Category Archives: Financial News

accounting software

Tips for integrating accounting software with payment systems to streamline financial processes, improve accuracy, and enhance reporting capabilities

Are you tired of manual data entry, reconciling payments, and juggling between multiple systems to manage your finances? Say goodbye to the hassle and hello to efficiency with integrated accounting software and payment systems! Streamline your financial processes, boost accuracy, and unlock powerful reporting capabilities by seamlessly merging these two essential tools. Let’s dive into how this dynamic duo can revolutionize your financial operations for the better!

Benefits of Integrating the Two Systems

Integrating accounting software with payment systems offers numerous benefits for businesses looking to streamline their financial processes. One advantage is the improved accuracy in recording and reconciling transactions. By automating data entry from payments directly into the accounting system, errors are minimized, leading to more reliable financial records.

Another benefit is enhanced reporting capabilities. With seamless integration between the two systems, businesses can generate real-time reports on cash flow, sales trends, and expenses without manual intervention. This not only saves time but also provides valuable insights for making informed business decisions.

Moreover, integrating these systems can help increase efficiency by reducing manual tasks associated with managing payments and updating financial records separately. This allows employees to focus on more strategic activities that drive business growth rather than mundane data entry tasks.

Integrating accounting software with payment systems can lead to increased productivity, better decision-making, and improved overall financial management for businesses of all sizes.

Factors to Consider When Choosing an Accounting Software and Payment System

When selecting accounting software and payment systems, it’s crucial to consider the specific needs of your business. Start by assessing the size of your company and the volume of transactions you handle on a daily basis. This will help determine if you need a robust system with advanced features or a more basic solution that fits your budget.

Another factor to think about is scalability. As your business grows, you want software that can grow with you without causing disruptions in your financial processes. Look for solutions that offer flexibility and customization options to adapt to changing requirements seamlessly.

Consider the level of integration between the accounting software and payment system. A seamless connection between the two can streamline operations and reduce errors by eliminating manual data entry tasks.

Security is paramount when dealing with financial information. Ensure that both systems comply with industry standards and provide encryption protocols to safeguard sensitive data from potential cyber threats.

Evaluate customer support options offered by vendors. Responsive support can be invaluable when encountering technical issues or needing assistance in optimizing system performance for your specific business needs.

Steps for Successfully Integrating Accounting Software with Payment Systems

When it comes to integrating accounting software with payment systems, following the right steps is crucial for a seamless process. The first step is to conduct a compatibility check between your accounting software and chosen payment system. Ensure they are compatible to avoid any technical issues down the line.

Next, set up the payment gateway within your accounting software. This allows for secure transactions between your financial records and the actual payments received. Configure settings and permissions accordingly based on your business needs and user roles. This helps in controlling access and maintaining data integrity.

After setting everything up, test the integration thoroughly to identify any potential issues or errors that need fixing. Make adjustments as needed to ensure everything functions smoothly before fully implementing it into your financial processes.

A. Compatibility Check

Before you start integrating your accounting software with payment systems, it’s crucial to conduct a compatibility check. This step ensures that the two systems can seamlessly work together without any issues or disruptions.

Check if the accounting software and payment system are compatible in terms of their technical specifications and requirements. Verify if they can communicate effectively and transfer data accurately between each other.

Review the documentation provided by both systems to understand their capabilities and limitations when integrated. Look for any potential conflicts or areas where adjustments may be needed for smooth integration.

Consult with your IT team or software providers to address any concerns regarding compatibility issues. They can provide valuable insights and solutions to ensure a successful integration process.

By conducting a thorough compatibility check upfront, you can avoid potential headaches down the line and streamline the integration process effortlessly.

B. Set Up Payment Gateway

Setting up a payment gateway is a crucial step in integrating accounting software with payment systems. It ensures that transactions flow seamlessly between the two platforms, providing accurate and real-time financial data.

When choosing a payment gateway, consider factors such as transaction fees, security features, and compatibility with your accounting software. Look for options that offer easy integration and customization to suit your business needs.

Once you’ve selected a payment gateway, follow the provider’s instructions to set it up properly. This typically involves creating an account, linking it to your accounting software, and configuring settings like currency preferences and transaction limits.

Testing the payment gateway integration is essential to ensure everything works smoothly. Make small transactions to verify that payments are processed correctly and reflected accurately in your accounting system.

By setting up the payment gateway correctly, you can streamline financial processes, improve accuracy in recording transactions, and enhance reporting capabilities for better decision-making.

C. Configure Settings and Permissions

When integrating your accounting software with payment systems, configuring settings and permissions is a crucial step in ensuring smooth operations. Start by defining user roles and access levels within the software to maintain data security and confidentiality.

Customize settings to align with your business needs, such as setting up automatic syncing between transactions for real-time updates. This can help streamline processes and reduce manual errors.

Configure notification preferences to stay informed about payment activities, alerts for discrepancies or failed transactions. Tailoring these settings can enhance transparency and accountability within your financial operations.

Grant access only to authorized personnel based on their responsibilities. Limiting permissions helps prevent unauthorized changes or misuse of sensitive financial information.

Regularly review and update settings as needed to adapt to changing business requirements or system updates. Continuous monitoring ensures that your integration remains efficient and effective over time.

D. Test Integration and Make Adjustments

After setting up your payment gateway and configuring the necessary settings, it’s time to test the integration between your accounting software and payment system. Testing is crucial to ensure that data flows accurately between the two systems without any errors or discrepancies.

Start by making a test transaction to see if payments are being recorded correctly in your accounting software. Double-check that all financial information is syncing accurately, including invoices, receipts, and bank reconciliations.

If you encounter any issues during testing, don’t panic. Take the time to troubleshoot and make adjustments as needed. It may involve revisiting your settings, updating permissions, or seeking help from customer support.

Once you have successfully tested the integration and made any necessary adjustments, it’s essential to monitor the system regularly to ensure ongoing accuracy and efficiency in your financial processes.

Common Challenges and Solutions for Integration

Navigating the integration of accounting software with payment systems may come with its own set of challenges. However, being prepared and understanding potential hurdles can help mitigate these issues.

One common challenge is data synchronization errors between the two systems. To solve this, ensure that both platforms are regularly updated and communicate seamlessly to avoid discrepancies in financial records.

Another issue could be security concerns when transferring sensitive financial information between systems. Implementing encryption protocols and utilizing secure payment gateways can help safeguard data during the integration process.

Additionally, compatibility issues between different software versions or outdated systems may arise. Researching thoroughly before integrating and ensuring all components are up-to-date can prevent these compatibility roadblocks.

By proactively addressing these challenges with practical solutions, businesses can successfully integrate their accounting software with payment systems to streamline processes, enhance accuracy, and improve reporting capabilities for a more efficient financial management system.

