Strategies to Optimize Operations and Do More for Your Business

6 Ways to Start Optimizing Your Business Today

Here are six ways you might start optimizing your operations and get your company to work harder for you: 

1. Assess your organization’s cost structure and cut where you can. If you’ve been running at high speed fulfilling customers’ requests and working one-on-one with clients, you may not have stopped to assess your cost structure and make some necessary adjustments. Consider identifying all business expenses, including both variable and fixed costs. You may then want to prioritize these expenses by importance and pinpoint any that aren’t contributing to your company’s success.

Inventory that’s sitting in your warehouse, insurance policies that could be shopped around for better rates, and unused monthly subscriptions are all good starting points. Once you’ve made the cuts, start monitoring spending every month to avoid having to go through this exercise again. 

2. Take a close look at existing processes. Time is money for small business owners and team members who only have a limited number of hours in a day. Redundant processes, rework, and tasks that are taking too much time to complete are all good targets for optimization. Talk to your employees about their biggest time-wasters and help them get those projects finished faster.

Automation might help in this area. For example, if your accounting manager spends too much time generating customer invoices, find a software solution that automates some or all of that process. Consider outsourcing non-core tasks like payroll, customer service, or graphic design to free up yourself and/or internal resources to focus on more strategic projects.

3. Ask your suppliers for better deals, terms, and perks. The business environment is always in flux; nothing stays the same. If you’ve been paying the same prices and getting the same service levels and terms from suppliers for some time now, you may want to revisit those contracts and negotiate for lower prices, discounts, or extended payment terms. Come to the table with information about industry trends and market prices, and be sure to emphasize your value as a repeat customer.

Negotiations that work out in your favor can also help you offer your customers more competitive pricing, improve your company’s cash flow, and increase its profit margins. As a bonus, these interactions will also help solidify supplier relationships because your vendors know you’ll come to them with these requests, versus just taking your business elsewhere.

4. Put business credit cards to work for your company. Used properly, business credit cards might help improve cash flow, simplify expense tracking, and maintain better controls over employee spending. For example, a business credit card used for travel expenses can be closely monitored and used to establish spending thresholds. Credit cards can also be used for larger purchases that can then be paid off over time versus coming out of your business bank account.

Most business credit cards also come with expense tracking tools, real-time transaction notifications, and other functionalities that streamline financial management. Finally, you can use credit cards to establish your company’s creditworthiness and position it for a “yes” answer on that future loan or financing application.

5. Take advantage of rewards programs. By strategically using rewards programs, you can save money on expenses that range from travel to office supplies and technology. Most business credit cards offer cash back, miles, or points on every purchase. Most office supply stores offer loyalty programs, while suppliers may also have rewards programs for repeat buyers.  

Sign up to use these programs to your advantage. When you earn cash back for everyday expenses or accumulate points that can be applied to hotel stays, you’ll be contributing to your company’s bottom line without much added effort. With business payment cards, your small business can earn valuable discounts, rebates, and rewards.

6.  Use goals and KPIs to track progress and then adjust accordingly. Small business optimization isn’t a “set it and forget it” exercise. For best results, consider it an ongoing task that involves your entire team. Set some specific goals and key performance indicators (KPIs) to help keep the progress on track and identify new areas of improvement. If you want to increase sales this year, for example, consider tracking metrics like revenue growth, customer acquisition costs, and average order value.  

If these KPIs aren’t meeting your expectations, explore the underlying causes and adjust accordingly. For example, if your average order value is lower than you’d like, you may want to test out some upselling and cross-selling opportunities on your e-commerce site or in your physical store (e.g., someone who orders a kayak probably also needs the accessories, garb, and sun protection to go along with it). If revenues aren’t meeting expectations, it could be time to diversify into new lines of business or start marketing to new customer segments.

