The drop in interest rates has created different rules of profitability for merchants. It may actually be in their best interests to give customers 30-day credit terms instead of asking for instant payments. This flies in the face of conventional wisdom but it may actually make better business sense for merchants.
Conventional thinking says to get payment as soon as possible. However, with credit rates so low the game is changed. If a customer pays with a credit card, the merchant pays a 2.5% fee on the transaction. The annualized interest rate falls at about 30%. The business can borrow at a rate of less than 6% to make up the wait. If the customer pays reliably within 30 days, why should the merchant have to pay such a large fee for the transaction?
Offering credit terms of course has a certain set of risks and liabilities, which is why so many merchants choose to take the hit on fees rather than extend credit terms. If your business chooses to offer this service, be sure to take precautions to prevent loss. The merchant may have to do a lot more legwork in order to get paid within a reasonable amount of time.
Source: http://www.chicagobusiness.com/article/20111107/BLOGS06/111109822/barry-moltz-credit-terms-vs-credit-cards-the-math-has-changed
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