Fraud Prevention

Discuss the latest tools and techniques businesses can leverage to combat fraud, including machine learning, biometric authentication, and behavioral analysis

Fraud – a word that strikes fear in the hearts of businesses worldwide, threatening financial stability and reputation. In today’s digital age, where transactions happen at the speed of light, combating fraud requires innovative tools and techniques to stay one step ahead of malicious actors. Join us as we explore the latest advancements in technology that businesses can leverage to safeguard against fraudulent activities. Let’s dive into the world of machine learning, biometric authentication, and behavioral analysis to fortify your defenses and protect your bottom line!

Traditional Methods of Combating Fraud

When it comes to combating fraud in business, traditional methods have long been relied upon. These include manual reviews of transactions, audits, and setting up internal controls to prevent financial losses.

One common practice is the use of passwords and PINs for authentication purposes. However, with the rise of sophisticated cybercriminals, these methods are no longer foolproof.

Another traditional approach is employing a team of experts to manually sift through data looking for irregularities or suspicious patterns that may indicate fraudulent activity.

While these methods have been effective to some extent, they are often time-consuming and can miss more subtle forms of fraud. As technology continues to advance, businesses are turning towards more innovative solutions to stay ahead of ever-evolving fraudulent tactics.

The Rise of Technology in Fraud Prevention

As businesses continue to digitize their operations, the risk of fraud has also increased. However, with the advancement of technology, new tools and techniques have emerged to combat fraudulent activities effectively. The rise of technology in fraud prevention has revolutionized how organizations safeguard their assets and data.

Gone are the days when manual checks were sufficient to detect fraud. Today, sophisticated algorithms powered by machine learning can analyze vast amounts of data in real-time to identify patterns indicative of fraudulent behavior. This proactive approach enables businesses to stay one step ahead of potential threats.

Biometric authentication is another cutting-edge technology that is making waves in fraud prevention. By using unique physical characteristics such as fingerprints or facial recognition, businesses can ensure secure access to sensitive information and prevent unauthorized transactions.

Furthermore, behavioral analysis plays a crucial role in detecting suspicious activities. By monitoring user interactions and flagging deviations from normal behavior patterns, organizations can swiftly intervene before any harm is done.

Incorporating these technological advancements into a comprehensive fraud prevention strategy is essential for modern businesses looking to protect themselves from financial losses and reputational damage caused by fraudulent activities. By leveraging machine learning, biometric authentication, and behavioral analysis tools effectively, companies can fortify their defenses against ever-evolving threats posed by cybercriminals.

Machine Learning and its Role in Identifying Fraudulent Activity

In the world of combating fraud, machine learning has emerged as a game-changer. By analyzing vast amounts of data at high speeds, machine learning algorithms can detect patterns and anomalies that human analysts might overlook. This technology is constantly evolving, becoming more sophisticated in identifying fraudulent activities across various industries.

Machine learning algorithms can adapt and learn from new data inputs, making them highly effective in staying ahead of ever-changing fraud schemes. These algorithms can sift through massive datasets to uncover subtle correlations and trends that point towards potential fraud incidents.

One key advantage of using machine learning for fraud detection is its ability to automate the process. This automation saves time and resources while providing real-time insights into suspicious activities. Businesses can leverage this technology to enhance their fraud prevention strategies and protect themselves from financial losses.

As machine learning continues to advance, it promises even greater accuracy in identifying fraudulent behavior before it causes significant harm. Its role in detecting complex patterns and predicting future fraudulent activity makes it an invaluable tool for businesses looking to stay one step ahead of cybercriminals.

Biometric Authentication and its Advantages in Fraud Prevention

Biometric authentication has revolutionized the way businesses combat fraud. By using unique physical characteristics like fingerprints, facial recognition, or iris scans, companies can ensure secure access to sensitive data and transactions. These methods are extremely difficult to replicate or forge, making it nearly impossible for fraudsters to gain unauthorized access.

One of the key advantages of biometric authentication is its accuracy and reliability. Unlike passwords or PINs that can be easily forgotten, stolen, or shared, biometric data is inherently tied to an individual and cannot be altered. This significantly reduces the risk of fraudulent activities carried out by imposters.

Moreover, biometric authentication provides a seamless user experience without compromising security. Employees and customers alike can verify their identities quickly and conveniently with just a touch or glance – eliminating the need for cumbersome login processes while ensuring robust protection against potential threats.

As technology continues to advance, leveraging biometric authentication will become increasingly vital in safeguarding businesses against evolving forms of fraud. Its combination of convenience and security makes it a powerful tool in today’s digital landscape.

Behavioral Analysis and its Effectiveness in Detecting Suspicious Behavior

Behavioral analysis is a cutting-edge tool that businesses are using to stay one step ahead of fraudsters. By analyzing patterns in user behavior, companies can detect unusual activities and flag them as potential risks.

This technique goes beyond traditional security measures by considering how individuals typically interact with systems or devices. It looks for anomalies like sudden changes in spending habits, login locations, or transaction frequencies.

The advantage of behavioral analysis is its proactive approach to identifying suspicious behavior before any actual harm occurs. Rather than simply reacting to incidents after they’ve happened, this method allows organizations to anticipate and prevent fraudulent activities in real-time.

In today’s digital landscape where cyber threats continue to evolve, leveraging behavioral analysis can provide a significant edge in safeguarding sensitive data and financial assets against malicious intent.

Implementing a Comprehensive Fraud Prevention Strategy

Implementing a comprehensive fraud prevention strategy is crucial for businesses of all sizes to protect themselves from potential financial losses and reputational damage.

One key aspect of this strategy is to conduct regular risk assessments to identify vulnerabilities within the organization’s processes and systems. By understanding where weaknesses lie, companies can proactively address potential areas of exploitation.

Training employees on fraud awareness and fraud prevention techniques is another vital component. Educating staff on how to recognize suspicious activities and report them promptly can serve as an effective line of defense against fraudulent behavior.

Utilizing advanced technology solutions such as AI-powered monitoring tools can help automate the detection of irregular patterns or anomalies in transactions, enabling swift action to be taken before significant harm occurs.

Collaborating with industry experts and staying up-to-date on the latest trends in fraud tactics can also enhance a company’s ability to stay ahead of evolving threats. By fostering a culture of vigilance and proactive risk management, organizations can significantly reduce their susceptibility to fraud schemes.