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What You Need To Know About Payment Processing Fees

The number of payments made by card has increased over the past year, thanks to the convenience and safety of online shopping and touchless checkouts. But for business owners, there is a cost to all those extra swipes and clicks: more payment processing fees. “Not only are there many kinds of fees, but it’s often difficult to decipher which ones cover which aspect of a transaction, which makes it hard for merchants to know what they’re paying for,” says Riaz Bhamani, senior vice president with Merchant Services at Bank of America.

The following breakdown can help you understand exactly what fees you’ll likely encounter and how to decide which pricing plan works best for your business.

Typical credit card processing fees

Every time a customer uses their card, you’ll need to pay processing or transaction fees. The largest transaction fee is the interchange fee, which is determined by the payment network (e.g., Visa® or Mastercard®). Other per-transaction fees include a small fee charged by the payment network and the fee charged by your merchant account provider.

While that might seem straightforward, transaction fees can be confusing, since they vary depending on numerous factors, including whether the customer paid with credit or debit, which payment network is involved, what type of business you operate, and whether the purchase is made online or in person, among many other criteria. In addition, they may be calculated as a percentage of the transaction amount, a flat fee (such as 30 cents per transaction) or some combination of the two.

You may also need to pay one-time or ongoing fees that are not tied to the volume of transactions and may not even be related to credit card processing. Examples include startup or annual fees, monthly statement fees, minimum processing fees and a gateway fee if you use an internet merchant account. In addition, if a customer disputes a transaction, you may also be responsible for chargeback fees.

Pricing plans

Many providers allow you to choose how your transaction fees are calculated. Below are common pricing models:

Interchange plus

This model adds the interchange fee, which is set by the payment networks, to the fees charged by the merchant services provider. Hence, interchange plus. This is the most transparent type of pricing plan because you can see how much each party charges to process a transaction. It’s also typically the most cost-effective structure — but it can be unpredictable, complex and hard to understand because there are hundreds of interchange rates, depending on card type, issuer, industry and more.

Flat rate

As the name implies, flat rate pricing allows you to pay a fixed amount for all transactions. For instance, if most of your customers use debit cards or no-reward credit cards in-person, which tend to have the lowest transaction fees, you may not benefit from a flat rate system. On the other hand, if you get a lot of cards or transactions that have high interchange rates, you could significantly benefit. Either way, the flat rate structure is easy to understand and offers predictability for the merchant, so many businesses like to start with flat rate pricing and move to interchange plus later on, when they can better evaluate their transaction history, says Bhamani.

Tiered

This less common model offers a middle ground between flat rate and interchange plus. It takes the hundreds of different interchange-plus rates and organizes them into buckets, or tiers, based on the type of transaction. While the tiered model seems fairly easy to understand because there are limited price points, it is difficult for the merchant to know whether a given transaction is categorized into the correct tier, says Bhamani, which can make it hard to compare pricing.

 The best pricing structure for your business depends on multiple factors, including the most common types and volume of your transactions. When comparing providers, make sure to review the fee schedule in detail, taking into account one-time and miscellaneous fees, as well as typical monthly costs. Also consider whether the transaction rates are guaranteed for any length of time, and whether there are any termination fees if you decide to go with another provider.

Also keep in mind that many providers offer services that are not core to taking payments but can enhance the efficiency and security of your transactions or help you streamline some of your business operations, such as enhanced fraud management capabilities, automatic recurring billing for subscription-based businesses and business management software. Before you sign up with a provider, consider which, if any, of these services you might want and whether and how it would affect your ongoing costs.

As the shift from cash to electronic payments accelerates, you can expect the amount you pay for processing fees to increase, too. Understanding what goes into the fees and how they’re charged can help you better manage these expenses. Source

How Mobile Payments Are Transforming Transactions And Payment Security

Mobile technologies are revolutionizing the way the world shops, as well as how they pay for their purchases. In less than two decades, smartphones and wearables have forever transformed the commercial ecosystem, including the ways payments are made, as well as their safety from digital criminals. Mobile payments are secure transactions that occur using an Apple or Android phone, or a wearable device such as a smartwatch or fitness tracker. They are made possible thanks to NFC technology and can also happen via apps. In the recent past, purchases were generally made with cash, checks, or credit cards. They required that a shopper have money, a check, or a physical credit card available to facilitate the purchase.

