How To Overcome The Rising Operational Costs In Business

When I launched The Entrepreneurs’ Journey podcast, I knew it was because I knew my clients needed more than just efficient credit card processing rates. I wanted to be able to help business owners with more than just credit card processing as I could see there were more pressing issues impacting the success of their business than merchant fees. This sent me on a journey to interview people smarter than me in other areas of business so I could be a better resource for my clients. Like most decisions, the confirmation of my intuition didn’t come until much later, like almost 2 years. Recently, I had a client reach out because they needed 100k in capital for some investments they needed to make in their business. In less than 2 days, they received a deposit for the capital they need to execute their 2023 strategic plan. Their execution of their strategic plan will allow them to not only grow their business but allow them to restructure debt and eliminate the opportunity costs they were facing by not having the capital on hand.

As we continue to move forward in an uncertain economy, right now is the best time to position your company to be as profitable and efficient as possible.

 

Streamline Costs

 

When companies hire us to evaluate their merchant services, there are times when the payment processor asks for bank statements. Within those bank statements, we can see everything a company spends money on. Many times, while the expenses at one point were correct, there are times we see companies paying for payment processors that they haven’t used in years. There are other times when a company is paying for levels of service that are completely unnecessary. For example, when I started PaySuite, I was paid to consult with a large local convenience store chain that was negotiating with payment processors so they could reduce their costs. In looking through their proposal for the processor they chose, I was able to help them save an additional 50k over the course of the contract they were going to sign because I knew they were already paying for the service the processor included in their proposal. This scenario happens with almost every service you pay for as a business owner from your phone service, internet, payment processing, marketing services, payroll, software, and other services that are essential to running your business. You may be wondering; shouldn’t my accountant or bookkeeper be on top of this? Well, yes and no, when you hire a bookkeeper or an accountant, they are experts in properly classifying the debits and credits that hit your bank account, not necessarily experts on whether your vendor unscrupulously passed an incremental fee increase to you without telling you about it. That is where having an advisor working with your accounting team is helpful as they can work together to make sure you have the best vendor at the appropriate price for your business model. This is important not only from the standpoint of costs, but as it relates to productivity in your business environment. If you could add technology to your business to increase your sales by 20% without increasing your labor costs, then for the right price, it’s probably an easy decision.

 

Improve Relationships

 

Every business has people, internally and externally, and within that lies the opportunity to improve relationships. Improving relationships with your staff, partners, and clients is likely one of the most impactful things you can do as a business owner for a number of reasons. First, studies show that engaged employees drive 43% more revenue than their non-engaged counterparts and this alone would dramatically change the numbers on your balance sheet. Why? Because not only would your employees be more productive by getting more work done, but the interactions they have with your customers would also change how your customers perceive your business. Customers that have a positive perception of your business are more likely to increase their spending with your company, refer others to your product, service, or experience and are more likely to leave positive reviews on your website and review websites.

 

Increase Revenue

 

When it comes to growing your revenue, you have an endless list of possibilities to choose from to achieve your goals. You could increase your prices, establish strategic partnerships, or even create new products or services that are relevant to your brand.

Here’s a few questions that I want you to ponder:

 

  • If you’re a restaurant, could you create a partnership with a local nonprofit to increase your impact and visibility? How is this a win-win? Well, nonprofits need help building relationships, demonstrating the work that they do, and need to be seen in the community as being more than an “ask”. The same goes for your restaurant. People are more likely to shop with local brands that are more than just good food. All things being equal, they will shop with brands that make an impact in the community.

 

  • As an online store, could you partner with local retailers to do product placement and fulfillment? How is this a win-win? Well, as an online retailer, potentially competing with Amazon and big box retailers, having local retailers that can display your products and perhaps deliver friendly service to your customers is valuable. Especially with Amazon closing many of its retail stores. Why is it valuable to a local, non-competitive retailer? Many retailers struggle with competing for visibility online, so supporting an established eCommerce brand may be a great partnership as your customers may choose to frequent their store for other items you don’t offer, making it a great co-marketing opportunity for them.

 

  • As a home services company, could you create a strategic partnership with the local bank to have your information shared with everyone that gets a mortgage? This is a great opportunity for the bank and the local roofer, electrician, landscaper, and HVAC company. The bank needs help with several things, but their primary goal is to grow their deposits so they can provide loans and other financial products. The more customers the bank has, the more opportunities they have to earn interest from the financial products they sell. As a home services company, you don’t sell financial products, but your customers may need a credit card, home equity line of credit, short term financing, or other options to consider as they decide whether to use you or your competitor. Having a financial institution that can help your clients evaluate the most cost-effective way to pay for your service is a great value to the customers you meet with and would differentiate you from other home service providers and help you pick up additional sales. You win because you become a resource to the client by helping them get what they want, and you help the bank because they gained a new customer. This is something that you could set up with a bank with minimal effort and could be automated on your end and at the bank so there are no additional steps or work needed from either party.

