8/27/2004
What About Credit and Debit Cards??? – Part 1
by Vonelle Vanzant, Center Director, UA Fort Smith SBDC
As a business owner you really have two decisions to make regarding credit and debit cards – whether to use them and whether to accept them. This article discusses the decision to use credit and debit cards. The decision to use credit cards to finance business purchases needs to be carefully considered. Certainly, there is an amount of ease and convenience associated with paying for items with a credit card. The advantages include not having to carry cash or a check book around all the time, returns are handled more quickly and without a waiting period, and trusted employees can be issued a credit card to facilitate needed purchases. They can also be used as a cash management tool. However, credit cards should be considered as an alternative to paying cash rather than as a substitute for cash.
High credit card debt can strain a company's resources and impair its ability to borrow money for other needs. Debit cards, on the other hand, can combine the convenience of a credit card while lowering the risk that credit card debt will exceed the business’ ability to pay. Of course the money needs to be in the account before the debit card is presented as payment since the funds are withdrawn electronically from the account much like an ATM withdrawal. For a discussion on accepting credit and debit cards from your customers, watch for Part 2 in the next issue.
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