Since today’s mobile payments take place with devices such as tablets, phones, or wearables, they do not require a customer to have anything else in hand. These devices use near-field communication (NFC) to facilitate Tap to Pay on iPhone or Android. After inputting payment details into a digital wallet app on the phone, buyers simply unlock their device, place it near the merchant’s reader, and wait approximately two seconds for the payment to be authenticated, authorized, and completed.

Mobile payments can take various forms. They can occur via the digital wallets described above or can happen contactless for in-person customers. In supported apps and on websites, users simply select their preferred method, authorize the payment, and complete the transaction without needing to enter all of their details every time. Mobile payments bring numerous advantages to buyers and sellers. These include convenience, speed, efficiency, security, added payment options, boosted sales, and boosted insights. Mobile payments have transformed the commercial universe for the better. Because they are wireless, they can take place anywhere, and they happen in an instant.

Each time a mobile purchase is initiated, the data is changed into a random series of digits. This tokenization process renders it useless to hackers and allows you to increase security.

Moreover, mobile devices can accept a wide variety of payment types including debit and credit cards, digital wallets, and even bank accounts. This flexibility has brought added sales to merchants, who can now also tap into a rich set of analytics that enable them to make more accurate sales forecasts and marketing decisions. Source

What Are The Benefits Of Working With A Payment Processor?

Five Key Benefits That Payment Processors Offer Business Like Yours...

#1 – Accept credit card and debit cards

The first and most important benefit payment processors deliver is the ability to process credit cards and debit cards payments. This insight may seem obvious but consider for a moment how your business might operate without the ability to accept card payments.

Reliable payment processing is on the short list of essentials for most businesses to function properly. It has been found that together credit cards and debit cards accounted for over half (42%) of eCommerce and three quarters (74%) of in-store consumer payments in the US in 2017. That makes accepting credit and debit cards as important as electricity for daily operations.

This essential benefit is available whether you contract for payment processing directly, via a value-added reseller (VAR), or however you may access your payment processor.

#2 – Offer your customers alternative payment options

Your customers want choice—especially when it comes to how they pay. Credit and debit cards are essential but they’re far from the only important payment option. Today’s consumers want to use an emerging set of alternatives, like paying via their smartphones with mobile wallets.

Payment processors help businesses determine the best mix of payment alternatives to serve your customers. From direct bank transfers to pre-paid cards, gift cards to buy-now, pay-later options, payment processors help you maintain happy customers by letting them pay the way they want.

How you connect to your payment processor can determine whether you can offer all the payment alternatives your customers want. Whether your business is working directly with a payment processor or through a third-party, take the time to understand what alternatives are available before you make a commitment.

#3 – Integrate payments with your own systems

The business world is full of specialized systems. Integrations that allow separate business systems to talk to one another are essential to develop business efficiency—and to maintain business sanity.

Payments don’t take place in a vacuum. Leading payment processors seamlessly integrate payments with other business workflows like accounting, billing, customer relationship management (CRM), and more.

#4 – Direct pricing, direct relationships

Value-added resellers (VARs) bundle payment processing with other business services. Independent sales organizations (ISOs), merchant service providers (MSPs) and eCommerce providers also offer payment processing, though one step removed from the source. These and other third parties often resell the services of a payment processor as part of their business services package as part of the wealth of value-added services they provide.

Yet many businesses prefer direct payment processor relationships. Direct relationships offer can offer more extensive payments expertise, superior customer service, 24/7 troubleshooting, data security assistance, fraud protection and more. Direct relationships with payment processors can also mean direct pricing models that can result in significant savings.

