BACK

Expert Q&A

When does it pay for consultants to accept credit cards?

Summary

If you have a consulting business, customers may want to pay with credit cards. Providing that convenience isn’t free, but it could be worthwhile

The editorial content below is based solely on the objective assessment of our writers and is not driven by advertising dollars. However, we may receive compensation when you click on links to products from our partners. Learn more about our advertising policy.

The content on this page is accurate as of the posting date; however, some of the offers mentioned may have expired. Please see the bank’s website for the most current version of card offers; and please review our list of best credit cards, or use our CardMatch™ tool to find cards matched to your needs.

Question for the CreditCards.com expertDear Your Business Credit,
I run a one-person consulting firm. Some of my clients have asked if I accept credit cards. What do you think — should I? — Catherine

 

Answer for the CreditCards.com expertDear Catherine,
This is a great question. I’m coming across more consultants who are considering the same question these days, with the economy recovering and opportunities for winning new customers improving in some industries.

One good reason to accept credit cards is that it’s a convenience for clients who prefer to pay this way, says Mark Faust, principal of Echelon Management, a growth consultancy in Cincinnati, Ohio. Faust, who wrote the book “Growth or Bust!,” says some consulting clients will prefer to pay with plastic because it’s easier to keep records or because they want to rack up rewards points. “If nothing else, it allows them to track and manage their expenses in a way that is passive compared to the active work of balancing a checkbook,” he says. “They only have to write one check at the end of the month, when they pay their bill.”

In fact, not accepting credit cards may prevent you from working with clients who might benefit from your services but can’t afford to pay in full right now, he adds. Say you’re a consultant who advises companies on overcoming cash flow problems or a career coach who teaches out-of-work job seekers how to market themselves to employers. These folks may need your services, but may not consider retaining you if they can’t find a way to finance the work. You might say to them, “For your convenience, you can put this on a credit card and string out the payments as long as you need,” Faust suggests.

Accepting credit cards can also help you avoid chasing down late payments. The economy is healing, but many businesses and individuals are still experiencing cash flow problems in the aftermath of the recession. It’s no fun pursuing them if a check has bounced or they simply have not responded to your invoices on time.

Even if you have not had a collections problem yet, chances are that you will at some point. The Cortera Past Due Index, which tracks late payments in business-to-business transactions, found that in February 2013, 17.8 percent of payments by businesses to other businesses were past due. In service firms, 18.2 percent of these receivables were late.

Faust keeps a $15,000 check on his wall to remind him of a time when a startup company’s check for that amount bounced. Although the company made good on that payment, it eventually stiffed his company for another $45,000 — a problem that, he says in retrospect, could have been avoided if he had steered the client toward paying with a credit card. “They eventually went under because of mismanagement of their funds,” he says.

If you have a client pay by credit card for a consulting engagement, he suggests asking for an initial deposit equal to 50 percent of the total cost. “If we have a $30,000 engagement and it’s three-month deal, we’ll get $15,000 upfront and $15,000 six weeks into it. That’s quite typical,” he says. “Sometimes we’ll get full payment upfront. That’s a great protector right there.”

Bear in mind that the pay-by-credit-card approach won’t fly in every industry or situation. In some industries, it’s most common for consultants to get paid by checks or, perhaps, ACH payments, if the client is a big company. I do some editorial consulting, and that’s the case in my industry. In those cases, even if you offer the option to pay by credit card, you may find yourself with few takers.

That’s worth considering when you weigh getting set up to accept credit cards. It takes time to research merchant account providers, and your time as a consultant is worth money.

And, of course, accepting credit cards isn’t free. There are costs involved in both opening and maintaining a merchant account. (You can get an idea of the costs for on Merchant Account Guide).

If there are only rare instances when you will need to accept credit cards, it’s probably not worth the time and effort to get set up. However, if you find that a growing number of clients are asking if you take credit cards, now may be a good time rethink that approach and give them a try.

See related:Which credit cards should your small business accept?

 

 

What’s up next?

In Expert Q&A

What’s the best low-hassle cash-back card?

If you travel a lot by car, airline reward cards won’t do you much good. You’ll be better off with cash-back cards that offer rewards in driver-friendly categories

Published: May 7, 2013

See more stories
Credit Card Rate Report Updated: May 19th, 2019
Business
15.61%
Airline
17.50%
Cash Back
17.60%
Reward
17.62%
Student
17.79%

Questions or comments?

Contact us

Editorial corrections policies

Learn more

Join the Discussion

We encourage an active and insightful conversation among our users. Please help us keep our community civil and respectful. For your safety, do not disclose confidential or personal information such as bank account numbers or social security numbers. Anything you post may be disclosed, published, transmitted or reused.

The editorial content on CreditCards.com is not sponsored by any bank or credit card issuer. The journalists in the editorial department are separate from the company’s business operations. The comments posted below are not provided, reviewed or approved by any company mentioned in our editorial content. Additionally, any companies mentioned in the content do not assume responsibility to ensure that all posts and/or questions are answered.