing a down-payment check to ensure it doesn’t bounce.

Depending on the scope of the work and your client’s preferences, you may be able to schedule recurring payments or installments that are automatically charged to your customer’s card so you can count on regular cash flow as long as the job is on schedule.

It makes bookkeeping easier.

Card payments create a digital record of purchases, thereby streamlining the accounting process and reducing the potential for manual errors. If there is a problem with your customer’s card payment, you’ll know immediately. By contrast, with a check, you’ll have hope the payment is cleared by the bank. If it’s not, you’ll have to go back to the books to rectify it.

According to Hakimi, accepting card payments can help “improve cash flow and, above all, reduce the risk of bounced checks.”

It can increase your bottom line.

Current customers are more likely to spread the word about your business if they have a positive experience, which includes a smooth payment process. It will also give you a competitive edge over companies that accept only cash and checks. 

Plus, your customers may have the opportunity to earn cash-back rewards when paying by credit card, which could incentivize them to return and spend more at your business.

“Credit cards offer flexible payment terms that reflect a customer’s buying power,” said Clark Lowe, president and CEO of North Carolina-based nonresidential construction firm O’Connor Company. “Some customers may use cards for their added benefit in points or take advantage of friendly payment terms at low interest rates.”  

Potential downsides of accepting credit cards

If you’re not accepting credit cards yet, you may have some concerns that are holding you back. However, there are some steps you can take to prevent or alleviate these potential drawbacks.

There are fees.

The fees that credit card processors collect for each transaction can look expensive when the payment is for hundreds or thousands of dollars. Credit card payments include a processing fee of about 1.5 to 3.5 percent of each transaction, which could potentially eat into your profits.

While most credit card companies take a percentage fee for processing payments, determining who is responsible for paying that fee may become a point of contention, Lowe said.

However, you can build this expense into your margin, and if you prefer cash or check payments, you can offer a discount for those payment methods. Some businesses opt to charge a convenience fee for accepting card payments, but you must be careful about this because it’s illegal in several states. Card networks also require you to follow certain regulations.

If your fees are high, don’t hesitate to negotiate a lower price or shop around for a cheaper credit card processing provider.

There’s a risk of charge-backs.

A charge-back happens when a customer disputes a charge. The dispute resolution process occurs between a merchant and a card-issuing bank until the issue is resolved. While the dispute is ongoing, the funds are withheld from the merchant.

Companies can take steps to avoid charge-backs by making their payment policy clear and ensuring they maintain detailed records of each transaction. 

You should also document your work with photographs and do quality assurance checks with your customers. Walk them through the work you’ve completed and have them sign off on it, stating that the work is finished and meets their approval.

It increases fraud liability. 

Banks and card-issuing companies have a history of making merchants pay for various types of fraud in their systems. Banks can look for reimbursement if a business owner permits charges by a stolen credit card. Additionally, the processing account may be terminated, which is bad news for future business because it is unlikely that other processing firms will accept the merchant’s business.

Business credit cards for construction companies

There are many credit card options, but some are better suited for construction companies than others. American Express’ Blue Business Plus and Capital One’s Spark are two cards from well-known companies that offer plenty of perks for cardholders. Most providers have a card geared toward business owners.

Tips for successfully expanding your payment options

If you think you’re ready to start accepting card payments at your construction company, these best practices can increase your chances of success:

• Do your research. “Explore and weigh the benefits of accepting all payment types,” Lowe advised. “Consider not only the risks each payment method has but also the risks each payment method may mitigate or eliminate.”
• Do a test run. Once you’ve researched and decided on the payment methods you want to accept, implement a pilot program, Hakimi suggested. “As business owners, you can select a small group of loyal and valuable clients to test credit card payments, before implementing it widely,” Hakimi said. “This way, you will be able to identify any other risks or drawbacks.”
• Choose a card for your industry. Hakimi recommended partnering with a payment processor that offers industry-specific solutions to ensure you get the best rates and features for your business. [Read more about choosing the best credit card payment processor for your construction company.]