#5 – Flexibility to grow with your business

Payment options are evolving fast—just like your business. Leading payment processors help businesses like yours stay ahead rapid changes in the payment marketplace. Full-service payment processors that operate at scale partner with businesses at every stage of growth.

Many third-party services that resell or bundle payment processing are designed for early-stage small businesses. From sole entrepreneur start-ups to enterprise businesses on a global scale, leading payment processors can not only grow with your business, the best can also help you achieve that growth. Source

What Is a Merchant Account?

Traditionally, a merchant account is a type of business bank account that connects with a payment processor, credit card issuer and your bank to let you receive electronic payments such as credit and debit cards. The merchant account receives money from credit card companies so it’s available to you immediately, instead of after the customer pays their credit card bill.

However, modern payment service providers combine the functions of merchant accounts with payment processing, so many small businesses don’t have to worry about setting up this type of account separate from signing up for a payment processor.The most common merchant account fee models for small businesses include flat-rate fees, interchange-plus fees and tiered rates. 

Understanding the pros and cons of each is key to finding the best merchant services provider for your particular needs;

Flat-Rate Fees

With flat-rate pricing, businesses pay one low rate based on the type of sale, with fees typically ranging from 2.5% plus 10 cents to 3.5% plus 30 cents per transaction. With flat-rate structures, in-person sales where the card is present have lower fees than online sales, but fees don’t vary based on card brands or rewards programs. Plus you don’t have add-on fees for PCI compliance or monthly statements.

Interchange-Plus Fees

Interchange-plus merchant services add a minimal markup percentage or fee to the base interchange rates set by the card associations, such as Visa, MasterCard and American Express.

Markup fees typically range from 0.10% plus 5 cents to 0.50% plus 25 cents per transaction, based on the sale type. Providers including Payment Depot and Stax use subscription-based pricing instead of percentage-based markups. This model pairs a monthly subscription fee with a minimal per-transaction fee, ranging from 5 cents to 15 cents per charge.

Tiered Fees

Tiered plans break card processing rates into three groups, which are called qualified, mid-qualified and non-qualified tiers. Each tier’s rates are based on a merchant’s overall processing volume, industry and typical transaction types, such as online or in-person sales.

Tiered rates can be tricky to understand, the monthly statements can be very detailed and many require lengthy contracts and charge early termination fees. High-volume sellers can save with contracted rates on tiered plans, but flat-rate and interchange-plus are typically better for startups and small businesses.

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Why Does Credit Card Transaction Processing Matter For Businesses?

Credit card transaction processing directly impacts a business’s ability to provide convenient and secure payment options for customers, which can affect sales, customer satisfaction, and overall growth. Finding the optimal credit card processing system offers several benefits in these areas, including:

Enhanced customer experience

By offering a simple, convenient credit card payment experience, businesses can meet the evolving needs of their customers, leading to increased customer satisfaction and loyalty. The benefits are even greater with a unified commerce model, where businesses integrate all sales channels, data, and backend systems into a single, seamless platform.

Increased sales and revenue

Credit card payments can boost sales for businesses by lowering the barriers that customers face when making a purchase. Generally, customers spend more when using credit cards compared to cash. Accepting credit cards also enables businesses to accept payments in different currencies without needing to deal with conversion, further expanding their market reach.

Improved cash flow

Credit card transactions are typically settled and deposited into the business’s bank account within 1–3 business days, resulting in faster access to funds compared to other payment methods such as checks.

Secure and compliant transactions

A strong credit card processing system helps protect both the business and its customers from fraud and data breaches by adhering to security standards such as PCI DSS. This compliance is important for safeguarding sensitive customer information and maintaining trust.

Competitive advantage

Accepting credit card payments and providing a simple payment experience can give businesses a competitive edge over competitors that do not offer these options, helping them attract more customers and increase their market share.

