Being stuck in Las Vegas is no fun, as a small business owner, I found this to be a nightmare while attending a trade show near the strip. While the lights were quite dazzling and the crowds kept squeezing by in the summer sun, I stood in the corner on the phone with my bank trying to sort out my room at a Las Vegas resort for over an hour. Walking over to the MGM grand, I noticed a group of college band with a sign 'Help us out with food and a room, anything would do.'
We have always relied on doing cash transactions since I started the little home fragrance business. My wife hate stress, so I promised we will use the cash flow, and I will be aggressive to be ahead. This was going all great until I got an order for a major chain with 48 stores. All the cushion in the bank was dried up and with no over draft protection, I was at a flat balance. The Las Vegas trip to the licensing show was booked ahead and everything was great until I tried to check in. The last deposit was done the previous Thursday and now Sunday should clear and give me some ease in checking. That was just the story I had in my head until I got to the front the line. When the card declined twice, I spent the rest of the evening trying to get the customer service or Call 24 to get an advance, clearance or something to cover this mess.
It was all my fault, I should have tried in the six months of business to get some kind of credit card. As a business owner I never had such an understanding as to why the micro loan scheme called credit cards was needed in the business world until now. I would be the first to say credit card provides some benefits that rivals many banks and helps a small business to grow successfully if managed right.
Credit cards provide convenience.
Unlike the banks, credit card gives you a chance to be able to conduct transactions in a safe and efficient manner. When booking a rental card, hotel, or airline ticket with a debit card, the hassle and requirements are automatically increased. Having the Visa, MasterCard, Discovery and selectively American Express, credit cards provide the convenience to conduct purchases at most places hassle free. I tried renting a car in Florida using my debit card and was asked for a security deposit, two recent pay stubs, one utility bill and proof of insurance. Now as a self employed person, I had a bank statement and my ID and SS Card. That was considered not enough but had I a credit card, I could have swipe the bad boy, and have the keys to go, end up in a cab to the hotel.
Having credit available provides a benefit of access to money. With some of my clients paying net 60-90 days, credit cards would increase the amount of orders I can supply and provide me with a bridge financing needed to hold me over. This is one of the ideal roles of the credit card, but seeing the news of the fees and schemes, we decided to go ahead without the evil little plastic.
Credit cards also increase your credit worthiness as you pay off in a timely manner. This is great for your personal credit too, as it increase your credit ratings and score. Having access to such an instrument is great for a small business who find a bank loan difficult to achieve.
Credit cards provide protection
It would be ridiculous for you to travel everywhere with stacks of money for everything. The bills, groceries, the malls etc. This presents a threat to life- simply put. There are some place, I would dread taking out a stack of presidents. The ability to use the plastic hassle free is the blessing of a credit card.
Credit card also provides character protection. When doing business, having a credit card becomes your measuring rod of being serious or being taken seriously. As mentioned earlier with the rental incident in Florida, it questions, my character being a business owner without credibility as credit and credibility are synonymous with business.
When one of our purchases arrived with all the glasses broken, it took the bank three to four months to dispute the claim that the merchandise was defected. This was one of the times I truly dreaded not having a credit card. I know they would have gone to war for me.
Credit Cards provide Kickbacks
I know it is bad to say kickbacks, but with all the little added incentive programs that most cards offer, there is no easier way to call it. It's difficult to find a reputable credit card provider who does not give cash back, discounts or travel miles for spending. With my line of business, the rental car company would have been the first, to come off the hassle list.
Then there are the offers, the chance to dump some of the fees with lower interest rates once you maintain your credit worthiness. This might not seem like a kick back, but when I consolidated my last credit cards, I understood this. However, they did not explain the hidden things like once you miss a payment you are hit with the whole book. That was when I close the
In the midst of this recession, small business are finding it difficult to get consistent cash flow and a credit card can provide this part of the puzzle to increase your productivity and offering by opening up some finance. While I do admit the hardest conversation my wife and I had recently was on the importance or urgency in getting a credit card. This truly would give us a chance to grow as a business and take more orders. So I am looking for the deals now. Off now to apply- Chase, Citi, Capital One- here I come.
Nigel Wiliamson is an author, entrepreneur and consultant. With expertise in health care, non profit and beauty and skin care. When he is not blogging , he is helping his wife with their home fragrance business.
Why don't some stores accept American express credit cards?
Just curious 
Answer
The discount rate is higher. Interchange for Visa/MC is around 1.6% plus a flat swipe fee, AmEx is more like 3%. Large merchants can negotiate a better rate, but small businesses cannot..
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