Recently, we discussed some basic points that every potential new business owner needs to consider during their brainstorming and planning processes. One of those key tips was to learn how their merchant accounts factor into their operations. As you know, your merchant account is what gives your business the ability to accept and processes payments, like checks and credit cards. Many budding entrepreneurs truly don’t understand how merchant accounts work, and they sometimes fail to factor in the fees associated with these services into their budget projections.
While AVP Solutions wants to educate prospective business owners on the logistics of merchant accounts, we also want to show you how to make your merchant account work for your business.
Beyond simple payment processing, your merchant account can be an excellent source for a small business working capital advance. However, you have to understand how they work in order to make the most informed decisions. For example, here’s just a quick overview of the advantages and disadvantages of a merchant cash advance:
| Advantages | Disadvantages |
|---|---|
| *Very fast processing time*Cash within days
*Approval not based on credit history * No minimum payments *Use cash for anything |
*May have higher overall fees than conventional loans*Reduces daily cash flow due to transaction fees
*Commits you to account provider until repaid |
Cash advances are an excellent way to inject your business with working capital, especially for things like unexpected expenses, urgently needed inventory, or expansions. However, they also affect your daily cash flow, and they may not make sense for your business depending on your operations.
