by Ty Hardison

Payment processing for the "small" small business

New businesses need to accept payments in a way that helps them maintain their cash flow.

If you're self-employed or manage a company of just a few other people, you probably think of yourself as a small business owner, a member of the all-important SMB class. However, if you look closer you'll find that the government includes organizations far larger then yours in its definition of a "small business." In fact, the U.S. Small Business Association will typically include any non-industrial company with fewer than 100 employees as an SMB. Although you both fall under that umbrella, your independent consultancy or online store likely has little in common with a company of 90 people that makes a few million dollars in annual revenue. 

To answer for this discrepancy within the SMB class, Observer author Shir Magen defines a new category - the "extremely small business" that employs just one to nine people. According to Magen, these so-called XSBs differentiate themselves in their ability to serve niche markets: 

"The smart XSBs don't compete on price or at being the biggest, they compete at being the best."

Companies with fewer than 10 employees face far different challenges than larger SMBs. Companies with fewer than 10 employees face far different challenges than larger SMBs.

These small-time specialists deserve their own category in part because they face far different day-to-day challenges than larger, more established "small businesses." One of the largest hurdles, according to Magen? Managing cash flow. 

Often times, XSBs don't charge their customers until the service is complete, meaning they must have enough cash on hand up front in order to operate. Key to this workflow is getting paid on time and keeping the cost of accepting those payments under control. 

Accepting commercial payment cards is central to this strategy, as they allow your business customers to pay right away regardless of their cash situation. Plus, taking advantage of Level 3 processing can help ensure you pay the lowest interchange rates possible, potentially saving thousands of dollars on your bottom line. Qualifying for Level 3 rates requires more than simply accepting commercial cards, however - standard credit card terminals and B2Consumer payment software are not capable of supporting Level 3. XSBs must implement a secure payment gateway that is not only optimized for B2B payments, but is flexible enough to adapt to the evolving Level 3 requirements. 

At Vantage, we can help ensure your company is outfitted with payment processing technology that will empower your business. To get started, speak with one of our payment advisors today!

by Ty Hardison

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