 

These are just a few simple ways to increase your visibility and potential relationships that will lead to increasing your revenue. We haven’t even talked about pricing strategies, bundling, adding new sales channels, or the subscription services you could offer. In a challenging economy, there are always new ways to reinvent how you do business to serve more people. It just takes taking the time to sit down with your key advisors to come up with a plan that will work for your business and goals.

If you’d like to discuss cutting costs and increasing your revenue, let’s talk!

Episode #19: Kevin Perry – Helping Organizations Manage Internet, Phone, and Cloud Solutions

In today’s episode, I’m talking with Kevin Perry an independent Agent at Forestel who has 10 years of experience helping local, regional, and national customers secure their internet, voice, and cloud services to ensure they are most productive, profitable, and secure. Kevin’s focus is helping companies in the NW solve problems with their internet, voice, and cloud services, and provides his customers with these solutions from a diverse array of service providers at NO cost to them.

What I appreciate about our call is Kevin not only educated me on the service that he provides as an independent agent but also shared key leadership advice for companies wanting to attract and retain more key employees, which he learned working within large organizations like Coca-Cola.

To learn more about Kevin Perry:

Phone: 503-744-4264
Email: [email protected]
LinkedIn: Kevin on LinkedIn

Please subscribe to the podcast and the YouTube channel to be the first to hear of new releases and exclusive content.

Follow us on YouTube: https://bit.ly/3mBACTn

Episode #18: Keith Sconiers – Helping Entrepreneurs Build Better Businesses

In today’s episode, I share my story of what inspired me to start PaySuite and the six economic forces that inspired us to deepen our support for entrepreneurs.

If you’d like to read a copy of the Deloitte report discussed in the show, you can see that here: The 6 Forces Report by Deloitte

Don’t hesitate to reach out if there’s anything we can help you with at PaySuite or beyond.

To learn more about PaySuite:

 

Email: [email protected]

LinkedIn: PaySuite on LinkedIn

Website: Learn more about PaySuite

Book: The Entrepreneurs Ultimate Tax

 

Please subscribe to the podcast and the YouTube channel to be the first to hear of new releases and exclusive content.

Follow us on YouTube: https://bit.ly/3mBACTn

The 10 Lies Entrepreneurs Must Know About Payments

As an entrepreneur, software developer, or accountant you understand that the payment processing industry is essentially mandatory for you to engage with to accept payments in your business so you can efficiently get paid from your customers. For decades, it has also probably felt like lies and deceit are mandatory too. It isn’t. There are ways for you to avoid being taken advantage of by payment processing companies and it starts with knowing what the lies are, so you don’t fall for them and sign the wrong contract. The following lies are 10 of the most popular lies being told in 2023:

 

We Eliminate The Middleman

 

There are 12-15 payment processing platforms in the United States that authorize and settle daily transactions and deposit them into the business bank account. Fiserv, WorldPay, Elavon, and Global Payments are a few of the most notable payment providers that are considered ‘direct processors’. There are over 2k registered resellers of these platforms called Independent Sales Organizations. Regardless of who you are processing with, eighty to ninety percent of your costs are controlled by Visa, MasterCard, Discover, and American Express. This portion of your costs is called Interchange, Dues, and Assessments. The payment processing platform you’re using has no impact on these fees and is the same if you’re using a direct processor or an independent sales organization. The only impact on cost beyond that has to do with your provider’s markup. When I worked for a direct processor, I thought all ISOs had to mark up the fees from the direct processor and pass it on to the customer. I was wrong. As I met with prospective clients, I came across plenty of customers using a ‘middleman’ that were processing at costs we couldn’t beat or come close to matching.

 

You Can Process Payments For Free

 

The hottest craze in the payments industry has been merchant processing providers telling business owners they can process payments for free. Nothing could be further from the truth and, if done improperly, can lead to business owners paying thousands of dollars in fees. Payment processors promote these programs, not because they are better for your business, but because instead of charging you 2.5% to process payments, they get to charge your customer 4% and make a lot more money on your account. In my opinion, if the customer is going to pay more anyway, you might as well increase your prices and keep the additional profit you’re giving away to the payment processor and avoid having to pay Visa a $5k or $25k fine for improperly adding fees at the checkout.

 

It’s Illegal To Store Credit Card Information

 

I’m not sure where this started, but I’ve heard business owners say it’s illegal to process a credit card over the phone or to store the information. This in some cases has to do with PCI Compliance and probably had to do with some merchant processing company trying to find leverage to get a merchant to switch or to discredit their existing provider. PCI Compliance has to do with how you handle and store the credit card information you handle over the phone, on your website, or within your business environment. You can store credit card information securely using a secure website provided by most payment providers. It’s, of course, always best to make sure you don’t write down information on paper or in an Excel spreadsheet that’s unencrypted. If you need recommendations on how to store information securely, without being charged significant fees to do so, feel free to schedule a call with us.