Future Advances in Fraud Prevention Technology

As technology continues to advance, the future of fraud prevention looks promising. Innovations such as machine learning, biometric authentication, and behavioral analysis are revolutionizing how businesses combat fraudulent activities. By leveraging these cutting-edge tools and techniques, organizations can stay one step ahead of cybercriminals and protect their assets effectively. As we move forward, it’s crucial for businesses to adapt and integrate these advancements into their fraud prevention strategies to safeguard their operations in an increasingly digital world. Stay informed, stay proactive, and stay secure against evolving threats in the realm of fraud prevention technology.

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What Is An Upfront Reserve?

Before considering a merchant’s application, an acquiring bank or a payment processor requests them to put an upfront reserve—an amount your processing bank can use to recover from the monetary issues that might emerge later.

This reserve is used against the exposure to financial risks, such as an increased number of chargeback requests. Reserves are not just for the protection of the acquiring banks, but they are equally important for the merchant’s safety. Read on to learn more about the upfront reserves, why they are required, how much reserve is needed to create a merchant account, and who needs it.

What is an Upfront Reserve?

Working with a high-risk merchant carries significant risk for the payment processor. There can be many legal issues that can shut the business down for good. Reserve accounts refer to the place where a portion of the merchant’s income is held temporarily to cover possible chargebacks, refunds, and other claims.

If a customer issues a chargeback against a transaction and their request is approved, the merchant has to refund the amount. The acquiring bank uses this reserve to clear the refunds and chargebacks. In most cases, payment processors request a rolling reserve only, but if it’s a high-risk merchant, they might request an upfront reserve as well.

An upfront reserve, as the name suggests, is the amount that a payment processor holds in the merchant’s reserve account before they start operation. It has nothing to do with the merchant’s income or weekly sales. It’s rather a fixed amount that the merchant has to deposit into their reserve account for safety purposes. The upfront reserve amount can vary greatly depending on the merchant’s processing volume for the month, but it’s usually between 50 and 100 percent of their monthly processing volume. For example, if you are allowed to process transactions worth $200,000 a month, your upfront reserve balance must be between $100,000 and $200,000.

Different Types of Reserve

Different Types of Reserve

As mentioned above, the reserve is used to cover chargebacks, financial obligations, refunds, and other issues that might emerge from credit card transactions. The main purpose of this reserve is to mitigate the financial risks of the payment processor. Let’s take a look at the different types of reserves.

  • Upfront Reserve: It is the amount stored in the merchant’s reserve account before they start processing credit card transactions. The upfront reserve is calculated based on the merchant’s risk profile, the industry they operate, the chargeback ratio, and other factors.
  • Rolling Reserves: In addition to the upfront reserve, the payment processor can keep a specific percentage of the amount from the merchant’s daily or weekly income and hold it for a short period. The amount is then transferred to the merchant’s account, usually within 30-180 days. The rolling reserve doesn’t have a fixed percentage. It varies depending on the merchant’s sales volume and their income. Usually, it is 10% of your sales volume.
  • Capped Reserve: The capped reserve refers to the total amount the payment processor can hold in the merchant’s account. Once this threshold is reached, the acquiring bank can no longer put money in the reserve.

How Does It Work?

The payment processor collects a specific amount of money and puts it in the merchant’s reserve account to recover from the financial losses if the merchant’s account is terminated in the future. Although this amount acts as financial security, it is still the merchant’s money. If your account activity doesn’t indicate any trouble or you have not incurred any chargeback or any financial loss in the past few months, the upfront reserve will be given back to you.

Not just for safety purposes, but the upfront reserve can be used to increase your processing volume over time. For instance, if you are currently approved for a monthly processing volume of $150,000, you can raise it to $200,000 by putting an extra $50,000 into your reserve account.

How is the Reserve Collected?

The upfront reserve is deposited either immediately or in installments based on the merchant’s risk profile. In most cases, the merchant submits a fixed dollar amount to the processing bank. The amount is decided based on the merchant’s sales volume. There’s also an alternative method, in which the merchant doesn’t deposit the upfront reserve immediately, but their income from the sales is held in this account until the minimum reserve is met.

For example, if you are approved for a $100,000 monthly processing volume, but started accepting credit card transactions without putting any money in the reserve account, your earnings from the sale will be deposited into the reserve account until you have $100,000 in it. As soon as the minimum reserve balance threshold is met, your income from the sales will start to be deposited into your bank account. This kind of reserve is for businesses that do not have any processing history or do not have enough capital to save money in the reserve account before starting a business.

So, where does this reserve amount stay? Well, it’s stored in the non-interest-bearing bank. Your payment processor collects and saves this amount in the reserve. Since it’s linked to your merchant account, you can view the balance in your reserve account on your statement any time you want.

How is Upfront Reserve Different from Other Reserve Types?

The upfront reserve is not requested from every merchant. It’s only required from the high-risk merchant, who’s doing business in an industry that’s associated with legal issues. Capped and rolling reserves are more flexible in that they allow you to put money in the reserve account over time instead of depositing a huge amount at once.

In an upfront reserve, you need to save the funds before starting a business. The biggest advantage of the upfront reserve is that it’s only for a brief period and you will start making money once you have met the reserve balance. No matter the type of reserve, you can rest assured that the entire reserve amount will be credited to your bank account within a few months.

Why Should You Have an Upfront Reserve?

Upfront reserves are not very common in the credit card processing industry. If you are requested to deposit an upfront reserve, you are either accepted for a high monthly processing volume, you have a history of excessive chargeback requests, or you are in a high-risk industry.

If the processing bank believes you can pose a financial threat to their bank or might incur a significant financial loss, they will ask you to deposit an upfront reserve to be approved for the merchant account with them. Alternatively, the processing bank might ask you to deposit the money in your reserve account as you earn from sales. As mentioned previously, the entire amount from your sales will go into the reserve account until the reserve requirements are met.

This leads us to an important question, how can you get the upfront reserve amount back?

Your upfront reserve amount will be transferred to your bank account once you have built a successful and healthy processing history. The reserve is stored to prevent financial liability for the payment processor. If you do not receive any chargeback, refund, or any financial obligations that require reservations, the processing bank will most likely give it back in some time.

However, the amount is not released immediately. It’s rather released in stages, even if you deposited the full amount in the reserve immediately. For instance, the processing bank could release 20% of your reserve initially and every month until the full amount is released and your reserve account is emptied. You can also ask the payment processor to release your reserve.

Where is the Reserve Used?

If you are declared insolvent and you have to shut down your business, the payment processor will use the reserve amount to repay your chargebacks and refunds, and meet other financial liabilities. In 180 days, whatever amount remains in the reserve (after clearing the chargeback and other financial liabilities), will be transferred back to the merchant. Of course, you can check with your payment processor and request an early reserve release, if your merchant allows that.

