Getting Paid Faster

Government suppliers receive quicker payments with purchasing cards

Everywhere Mirinda Jackson turns she sees minority small business owners who don’t realize the value of accepting purchasing cards from their customers, mainly the federal government and large corporations. Offered through Visa and MasterCard, these credit-card-like accounts are used by a number of large entities that, according to Jackson, intentionally seek out vendors who accept “P-cards.”

“Most small businesses either don’t know about them, or they’re worried about the 1% to 3% fee that they’ll pay to use the service,” says Jackson, president of MJA Inc., in Accokeek, Maryland. “I say, what is 1% when you get paid within 48 to 72 hours, rather than 30 to 45 days?”

To help raise awareness of its purchasing card, Visa introduced its Supplier Enrollment Program in 2004. The program allows small businesses to sign up to accept purchasing card payments. Linda McGee, Visa’s vice president of merchant consulting for commercial markets, says the new initiative came on the heels of the federal government’s announcement that it would spend 23% of its revenues with the nation’s small businesses.

Through its program, Visa has been working with groups like the African American Chamber of Commerce and individuals like Jackson to get the word out about its purchasing card. Jackson, who estimates that the government alone spends $20 billion annually using purchasing cards, says federal agencies not only seek out firms that accept them, but also pay those companies much faster than it would through other means.

CASH FLOW HELP
Having worked for the public sector for 35 years, Jackson says she’s found that micro purchases of $2,500 or less are generally routed through the purchasing card. “It’s often easier for them to use the vendor who accepts the purchase card, which saves the government about $60 per transaction (in paperwork, processing, etc.),” says Jackson, who adds that most government agencies maintain a list of purchase-card holders on their Websites, thus allowing small companies to market their P-card abilities to those agencies.

“Cash flow is critical for all entrepreneurs who need to pay their own bills and make their dollars stretch as far as possible,” says McGee. Good cash flow strategies can lead to better financing opportunities for the small business, which may be looked upon more favorably by lenders and/or investors if it can collect payments within just a few days, instead of months.

EXPANDED OPTIONS
Small businesses don’t have to do business with the government in order to take advantage of the purchasing card, says Gary Rice, senior account executive at Atlanta-based Global Payments Inc., which sets up companies to accept Visa and MasterCard purchases. He says many large corporations also use the cards and seek out suppliers who accept them. Additional benefits for those vendors, he adds, include increased awareness of their existence by potential customers.

“Once a company is in the supplier-enrollment database, other customers who may not have known about the products or services — and who may have gone elsewhere — may take a closer look based on the fact that the company accepts the purchasing card,” says Rice.

Small

Pages: 1 2
ACROSS THE WEB
  • http://www.credit-card-processing.123vendors.com Credit

    The quality of the info is what keeps me on this site, thanks!