Cost optimization

By carefully selecting the right credit card processor and negotiating favorable rates and fees, businesses can streamline operations, minimize processing expenses, and maximize their cost margins.

Access to valuable data and insights

Credit card processors often provide detailed transaction data and reports, allowing businesses to track sales, identify trends, and make data-driven decisions that can optimize their operations and marketing strategies.

Reduced risk

By accepting credit cards, businesses can minimize the risks associated with handling large amounts of cash, such as theft, loss, or mismanagement.

Adaptability

A thoughtfully designed credit card processing system enables businesses to embrace flexibility and adapt to new payment technologies, such as contactless payments or digital wallets, helping them stay ahead of industry trends and cater to evolving customer preferences. Setting up a credit card processing system in a strategic way enables businesses to access these benefits and create a more robust, adaptable foundation for growth and stability.

Working with a strong payment processing provider will help ensure that your credit card transaction processing system is tailored to your needs while allowing you to provide a secure, efficient, and compliant customer experience. Source

Credit Card Processing Company Pricing Structures

The most common payment processing models for small businesses include flat-rate fees, interchange-plus fees and tiered rates. Understanding the pros and cons of each is key to finding the best service and processing rates for your particular needs.

Flat-Rate Pricing

Flat-rate pricing is the simplest fee structure and typically charges one low rate for all credit card transactions, regardless of the type of card used. Many flat-rate processing services also provide free sales tools such as POS software, free card readers and integrated online gateways for e-commerce sales.

With flat-rate pricing, businesses pay one low rate based on the type of sale, with fees typically ranging from 2.5% plus 10 cents to 3.5% plus 30 cents per transaction. With flat-rate structures, in-person sales where the card is present have lower fees than online sales, but fees don’t vary based on card brands or rewards programs, plus you don’t have add-on fees for PCI compliance or monthly statements.

Flat-rate pricing can be a good option for businesses with low average transaction amounts, especially when considering free perks such as POS systems, online gateways and card readers. However, higher-volume sellers can save on credit card processing costs with interchange-plus or tiered pricing.

Interchange-Plus Pricing

Interchange-plus pricing is growing in popularity, mainly thanks to the small business-friendly plans offered by Helcim, Payment Depot and Stax. These Interchange-plus payment providers add a minimal fee to the base interchange rates set by the card associations.

Some, such as Helcim, mark up the interchange rate with a small percentage and per-transaction fee but have no monthly fees. Markup fees can range from 0.10% plus 5 cents to 0.50% plus 25 cents per transaction, based on the sale type. Others, such as Payment Depot and Stax, don’t mark up the interchange rate. Instead, they pair a monthly subscription fee with a minimal per-transaction fee, ranging from 5 cents to 15 cents per charge.

When comparing providers, remember that markup rates are in addition to the base interchange rates, which vary based on transaction-specific factors. Even so, interchange-plus models are very transparent and often the most economical choice for businesses processing more than $5,000 in monthly card transactions.

Tiered Pricing

Tiered pricing is a standard pricing structure used by traditional merchant services account providers and business banking services. To set tiered plan rates, providers first audit your business model and transaction history, so it takes more work to get this type of plan in place. Most tiered plans also require lengthy contracts and charge early termination fees if you want to change plans or providers.

Tiered plans break card processing rates into three groups, which are called qualified, mid-qualified and non-qualified tiers. Each tier’s rates are based on a merchant’s overall processing volume, industry and typical transaction types, such as online or in-person sales.

Each sale’s tier is determined based on the transaction type, credit card used and whether or not the cardholder’s billing address is verified. In most cases, qualified transactions have the lowest rates, while non-qualified transactions have the highest rates.

Tiered rates can be tricky to understand and the monthly statements can be very detailed. For most small businesses, flat-rate or interchange-plus plans are more economical and easier to manage. However, higher-volume businesses in certain industries, such as wholesalers and multi-store retail outlets, can save with a tiered card processing model. Source