Industries that offer future delivery services are more likely to receive the upfront reserve request. Examples include concert tickets, airline services, etc. That’s because these services have delivery dates, which are 3-6 months into the future. There’s a chance the buyer may reserve the services and then change their mind in the future. There’s also a high risk of chargeback or refund requests.


For any business dealing with high-ticket transactions, there is an increased risk of chargeback and financial issues. As a result, the payment processor might require an upfront reserve, which is held in your reserve account for a short while, around 180 days until the amount is returned to your account. Upfront reserves are not for every business, and there’s a good chance a merchant won’t be requested to make this fixed deposit. It’s just for high-risk merchants.

Profit and Loss Statements

Understanding Profit and Loss Statements

The ultimate objective of any business is to earn maximum profits. Every decision taken on behalf of the company will affect the overall profits of the business. To understand the respective profits, a business is expected to ensure a detailed record of the income and expenses. It is possible with the help of a dedicated profit and loss or P&L account. It is regarded as a type of financial statement reflecting the financial outcome (both profits and losses) of the particular organization out of business activities during a specific accounting period. 

The profit and loss or P&L statements form a crucial aspect of the financial statements of any organization. Let us understand the same in depth.

What is a Profit & Loss (P&L) Account?

A profit and loss account is regarded as a detailed record of all the expenses and incomes of the organization during a specific duration of time. This period can refer to the complete financial year, a quarter, or an interim period like a half financial period. All businesses -whether a sole proprietorship or an enterprise, are expected to maintain a proper profit & loss account. This helps them in obtaining the right financial position during the end of the stipulated period. All non-cash as well as cash-based income & expenses of the organization are effectively recorded in the profit & loss account.

A detailed profit & loss statement is generated depending on particular accounting principles. These accounting principles encompass the principle of accrual accounting, revenue recognition, and matching principle. It reveals multiple stages of profits garnered by the organization like gross profit & loss, the net profit & loss, and the operating margin incurred by the particular business.

How Do Profit & Loss Statements Work?

The profit & loss statement can be regarded as one of the primary financial statements that every public organization is expected to issue on an annual or quarterly basis. Additionally, the organization is also expected to present cash flow statement and balance sheet. P&L statement is one of the most popular financial statements in any financial plan. It is because it reveals the total amount of profit or loss a company generates in a given period of time.

Profit & loss statements can also be recognized in the following ways:

  • Expense statement
  • Statement of operations
  • Statement of profit & loss
  • Earnings statement
  • Statement of financial income or results
  • Income statement

The profit & loss statement -quite similar to the cash flow statement, helps in revealing changes in the respective accounts over a particular period of time. On the other hand, balance sheet refers to the snapshot -revealing what the organization currently owes and owns at the given moment. It is crucial to compare profit & loss statement with the cash flow statement. It is because within the scope of the accrual accounting method, a business can consider logging in expenses and revenues before cash will change hands.

The profit & loss statement or document has a particular format. The format commences with the revenue’s entry -referred to as the top line. The statement goes ahead with subtracting the costs of executing business -along with the costs of items sold, tax expenses, operating costs, and interest-based expenses. The difference is referred to as the bottom line or net income. It is also referred to as the overall earnings or profits. 

Types of Profit & Loss Statements

A profit & loss statement can be prepared in the following ways:

  • Accrual Accounting Method: This method helps in recording revenue in the form it is earned. This implies that an organization utilizing the accrual method will account for the amount it expects to receive in the coming future. 

For example, an organization delivering a service or product to the customers will be recording its revenues on the profit & loss statement -even though it might not have received the payment yet. At the same time, liabilities are accounted for even when the company might not have yet paid for its expenses. 

  • Cash Accounting Method: This method is utilized only when the cash will go in & out of the particular business. It turns out to be a simple method accounting for only the cash paid or received. An organization can consider recording transactions in the form of revenue whenever cash has been received and in the form of liabilities when cash is being used for paying liabilities or bills. This method is popularly used by small-scale organizations and people looking forward to managing their overall personal finances. 

What are the Essential Components of Profit & Loss Statements?

The P&L account encompasses different components that are helpful in recording income & expenses of the particular business under diverse categories. Some of the core components are:

  • Revenue or Income: The revenue of an organization is also known as the top line. The revenue earned out of core business operations are recorded initially. It will feature revenues generated during the day-to-day course of the organization. The following category will refer to additional income and other miscellaneous income of the company. It will feature income that is obtained out of multiple investments of the organization.
  • COGS: COGS or Cost of Goods Sold is the next category of the profit & loss statement. It features the direct operating cost for any business -including labor cost, cost of raw materials, or the overheads of the respective entity linked with purchasing or manufacturing goods. These expenses refer to the first line of expenses that are deducted out of the revenues for generating gross margin of the particular business.

It is crucial that a company should feature a higher gross margin as the non-operating and operating expenses will be deducted from the gross margin. It will ultimately minimize the business’ profits. Therefore, it is crucial to check the COGS to make sure that your business has higher net gains for the shareholders or owners of the organization.

  • Operating Expenses: These are not the direct expenses in the manufacturing or production process but the indirect form of cost of running any business. These expenses will feature administrative expenses including depreciation costs, employee costs, research & development costs, distribution and marketing costs, selling costs, and so more. 

These indirect costs tend to deliver a direct impact on the net profits of any business. When the operating costs of the organization are significantly higher, it might make the positive gross profit margin be converted into net losses as well.

  • Operating profit: It is regarded as the positive balance from the company’s gross margin after minimizing the overall operating expenses. It is also known as the EBIT or Earnings Before Interest & Taxes. A positive outcome of operating margin offers the assurance to stakeholders and investors that a higher profitability will be earned. It also indicates the solvency of the particular organization.
  • Net Income: The organization’s net income is regarded as the net profit or bottom line generated by the particular business after subtracting all non-operating as well as operating expenses along with the respective taxes and interests. It is the amount of profit that is made available for getting distributed to the stakeholders. 

What is the Importance of Profit & Loss Statements?

The profit & loss account of any organization is the ultimate reflection of the financial viability. It is an essential statement that is crucial for all businesses out there. The statement should be prepared carefully to ensure the overall correctness. Some of the important aspects of the benefits of these statements are:

  • It assists businesses understand the operational efficiency and different expenses incurred by the organization.
  • The P&L account assists the shareholders in understanding the net earnings per share. At the same time, the investors can think of evaluating the overall viability of the respective investment. 
  • It also assists businesses in meeting the statutory specifications of coming up with financial statements and ensuring proper auditing as well as approval.
  • A P&L account refers to the direct evaluation of the business’ profitability along with in-depth comparison of the past performance.
  • It also helps in forming the basis of ensuring future P&L statements towards estimating projected profits of the organization and making improved business decisions.


