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Forget the Checks: 3 Reasons Why Your Construction Company Should Accept Credit Card Payments

By Lori Fairbanks
Business.com / Financial Solutions / Last Modified: April 9, 2018
Photo credit: Sean Locke Photography/Shutterstock

Could accepting credit cards improve your cash flow by making it easier for your customers to pay you?

According to the 2016 U.S. Consumer Payment Study conducted by TSYS, 40 percent of consumers prefer to pay by credit card and another 35 percent of them prefer to pay by debit card. If your customers follow the national trend and prefer to pay by card, why does your construction business only accept cash and checks? Perhaps it's time to evaluate whether or not accepting credit cards would help your business get paid faster and earn more business. Here are three reasons why you should consider offering this payment option to your clients.

1. It's convenient for your customers.

Accepting credit and debit card payments can make it easier for you to get paid, because most consumers don't carry enough cash to cover a large expense and seldom use checks, but have at least one credit card in their wallet at any given time. Plus, rather than dropping off an envelope of cash or mailing a check, they can easily pay you in person, over the phone or online, whether by clicking a link on your electronic invoice or through your website. Paying on credit cards can also help customers short on funds afford to have work done now, rather than waiting until they have the money in the bank. 

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2. It inspires customer confidence that your company is aboveboard.

Your customers feel comfortable paying by credit card. This form of payment is so common that it seems odd when a company doesn't accept it and may cause your customers unease. Further, consumers are often told that credit cards are the safest way to pay contractors. For example, Angie's List founder Angie Hicks recommends paying by credit card because of the consumer protections it offers and the paper trail it provides, or by check as a second option. The FTC also advises consumers not to pay contractors in cash, but rather to pay by credit card or check.

3. You can accept deposits and other payments immediately and reliably.

When you process a credit card transaction, you know immediately if it goes through or not. This allows you to start new projects faster, because you don't have to wait a few days after depositing a check for a down payment to make sure it doesn't bounce before you get started on a job.

Depending on the scope of the work and with your client's permission, 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. Also, when working with clients who are behind on their payments or have been delinquent payers in the past, accepting a credit card may help you get paid faster, which helps you avoid waiting around to see if the check is really in the mail.

Potential downsides

If you're not yet accepting credit cards, you may have some concerns holding you back. There are some drawbacks to this payment method, though there are things you can do to alleviate potential issues. Here are two common concerns and some suggestions to help you deal with them if you decide to accept card payments.

1. It's too expensive.

The average 2 to 4 percent fee the credit card processing company collects for each transaction starts to look expensive when the payment is for hundreds or even thousands of dollars. However, you can build this expense into your margin, and, if you prefer cash or check payments, you can offer a cash discount. Some businesses opt to charge a convenience fee for accepting card payments, but this can be tricky to do, since it's illegal in several states and the card networks require you to follow certain regulations.

2. It's too risky because of chargebacks.

This is a legitimate concern, since only 20 to 30 percent of chargeback disputes are settled in the merchant's favor, according to a 2016 report from the Federal Reserve Bank of Kansas City. However, you can proactively take steps to discourage chargebacks. EC&M recommends documenting your work with photographs and doing quality assurance checks with your customers, in which you 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.

Despite the drawbacks, there are several advantages to accepting credit cards, and the ease and immediacy of this payment method can be a win for both you and your customers. Getting paid should be the easy part of the job, and accepting credit card payments can reduce the time you spend chasing down cash or waiting for checks. If your construction company doesn't yet accept credit cards, it's worth your time to consider whether offering this payment option to your customers would be advantageous to your business.

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