One of the programs that we offer at Journey Business Solutions is cash discount. Cash discount is a merchant service that every small business or startup company should take advantage of. If you’re new to the business world or you want a way to increase your cash flow, then cash discount programs are something that you should learn about.
At Journey Business Solutions, we strive to make your life a little easier as a business owner. We understand how difficult it can be to run a business, after all we’re business owners ourselves. For this reason, we strive to be a one-stop-shop when it comes to merchant services. If you’d like to take advantage of our merchant services and the cash discount program, then we urge you to reach out to Journey Business Solutions today. We cover Dallas, Houston, Beaumont, Fort Worth, San Antonio, and Rio Grande Valley.
Breaking Down Cash Discount
In today’s blog, we’ll be going over what cash discounts are and what they can do for your small business. A cash discount is a program that is a great way for you to counteract some, oreven all, of the merchant service fees that you are charged for when it comes to credit card transactions. As a business, you know that credit cards are one of the most popular ways that people pay for their items, but that doesn’t mean it’s the best for your when it comes to profits. A merchant service fee will be charged for credit card transactions, but when you take advantage of cash discounts, then you can benefit from the increase in cash flow.
Cash discounts will build a larger foundation for customers who pay with cash because you are able to give incentives for customers who may previously use credit cards. You can help them make the switch over to cash paying instead of credit cards. By using cutting-edge technology, you’ll get to enjoy the benefits of cash while staying within the guidelines of Mastercard, VISA, and other processors.
If you’re wondering how this process works, then we’re going to dig a little deeper to break it down. A common cash discount would be the seller offering a two percent discount for invoices that are due before 30 days. The buyer will pay within those first 10 days when they receive the invoice. By offering a small cash discount, you’ll offer the seller an advantage so that he or she has access to cash sooner, which is always a benefit. Additionally, a seller will get the cash at an earlier rate, which puts money in the business, so that whatever needs to be purchased for the business can be bought, so that it can continue to build and grow.
The Cash Conversion Cycle
Additionally, there is a cash conversion cycle to help you further understand the number of days that a company will take to convert it into cash flow. This cash conversion cycle, which gives you a good idea when cash can be used, will help to measure the efficiency and effectiveness of a company’s ability to manage the overall health of the company. Based on how fast cash can be converted, this is how health a company is when it comes to the cash flow. The cash conversion cycle will measure the amount of time of the net input dollar and how it’s tied into the production of turning into cash from the sales to a customer. Additionally, the equation factors in the amount of time that your businesses needs to sell the inventory, the collect receivables, and the amount of time the company’s bill payment window is until penalties are incurred.
The cash conversion cycle is as follows:
- Days inventory outstanding = DIO
- Days sales outstanding = DSO
- Days payable outstanding = DPO
How Can It Help You?
So how can discount programs be beneficial to your business? They can, in fact, be a great way to cut down on merchant service fees, increase cash flow, and do so much more. Debit and credit cards became a convenience for consumers; however, for businesses, it can be more of a nuisance. The average consumer uses their debit or credit card at least 12 times a month. With over $50 billion debit card transactions every year in the United States alone, it’s in your best interest to take credit and debit cards. However, don’t you want to benefit as a business as well? With the cash discount, you’ll be able to. How many other ways can the cash discount benefit your business? It can help with the following:
Offers A Quick Fix
The cash discount program offers a quick fix without you needing to go above and beyond. The cash discount program offers your customers a lower price, which helps your business flourish since everyone loves not having to pay as much. Due to this, you’ll have more cash, and it’ll provide a fast way for you to capture more dollars. Additionally, with the holidays coming up, you’ll have a cost-effective method to deal with an abundance of merchandise if you go above and beyond and overstock or the items don’t sell as well as you projected.
Motivates The Customer To Pay
Another benefit of this system is that it motivates your customers to pay when they want to purchase something or if they need to pay bills. For many consumers, they will wait until they have paid their monthly bills before they decide to purchase something. Many people will wait until the last minute to pay monthly bills, which can put off paying for other things. After all, don’t you have to pay for what you need versus for what you want? As a business owner, you can incorporate a cash discount program will motivate customers to pay because they are benefiting from it.
Increases Cash Flow
Another benefit of the cash discount program is that it increases the cash flow, which is something that every business owner would like. An increase in cash flow can provide you more access to the cash, which allows you to pay your bills, buy more products, and pay your employees. By having an earlier deadline for cash payments, you’ll begin to see an influx of cash flow toward the beginning of the month instead of the end, which is what a lot of business owners see over time.
The Cash Discount Programs We Offer
At Journey Business Solutions, we offer three cash discount programs that you can take advantage of. Each program will offer your business a little something different.
- Prime Merchants: 100 per month with merchants who do over $10,000 per month.
- Core Merchant: 50 per month with merchants who do between $5,000-$10,000 per month.
- Mini Merchants: 25 per month with merchants who do less than $5,000 per month.
Now that you know what cash discount is, are you ready to take advantage of these programs?