A P&L account is the income & expenditure statement. It is expected to be prepared on a constant basis while being reviewed carefully to understand the ultimate profitability of any business.

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How Much Does Square Charge? | Square Rates and Fees in 2022/2023

Square is one of the most popular credit card processing companies in the market currently. This is because of the overall popularity of the Square card reader that enables customers to accept credit cards directly from their mobile devices. Businesses of all scales and sizes can use the POS (Point of Sale) and payment processing solutions -both in-person and online.

Who is Square Best for?

Square is quite popular with small-scale businesses. The company was introduced in 2009, and there are several reasons for the overall popularity of the credit card payment processing provider. The company has been given its name after the square-shaped mobile-based card reader it provides to its customers for free. This feature of the company allows customers to ensure payments almost everywhere. The company also comes forth with its all-in-one credit card processing solution that is easy to use and quick to set up. Companies can start taking payments through credit cards within minutes with the help of the free mobile-based credit card reader of Square. The card reader is capable of plugging into any tablet or smartphone and is a free POS software solution. There is the absence of any contracts, upfront costs, or monthly minimum requirements while using Square and its credit card processing services. Therefore, Square serves as the ideal solution for small businesses that do not want to invest money into a dedicated credit card processing system.

What are Squares Fees?

Typically, Square is known to charge three types of fees from merchants -hardware fees, software fees, and credit card processing fees. On an overall basis, there is the absence of any monthly fee for using its standard Square POS application. Instead of this, you are only required to pay the amount of 2.6 percent, along with $0.10 as the transaction fee for the acceptance of in-person payments. The Square fees you will be paying will ultimately depend on the respective software you are using and how you are accepting payments. Additionally, there is a one-time cost for the hardware you will use. Most payment processing companies are known to be quite complicated about issuing different types of fees levied by popular card companies, compliance standards, and banks. This tends to leave small-scale businesses confused about how much they are expected to pay. Square is known to eliminate all such confusion by coming up with a flat fee structure for processing transactions. Square will not charge any subscription, startup, or refund fees. Moreover, Square also extends its free-to-use Square card reader available for both Android and iPhone to enable organizations to ensure payments on the go. Every additional card reader will be available for $10.

Credit Card Payments Through Square

Square is known to charge 2.6 percent along with 10 cents for every transaction every time a customer taps, swipes, or dips a card at the time of an in-person transaction. It will include features like cards including Mastercard, Visa, JCB, American Express, and Discover, along with gift cards and mobile wallets -including Samsung Pay, Apple Pay, and Google Pay. Square is also known to charge 3.5 percent along with 30 cents for ensuring purchases that are made with the help of an online store, online invoices, e-commerce API (Application Programming Interface), or online checkout. The credit card processing fees by Square are not the most affordable in the market. Still, you should note that the POS app, activation, advanced reporting tools, support, chargebacks, PCI (Payment Card Industry) compliance, the first Square credit card reader, and next-business day deposits -all these factors are made completely free by Square. Square also comes forth with customized pricing plans for organizations that are capable of processing more than $250,000 in the form of sales through cards while having an average ticket size of over $15. Business owners who might be interested in the concept of custom pricing can reach out to the sales department of the company to obtain an estimate. For ensuring faster access to the money, businesses can also consider instantly transferring around $10,000 at the cost of 1.5% of the total transaction -along with the standard fee for credit card processing. In addition to these variants of common fees, Square is not known to charge any other fees. For instance, the company is not known to charge for the following;
  • PCI compliance
  • Dispute management and chargebacks
  • Recording check, cash, or gift card payments
  • Fraud protection
  • Customer support
  • Account Termination
  • Downloading the Square POS application or activating the account
Square also features a free-of-use magstripe credit card reader with the respective business account. There is no involvement of any monthly fee for credit card processing. At the same time, the overall transaction fees remain the same irrespective of the brand of credit card that is being used.

Square POS (Point of Sale) Software

For the default software, Square POS, the company will not charge any extra costs. It only charges the standard Square credit card processing fees that you will have to pay for every credit card transaction that is processed through the POS system of the company. It serves to be a great deal for businesses as there are several functions implemented by the Square POS software -right from processing all types of payments to tracking inventory, providing functions of employee management, and working offline.

Square for Restaurants Software Solutions

As the name implies, Square for Restaurants is available, particularly for restaurants. The restaurant-centric software solution by Square comes with a free plan without any monthly charges. The Plus plan of the software is available for $60 per month for every location. At the same time, the Premium Plan of the software starts at around $299. The processing rates will vary for each plan. However, the software for restaurants by Square offers high-end, industry-centric features -including the ability to manage the menus, arrange for takeout & delivery orders, reconcile tips, floor plans, and so more.

Square for Retail Software Solutions

Quite similar to the features of the restaurant-specific software by Square, the retail version of the software offers access to advanced retail-centric tools -including the ability to execute purchase orders from the POS, management of customer profiles, set permissions for custom employees, and much more. The retail software by Square is available with a free plan without any monthly charges. The Plus plan of the software is available for $60 per month for every location. At the same time, the Premium plan of the retail software starts at around $299. The processing rates for the software plans might vary from time to time. In addition to the existing plans, if you are processing transactions through the retail app of Square, you will be paying a reduced in-person transaction fee. You are expected to pay only 2.5 percent and $0.10 for every swipe, tap, or dip. It is in contrast to the standard fee of 2.6 percent, along with 10 cents for every transaction. However, it is important to understand that the existing low rate will apply only to the retail app offered by Square. Even when you have access to the subscription for retail by Square, but you still continue using the Square Point of Sale application to process the respective transactions, then you will have to end up paying a higher rate (2.6 percent plus $0.10) in association with the POS of Square.

Square Appointments Software Solutions

Square Appointments serves to be a unique form of the software solution. Unlike Square for Retail, Square for Restaurants, or Square POS, Square Appointments is available as the appointment-booking solution. The software has been designed to assist service-based businesses in scheduling customers and clients while organizing their schedules. Rather than a single option for a monthly fee, the cost of the software solution will depend on the number of employees you have:
  • Single individual: $0 every month
  • 2-5 employees: $50 every month
  • 6-10 employees: $90 every month
Additionally, like Square for Retail, the paid versions of the Square Appointments software will be available with a low processing fee for transactions carried out in-person -2.5 percent along with 10 cents rather than the standard 2.6 percent along with 10 cents.

Magstripe Reader by Square

As you sign up for Square, you will get shipped a magstripe reader. The device can be effectively plugged into the lightning port or the headphone jack of the mobile device while allowing you to run transactions related to magstripe credit cards along with the Square POS app. The hardware also remains compatible with Square for Restaurants, Square for Retail, and Square Appointments. If you require access to additional magstripe credit card readers, then you are expected to pay $10 for each unit.


