As a new fitness business owner, swiping a credit card is all too easy.
“It’s on the business.”
“Time to change out this dinosaur treadmill.”
“Lunch is on me!”
A couple quick swipes of a credit card and you’re the proud new owner of the latest Elliptical X 3.0 and a room full of other things you don’t really need.
However, as a new and busy fitness owner, it’s also all too easy to miss the bill due date when it comes.
For whatever reason, the human brain has an easier time spending than it does paying up.
You’re sitting at your desk thinking about how you need to pay your bill, and a headache begins to build up.
You realize you haven’t had your coffee yet, and Starbucks starts calling your name. The next thing you know, you never got around to paying, and the bill is five days overdue.
Sound familiar?
Implications of a Missed Credit Card Payment
Unfortunately, that Starbucks is going to become a lot more expensive than it was.
Missing a business credit card payment can eventuate to much harsher consequences than missing your personal one.
Although, as accountants, we don’t recommend missing those either.
The banks won’t walk in to repossess your smoothie machine, but they can charge you a higher interest rate next time you need a loan. Or worse, deny your business for new lines of credit altogether.
According to Credit Karma, once you’re late on a payment for more than thirty days, it’s reported to one or more of the three major credit bureaus. A few late bills later and your business credit rating, along with your chances for a reasonable interest rate, have both tanked.
This can have serious consequences down the road when it comes to leasing a new space for your business or upgrading equipment. At times of expansion, or survival, having a lower interest rate loan or receiving the full amount of your loan request can be the difference in thousands of dollars in interest or tens of thousands in capital your business needs to thrive or survive.
The Small Dings Add Up
While one or two $39 late fees don’t seem like much, small expenses here and there begin to add up for a growing small business.
According to U.S. News, fees can range from $28 to $39. Paying that a couple of times is the difference between replacing your tattered foam rollers and giving your hard-earned money away to the bank.
Which one do you choose?
Even worse, credit card bills that are 60 days or more overdue are at risk for being hit with a penalty APR, which could be as high as 29.99%. Ouch, that’s a 29.99% interest rate. And I thought burpees were painful.
Again, as a business owner, the small decisions are the ones that lead us to success.
Skip the Calendar Reminders
Whether the penalty is a $39 late fee or a severe ding to your credit score, why take the hit to your business at all? Being a business owner is hard enough without taking small hits like this on top of everything else you face each day.
The best solution is to set your credit card payments on autopay. Stop relying on calendar reminders and take the responsibility off of your plate altogether.
TIP: Setting your credit card on autopay is the best way to set and forget your bills while saving a few minutes every month.
Not only that, but it’s an effortless way to avoid unnecessary fees or lasting adverse implications on your credit rating.
That peace of mind is priceless.
With five minutes and a few simple setup clicks, its benefits outweigh the cons.
Exceptions to the Rule
However, there are always exceptions to the rule, and in this case a few good reasons why setting up autopay may not be right for your fitness business.
For fitness studios struggling with cash flow, setting credit card bills on autopay can become a little like Russian Roulette.
While we recommend paying the credit card statement in full every month, there is an option to set up only the minimum amount required.
For businesses without a lot of cash flow, setting your credit card to minimum payments amount is a good option until you are in a better cash position to pay off your card each and every month (like The Fitness CPA recommends).
However, beware that automatically paying the minimum amount every month comes with its own set of risks.
You may go over your credit card limit by not paying enough down, or you may accrue more interest by only paying the minimum month-on-month.
How to Set Up Autopay Step-by-Step
Have we convinced you yet?
Setting up your business credit card payments on autopay is the best way to avoid severe long-term consequences for your business down the road.
It’s what successful fitness owners do.
Here, we’re going to walk through the step-by-step process for setting up autopay on your credit card bill with Chase for Business.
If you have a credit card with Chase, you can follow the steps verbatim. For other banks, you are going to have to tweak the steps slightly, however the general process remains the same. You can always get in touch with us if you have problems.
Let’s get started.
First, login into your business credit card account and select the appropriate credit card.
Next, click the link next to Automatic Payments that says “Set up >”
Choose the account you would like the payment to come out of.
Next, choose whether you’d like the minimum or full amount to come out each month. Setting a fixed amount is also an option.
Click next.
Tick the box that says you agree to the terms and conditions.
Finally, click “set up automatic payments”.
Voila! You’ve done it!
Press Close and head back to your main account screen.
The Automatic payments should now be turned on.
Setting Up Autopay Can Save Thousands Down the Road
Once you take action to turn on autopay, you’ll sleep a bit more soundly at night.
No more $39 late fees or damaging hits to your credit score. You’ll sleep better knowing you’re taking every small step you can to ensure your fitness business is in the very best position for success.
If you don’t feel turning on autopay is right for your business for whatever reason, it might be a good idea to get in touch with your accountant. If you don’t have (a good) one, you can always get in touch with the team here. Simply write us a message and let’s see if we can help.
Cash flow should never be such an issue that it’s getting in the way of making smarter decisions for your business.
Until next time.
Fitness is such a big part of who I am. Maintaining a healthy lifestyle, eating well (mostly paleo), hiking, backpacking, mountaineering, practicing yoga and Crossfit are all important cornerstones of life. But I love ice cream and cookies too much to say no!
I love helping owners make sense of their business and finding ways to grow it. It’s an honor to help you see situations, scenarios and opportunities from all sides so you can make informed decisions.
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