Welcome to WebmasterWorld Guest from 220.127.116.11
Forum Moderators: buckworks
Does anyone have any creative ideas for paying your suppliers, supplies, employees, and other expenses while your money is being held?
But I've been there so I know how much of a pain it can be.
Around Christmas (I wouldn't want to scare them to soon), contact your supplier and let them know what is going on. Most suppliers should be accomadating.
You need to keep your employee's happy however, they don't want to be short changed before Christmas.
Have you contacted your Credit Card Processor, and try to reach an arrangement, like holding only 50% of deposits. This will give you some cash flow.
Of currosity, are you dealing directly with a bank or some third party payment processor. I hear of a lot of horror stories with third party processors, pulling this off, but never when dealing with a major processor that deals directly with the bank, (eg Global Payments, Moneris etc).
Keeping a second processor around, is not a bad idea, incase the primary one tries to put you out of buisness, however this luxury will cost you a several hundred dollars a year, in minimun monthy maintenace fees.
As long as you can manage to pay your credit card/loan in time there isn't much cost involved.
My main supplier only accepts credit cards or COD/wire for bigger purchases. I have net terms with some suppliers so there is some relief there.
> Keeping a second processor around
Thanks for the suggestion. I am looking into it - the luxury might cost me $300 per year ($25 per month).
> you may also want to talk to your bank to give
> you a LOC to get through this period of time.
I do have a $10k LOC which I used immediately last week. Assuming I pay it off in 30 days. But that will be gone early this week as I pay my immediate inventory and shipping expenses. If things get desparate, pawning the car sounds would be an option. But talk about high interest rates!
Sadly not the case - we were on a 45 day delay for the first year on our merchant account. And the bank (who also ran the merchant account) wouldn't lend us a penny of the month and a half's revenue they were sitting on. Still makes me angry.
My understanding is that the first party processors (what I call the major banks, and their solutions, eg moneris, global payments, etc) are highly capitalized, and they do the risk up front. Its harder to get setup, you have to jump thru more hoops, and forget it if you are in a high risk buisness (ie adu*t entertainment). But they are much less likely to scr*w you around, once you are setup, and if you play by the rules.
Try the third party providers..PP.2co, etc....
Try every other provider you can think of!
out of curiosity, how much did you tell them you were gonna do and how much did you actually do /month?
Best of luck--
Anytime you think you are going over the limit, contact the Loss Prevention Department of the MAP. This way you can be on record of calling.
Think of it this way, when you get a merchant account, you are asking to borrow money. If you are processing $20,000 you are basically asking to borrrow $120,000. And if you had a credit line like this and needed more, you would call the bank.
This is a very important lesson that you learned. Hopefully once they call some of your consumers to learn that everything was legitimate, the money will be released.
You need to have the turnover of at least one month or two on your bank account or a credit line of this amount.
I think this is ridiculous. They are charging 3-8 percent of your sales and in addition they keep the interest on the amount they withhold for one month or two.
I think I'll stick with Paypal for credit cards. Even if I am loosing some sales sometimes because of people who do not want to use it. At least I can withdraw the money daily.
I think the distinction is that Paypal will only freeze the amount in question, now your entire income stream. They could not hold Discover and American Express, but they are still holding Visa and MasterCard.
Two lessons I learned:
1) A backup merchant account is worth the minimal investment of $300/yr to reduce financial stress
2) Have credit cards (with no annual fee) or cash around to cover at least 30 days worth of business expenses should a situation arise
Also since AmEx and Discover are on a different network and depending on the relationship with the processor / the two companies, the funds might not be withheld. Each MAP is different and even though Paypal might be great for some, too many problems with a few good clients to ever recommend them