While you might find it difficult to understand the fee structure of Square initially, it is still easier to break the overall structure into different aspects like hardware, software, payment processing, and other types of fees.
PayPal Pricing For Merchants

PayPal Pricing For Merchants in 2022 and 2023

PayPal is regarded as one of the leading payment processing solutions out there. However, the presence of multiple pricing tiers makes it challenging for merchants and sellers to understand the exact pricing they will have to pay. The profit-based business model of PayPal is known to generate income by charging fees for providing payment services and online payments between merchants and consumers. As a leading payment service provider, the convenient payment processing services of PayPal are available at some cost to business owners. The volume of payments that merchants are processing with determine the fees that they incur. Therefore, it is imperative for merchants and businesses to understand the exact amount they will have to pay for payment processing with PayPal.

PayPal Fees for Sellers

Seasoned business owners are usually not surprised by the fees charged by PayPal. It is because there are no additional charges for the buyers. At the same time, buyers also do not need an additional account on the platform to ensure payments. Still, as a merchant or seller, you are expected to pay a specific amount of fees for every transaction. Some of the common PayPal account fees that you might have to encounter as a merchant are:
  • Transaction Fees: The transaction fee is regarded as the most well-known fee charged by PayPal. It is applied when you are selling the products as well as services either online or in-store. There are different types of rates for every type of transaction. You might also refer to the transaction fees as the payment processing fees.
Currently, you will get access to four different types of transaction fees or payment processing fees that are applied for sellers. They are divided by whether or not the transaction is taking place inside the United States of America. Then, the same is categorized by whether the transaction is online or offline. For online transactions within the United States of America, there is a transaction fee of 2.9 percent of the total transaction amount applied on the merchants. Additionally, there is the involvement of a fixed fee depending on the currency used for making the payment. For sales that are executed outside the United States, the rate subsequently rises to 4.4 percent along with currency fees. In-store sales executed within the United States have a slightly reduced fee of around 2.7 percent along with the currency fee. For in-store sales that are executed outside the United States, the rates rise to 4.2 percent. While you can experience some variations due to currency changes, most of the fees are around 30 cents USD. For complex transactions, you can make use of a dedicated fee calculator to obtain the accurate measurements.
  • Balance Transfers: PayPal is available with two distinct ways to ensure the transfer of earnings from the respective PayPal balance to any bank account. There is the presence of a standard account transfer capability from the PayPal account to any other linked bank account or even a checking account. There is no fee for withdrawing any amount. Funds from the respective account balance are deposited typically the next business day.
There is also the provision of a faster method or route for ensuring direct deposits with the help of Instant Transfer. Instant Transfers help in depositing your overall earnings to the linked debit card or bank account within minutes. If you wish to leverage the benefits offered by Instant Transfer by PayPal, you will have to incur a fee of one percent of the total amount transferred -up to the maximum fee of $10. If you make small-sized bank transfers on a regular basis, the fee could eventually add up. If you wish to save money on the overall PayPal fees, it is recommended to request Instant Transfers quite less often and instead use the standard method to transferring your payments.
  • Virtual Terminal Fees and PayPal Payments Pro: PayPal offers access to the opportunity to sign up for the feature of PayPal Payments Pro. It serves to be a dedicated payment gateway that enables you to accept payments through the website. The solution of Virtual Terminal by PayPal will convert your computer system into a virtual credit card terminal. This implies that you can go ahead with accepting payments at the respective retail locations.
Both solutions of payment gateway and virtual terminals will serve to be useful. However, fees for these solutions will vary depending on the location. Therefore, it is imperative for merchants to understand which fees will apply. Currently, the fees for leveraging the services of PayPal Payments Pro are 2.9 percent plus $0.30 for every transaction for the transactions that are made in the United States. For transactions that are made outside the United States, the fees are 4.4 percent plus a fixed fee. The fixed fee will differ from one location to another -just like the standard fees. There is a unique fee structure for transactions on Virtual Terminals. Domestic fees are fixed at 3.1 percent plus $0.30. At the same time, international fees are fixed at 4.6 percent plus $0.30.
  • Mobile Card Reader Fees: For most retailers, it is crucial to ensure the processing of payments -irrespective of the location. The utilization of mobile card readers makes it possible to accept credit card payments in remote locations or while on the move.
PayPal offers access to a dedicated mobile app service for ensuring this capability. There is the absence of any annual fees, monthly fees, or even startup costs. There is only the presence of transaction fees that you need to consider. Acceptance of international credit cards is no hassle. However, there is the presence of an additional 1.5 percent fee as the extra-border fee. There is also the provision of the currency conversion fee of 2.5 percent if the customer goes ahead to pay in some different currency.
  • Chargeback Fees: At some point of time, you are expected to process a chargeback request from the cardholder. With PayPal, you are expected to pay the chargeback fee depending on the currency in which the payment was made. There is a fixed fee for every payment instead of depending on the same-day currency exchange rate. You can go through the list of fees on the official website of PayPal -all of which remain in the range of $20 for every chargeback.
It is important to note that the chargeback rates of PayPal can be hefty. Therefore, you should aim at minimizing the chances of a customer requesting the chargeback.
  • Refund Fees: Requests related to customer refunds can take place more often when compared to chargebacks. In the given cases, there will no fee charged by the platform towards processing the refund. However, you will also not receive any refund on the seller fees.
  • Other Fees: Most sales on the platform tend to be straightforward. Therefore, it is easier to understand your PayPal fees. It is important to be cautious of international sales. This is because these are linked to an additional charge of 3.0 percent for ensuring currency conversion. This is on top of the 1.5 percent increase on fees related to foreign transactions in comparison to domestic sales.
The international sales fee of PayPal can catch you off guard if you are not typically processing international payments. PayPal users are also expected to be charged for the process of Amex or American Express cards. The usage fees of American Express cards can be higher than other types of transaction fees. It stands at 3.5 percent. The existing non-standard fees for credit cards and debit cards do not apply to other payment methods. Gift cards, Visa, PayPal credit, PayPal prepaid Mastercard, and Mastercard are not affected. PayPal merchants or sellers can also come across fees for card verification and uncaptured authorization transactions. Uncaptured authorization is the process in which you tend to authorize a card but there is no occurrence of any transaction. Transactions related to card verification will ensure that the credit card remains in good standing before the occurrence of any transaction. These fees tend to be small -at around 30 cents for every transaction. However, these fees could eventually add up in case you are capable of processing a higher volume of sales.

