| > what difference does it make if its on the shelf or already in customer's hands? Actually, it makes a huge difference: 1) I pay property taxes on all inventory held on the shelf at the beginning of the year 2) I can offer a discount to move product off of the shelf now at a lower rate (equivalent to paying a higher transaction rate) to achieve actually present cash-flows 3) I can write-off inventory that sits on the shelf too long and depending on my accounting method, I may have to claim income on a sale today, even though I haven't been paid yet. > % on month > 36% APR b/c of network leverage and government regulations. No, it's 3%. Period. Not 3*12, just 3%. Don't conflate accrual of interest with acquisition costs. That'd be like saying that since labor on production is 2% of COGS, firing everyone increases my yearly margin by 24% (at best, it would be 2%, if you could still produce). Consider that any method of capturing payment, whether cash or credit card, has an acquisition cost (time, money, labor, etc.). Paying a 3% fee on CC optimizes time and labor in exchange for money. |