Card payments are convenient for homeowners and slow-moving for your bookkeeping. A large roofing invoice is the kind of payment where the fee stops being a rounding error. On a $13,200 job, even a modest percentage is a few hundred dollars, and it leaves the job without appearing on the job.
How Big the Fee Gets
Processing rates vary by processor, card type and how the payment is taken. All figures below are illustrative. Use the rate on your own merchant statement.
| Illustrative reroof | Amount |
|---|---|
| Invoice paid by card | $13,200 |
| Effective processing rate (illustrative) | 3.0% |
| Fee withheld | $396 |
| Deposit that reaches the bank | $12,804 |
That $396 is 3.0 points of margin on the job. If a quarter of your 120 jobs a year are paid by card at that size, the fees come to about $11,900 a year. If a job is also paid in several card payments, the fixed per-transaction charges add to the percentage.
Recording It Correctly
- Record the full payment against the invoice. The customer paid $13,200. Revenue and the receivable should reflect $13,200, not the $12,804 deposit.
- Record the fee as its own expense. Use a merchant fees account. Netting the fee into the deposit hides it and understates both revenue and expenses.
- Reconcile the processor's clearing account. Many processors pay out in batches that combine several jobs and refunds. A clearing account lets you match each batch to its invoices and see the fee per payment.
- Watch refunds and chargebacks. A refunded card payment may not return the original fee. Record any chargeback fee against the job it relates to.
Charging It to the Job
A fee that exists only because a given customer chose to pay a given job by card belongs to that job. If your books can tag expenses to a job, tag the fee. If not, use a monthly entry: total the fees for the month, allocate them to the jobs paid by card in proportion to the payment amounts, and credit the general merchant fees expense. Profit does not change. The cost moves to the jobs that caused it.
The result is that a card-paid reroof shows 3.0 points less margin than the same job paid by check or ACH. That is the real comparison, and it is useful when you decide how to quote.
Pricing and Surcharges
You have three common choices:
- Absorb it and price the job knowing the fee is part of the cost. Raise the margin target for jobs expected to be paid by card.
- Offer a discount for check or ACH. The price list shows the card price, and a lower price applies to cheaper payment methods.
- Add a surcharge. Rules differ by state and by card network, and some states restrict surcharges. Check current state law and your processor agreement, and ask your attorney before adding one.
Whichever you choose, state the payment terms in the contract and invoice. Payment terms also interact with customer deposits and financing dealer fees, which behave much like a card fee on a larger scale. For the full picture of what a job costs, read the true cost of a roofing job.