Tips to Avoid PayPal Fees

Some of the useful strategies that can help in minimizing the overall fees are:
  • Having customers pay less frequently: PayPal is known to charge the per-transaction fee along with a percentage fee. Therefore, fewer transactions will imply fewer per-transaction fees.
  • Offering another form of payment: It becomes less expensive to accept checks, ACH transfers, or cash.
  • Observing if you can deduct fees in the form of business expense: It will cost you to pay towards accepting credit cards. However, it could be deductible.


Before using PayPal and its payment processing services, it is imperative for merchants to know about different pricing plans as it will help you to streamline your operations and have an idea on what types of fees you will be charged to accept cards in a variety of different scenarios.
stripe charge

How Much Does Stripe Charge? Stripe Rates and Fees in 2022/2023

Stripe serves to be the ultimate pay-as-you-go platform featuring transaction-based and flat-rate fees. Irrespective of the type of business you are running, it is not possible to operate unless you offer the ease of accepting credit cards. With Stripe, you can achieve this at relatively affordable rates. In some cases, the transaction fees while using Stripe tend to be quite low at 2.7 percent along with 5 cents for in-person transactions. On the other hand, the price of credit card terminals starts at around $59 for dedicated mobile-based card readers. Let us help you with the comprehensive guide to Stripe pricing and fees.

Who can Use Stripe?

Stripe serves to be one of the most sought-after payment processing providers for small-scale businesses. Stripe offers small-scale business owners a simple way to process payments along with the ability to ensure the acceptance of credit card payments without the requirement of a minimum monthly revenue. The leading payment processing provider offers access to comprehensive POS or Point of Sale tools while accepting more than 135 currencies. Stripe also permits businesses to customize the entire checkout experience for their customers.

Popular Pricing and Plans of Stripe

The overall pricing structure of Stripe is quite straightforward. The platform is free to set up. Moreover, the company does not charge annual or monthly fees for its payment processing services. Rather than this, all fees by Stripe are based on each transaction that is processed. Online sales of Stripe will cost businesses a fee of around 2.9 percent along with 30 cents for every transaction. There is the also the presence of an additional fee of one percent for transactions that are international or conducted for currency conversion. In-person transactions at Stripe cost around 2.7 percent along with 5 cents for every transaction. In this case also, there is the same provision for additional one percent transaction fee in case of international transactions or those for currency conversions. These additional fees are charged automatically. These are usually deducted from the final payout of the merchant for each batch. Stripe features a hosted, pre-built checkout page that has been optimized for ensuring conversions. The checkout page is capable of accepting both recurring and one-time payments. Additionally, it is possible to customize the checkout page to matching the branding requirements of the company. The best part is that the checkout page is available in more than 20 languages while featuring built-in conversion optimizations. Stripe also comes forth with automatic tax collection on all possible transactions for around 0.5 percent of every transaction along with easy-to-use tax reporting capabilities for different filing markets. Stripe also provides access to a customizable plan for businesses featuring larger payment volume, unique business models, and high-value transactions. The customizable plan provides access to multi-product discounts, large-volume discounts, interchange pricing, and country-specific rates. Businesses that are interested in the customizable plan should contact the sales team for receiving a quote. Once Stripe is associated to the bank account of the business, the standard payout is for the duration of two days. Business owners are capable of scheduling automatic payouts on a daily, monthly, or weekly basis. Businesses can also consider setting a customized payout schedule. Instant Payouts enable qualified or eligible business owners to be delivered payouts within 30 minutes of a transaction that has been approved. The option of Instant Payout will cost an additional fee of one percent of the total payout amount with a minimum fee of 50 cents for every transaction.

International Transactions on Stripe

One of the features of Stripe is the overall accessibility for international customers. Currently, around 47 nations – some including Brazil, Croatia, Japan, and Canada are known to support Stripe. Once Stripe has been supported, businesses in the respective nations can go ahead with taking payments from any corner of the world. Stripe is known to accept over 135 products -enabling businesses to present prices in the native currency of the customers. Additionally, the payment processing provider also helps businesses in collecting taxes in around 30 nations while offering global support and supporting leading payment methods from all corners of the world -including iDEAL, Giropay, EPS, Bancontact, and so on. It is important to note that pricing will not change based on the specific payment method along with the application of 1.5 percent fee for international payment methods along with one percent fee for ensuring currency conversion.

Credit Card Terminals by Stripe

Businesses who wish to accept credit card payments in-person are required to purchase a dedicated credit card terminal. The overall pricing will vary on the basis of terminals while starting at $59 for a dedicated mobile-based card reader. The pricing can go up to $249 for ensuring payments for countertop terminals.

What is Included with Stripe Payment Processing Services?

When you make use of the standard Stripe account that is available for free, you can get access to the following features:
  • Card account updater
  • 3D secure authentication
  • Developer tools
  • Activation
  • Stripe Connect
  • Stripe Checkout
  • PCI Compliance

How are Stripe Fees Calculated?

Stripe makes use of the flat-fee transaction-based pricing structure along with add-on charges for delivering its advanced range of payment processing services. The price you will pay based on every transaction will depend on:
  • Fees for ensuring international sales
  • Interchange fees
  • The total value of transactions -including taxes and additional applicable charges
  • Optional features of Stripe -adding fees to the respective transaction
  • Base markup of Stripe
It is important to note that with the base flat-rate pricing structure of Stripe, you will not observe the breakdown of markup and interchange fees on the monthly payment processing statement. The information is made available only when you go ahead with choosing the customized pricing plan along with interchange-plus pricing structure.

Chargebacks & Refunds by Stripe

Stripe is known to charge the chargeback amount of $15. You can decide to add relevant chargeback protection to the transaction for an additional value of 0.4 percent. Refunds with Stripe do not add additional fees. Instread, Stripe aims at keeping the original transaction fee.

Customized Pricing Plans by Stripe

Along with the flat-rate integrated pricing plan by Stripe, the company also brings forth the customized pricing plan to businesses experiencing significant payment volumes or having unique business models. However, the company does not offer information on the respective qualifications you are expected to meet towards qualifying under either of the existing categories. With the help of a customized pricing structure, you will receive access to interchange-plus pricing that will turn out to be quite lower than the flat rates offered by Stripe. The tradeoff in this case is that you will be subject to the standard array of recurring fees almost every month -whether you are using the account or not. Multiple items that come with no additional charge under the company’s integrated plan will have to incur individual fees if you are on the customized pricing plan. Stripe works excellently when it comes to disclosing the differences on the website. However, it is recommended to review the proposal contract in-depth to avoid any problems in the future.

Are Stripe Pricing and Fees the Best Option for Your Business?

Stripe has quite a transparent pricing structure. Still, you are expected to run your numbers towards determining whether or not the payment plans by Stripe will help you in saving money in comparison to the current payment processors. Stripe does not have any plan for monthly fees. Moreover, it also does not lock you into any contract. At the same time, you also get access to payment security linked with its payment processing capabilities. Modern businesses are always looking for a ready-to-scale and fully-branded solution. Therefore, with Stripe Payments, they can almost across all possible and helpful tools needed. However, for an e-Commerce business that requires a secure and reliable payment processor, it could turn out to be an overkill. If you do not possess the necessary technical expertise or experienced developers, you can never tap into the full potential of Stripe.
fns number

What is an FNS Number? Everything you need to know!

This article is for informational purposes and in no way an invitation or advice to apply and receive a VISAN FNS Number. We do not represent the government in any way and we are in no position to provide such an information nor can we guarantee you anything if you decide to apply. This is just general information only, we leave individual cases to the discretion of each potential applicant.

An FNS number is a unique identifier used by the United States Department of Agriculture’s (USDA) Food and Nutrition Service (FNS) to track program participants and benefits. It is also known as a household identification number (HIN), client identifier, or participant identifier.

The FNS is responsible for administering the Food Stamp Program, the Special Supplemental Nutrition Program for Women, Infants and Children (WIC), The National School Lunch Program, Low-Income Home Energy Assistance Program (LIHEAP), Community Food Projects (Community Facilities), Child and Adult Care Food Program and the Summer Food Service Program.

The FNS number is also used to track the benefits participants receive from these programs. This number is important because it helps the government keep track of how much money has been dispersed to each household and what the household’s current balance is.

You will need to provide your FNS number to your local grocery store in order to receive food stamps. You should also provide it to any other program administrator who requests it.

It is important to keep your FNS number safe and confidential. Do not share it with anyone who does not need it to access your benefits.

If you lose or forget your FNS number, you can call the toll-free number at 1-877-823-4369 and they will help you retrieve it.

So what do you need to do in order to obtain an FNS number?

First, you have to apply for Supplemental Nutrition Assistance Program (SNAP) benefits. This requires you to meet specific income and asset limits as well as other eligibility criteria.

If your application is approved, the FNS number will be sent directly to you by mail within 4-6 weeks after SNAP approves your case. If you do not receive your number within this time frame, you should call the FNS Client Service Center at 1-888-843-3663 (FNS has moved this number to 877-823-4369 as of 3/1/17) to inquire about your case status. Note that you can also contact a local welfare office to check on the status of your application.

Once you have your FNS number, you should keep it in a safe place and do not share it with anyone who does not need it.

What is the Application process for FNS Number?

The steps below will guide you through the process of applying for SNAP benefits:

  • Step 1. Fill Out The Application And Turn It In To Your Local Welfare Office

To apply for your FNS number, you should fill out an application and turn it in to your local welfare (public assistance) office. You can download a printable application from the FNS website or you can call 1-800-221-5689 to have a paper application mailed to you.

In most states, you do not need an appointment for this process and you can submit your application in person, by mail, or online.

  • Step 2. Meet With A Caseworker At Your Local Welfare Office

After your application is received, a caseworker will review it and schedule an interview with you. This meeting is called a “caseworker consultation.”

The purpose of the consultation is to assess your eligibility for SNAP benefits. You will need to provide proof of your identity, residency, and income at this meeting.

  • Step 3. Wait For A Decision About Your Application

After the consultation, the caseworker will make a decision about your application and notify you of the outcome. If you are found eligible, you will be sent a letter via mail letting you know that your FNS number has been assigned.

Note: It may take several months to complete the application, interview, and caseworker consultation process. You should contact your local welfare office if you have not received any news about your application within 90 days of submitting it.

  • Step 4. Receive Your FNS Number And Start Using Your Benefits

If you are approved for SNAP benefits, you will receive an FNS number in the mail. This number is important because it identifies you as a participant in the Supplemental Nutrition Assistance Program.

You should start using your benefits right away and show your FNS number to the cashier at your local grocery store. It is important to keep the number in a safe place and do not share it with anyone who does not need it such as friends or family members.

If your application for SNAP benefits is denied, you will be asked to submit an appeal within 10 days of receiving notice of the decision. You can find listings of local offices and phone numbers to appeal a decision in the denial letter you receive.

merchant cash advance

What is a merchant cash advance used for?

Merchant cash advances can be used by businesses that accept credit cards as payment. If you run a business such as a grocery store, restaurant, or hardware shop and accept card payments, some merchant cash advance companies will lend you money based on your future credit card sales. The amount of the loan is typically equal to 50-80% of future credit card sales, and the repayment is deducted from future credit card receipts as a fixed percentage. This fixed percentage can be as low as 1% or as much as 10%.

What do merchant cash advance rates look like?

Rates for merchant cash advance tend to be higher than those of traditional bank loans at first glance. However, compare the rates to those of credit cards and they’re actually far more competitive, especially for smaller loans. Most business owners find that their monthly rate is 1-2% lower than it would be with a traditional credit card. Many times, keeping this cost below what you’d pay in interest on your current credit card balance can be very beneficial over time.

The repayment period for merchant cash advances is usually shorter than with traditional bank loans, but it varies greatly depending on the lender. Most lenders that offer merchant cash advances give you up to 12 months to repay your loan in full. The maximum term for most businesses is typically 24 months, though some merchants qualify for 36-month terms at higher rates.

How are merchant cash advance payments made?

Once you get a merchant cash advance, the repayment is typically deducted from your daily credit card sales at a fixed percentage. Some lenders allow you to choose the deduction rate, which will affect how much you repay per month and how quickly you can pay off your loan. You’ll be able to check the daily deduction amounts using your lender’s online portal.

What should I look for in a merchant cash advance provider?

When looking for a merchant cash advance lender, make sure you understand what fees you’ll have to pay upfront and on an ongoing basis. Lenders typically charge an origination fee which can be as much as 5% of the loan amount when you get an advance. They also typically charge a daily fee on your outstanding balance, regardless of how much you pay back each month.

What happens after I repay my merchant cash advance?

Once your business has completed repaying its merchant cash advance and there are no more deductions from future credit card sales, you’ll begin to see regular business income like you would with a traditional bank loan. If your business is successful and continues to grow, you may be able to refinance your merchant cash advance for additional funds or take out another type of loan with the lender down the road.

Do I need good credit to qualify for a merchant cash advance?

Typically, you’ll need a minimum credit score of 600 to qualify for merchant cash advances. However, this is not always the case. The lender’s underwriters will consider many factors when approving your deal, including how much money you make each month and the types of payments you typically receive. If your business is new or there are other factors that would make your deal riskier, it may be more difficult to get approved.

If you’d like to learn more about business loans or find out if a merchant cash advance is right for you, fill out our form and one of the lenders in our network will contact you.