 

We Get Better Rates From Visa + MasterCard

 

Visa, MasterCard, Discover, and American Express partner with banks to distribute their credit and debit card programs. This is when they determine what fees will be associated with those programs. No payment processor is involved in setting these fees so if you hear a processor elude to them having a special relationship somewhere, they are lying.

 

American Express Costs More Than Visa + MasterCard

 

American Express changed their billing model to match Visa’s over 5 years ago making them more competitive and affordable for businesses doing less than 1m in annual sales with them. This in combination with American Express cardholders spending more per transaction, makes accepting this form of payment a great decision for your business. If you find that your payment processor is charging you significantly more for American Express, you may not be on the American Express OptBlue program and will need to ask your provider about updating your pricing.

 

Debit Cards Cost The Same As Credit Cards To Process Payments

 

In 2010, the Durbin legislation was passed placing a cap on debit card fees. This cap was applied to all transactions involving debit cards that were issued by major banks like US Bank, Wells Fargo, Citizens Bank, Bank of America, Key Bank, or any other bank with more than $10b in assets. These banks are considered ‘regulated’ and the fee associated with these debit cards is .0005% and .22 cents per transaction. This fee is the same whether it is processed in person, online, or via the phone or invoice and represents a significant reduction in costs for businesses accepting debit cards in their business.

 

Typing In Credit Cards Is Always More Expensive

 

Many businesses using companies like Stripe, PayPal, and Square have become accustomed to paying three to four percent for typing in a credit or debit card to process it and this is because these providers charge more for typing in payment information. In some cases, Visa & MasterCard charge more for transactions that are processed without the physical card being present, but it isn’t always the case. When set up properly, a business can still expect to pay rates as low as 2.5%-3% for credit card transactions and less when processing debit cards. The key in all scenarios is choosing the right payment provider and getting the most transparent pricing, which is called interchange plus.

 

Signing A Contract Will Save You Money

 

Contracts do not save you money. There is no stipulation in Visa or MasterCard’s pricing matrix that indicates a merchant will save money on payment processing if they sign a contract with the merchant service provider. Point-of-sale, software, and merchant services companies often require merchants to sign a contract with hefty termination penalties so they can recoup the cost of hardware and so they can increase the profitability of the accounts that they onboard. This has nothing to do with the true cost of processing payments in your business and you should have an advisor familiar with payment companies and their agreements before you sign any long-term contract with a company that has access to your bank account. We’ve seen companies levy termination fees as high as $20k per location for local small businesses, which is harmful to their cash flow and capital reserves.

 

Rates Are Going Up Because Of The Economy

 

Payment processing companies can be notorious for increasing rates and blaming it on Visa, MasterCard, Discover, or American Express. The same has happened with the volatility in the economy. Payment processing companies are blaming rate increases on market conditions, when in fact, there is no material reason for a payment processor to double the markup on their accounts other than the routine desire to increase their profitability. Visa postponed many of their rate increases during the pandemic and payment processors still handed down unreasonable fee hikes. If you’re tired of having to deal with rate increases on your own, schedule a call with us to see if your provider is being honest with you about the rate increases. We can tell you whether it is a legitimate fee increase from Visa or MasterCard, or if it is just a profit grab.

 

It Costs More Because It’s Integrated

 

Integrated payments is the process of a software company embedding payment processing into their software so you as a customer have one solution to run your business. We are a huge advocate of using an integrated system as it can streamline your operations and help you run a better business. We aren’t a huge advocate of you having to pay 2x as much to process payments for your business just because it’s integrated though, especially if you’re paying a monthly software fee. This isn’t always your software company’s fault as payment processing companies take advantage of software companies too. Software companies are experts in building, hopefully, great software. They aren’t experts in evaluating processor fees or hard costs charged by Visa, MasterCard, Discover, and American Express. They sometimes partner with the wrong payment processor to offer payments and it results in them charging more for payments just to justify the cost of doing the integration.

As a business owner, it’s important for you to know that it shouldn’t cost you more to process payments within your software as there is no true hard cost that makes it so. This is a profit center for payment processors and software companies and the costs should be reasonable while also being easy to justify, especially if there are tools being provided that help you grow your revenue and serve customers at a greater level.

 

How To Avoid The Lies

 

The best way to avoid these lies and control your costs tied to accepting credit cards is to work with an honest provider that is dedicated to doing what’s right for entrepreneurs. Since 2006, PaySuite has been focused on helping entrepreneurs manage the costs and services related to accepting credit and debit card payments in person, online, or within their software. Whether you are a startup, a seasoned entrepreneur, or a software company wanting an honest solution to handling payment processing, we’d love to serve you. If you have any specific questions about handling payment processing in your business or software, feel free to schedule a call with us.

We look forward to learning more about you and your business!

Why Every Entrepreneur Should Have A Payment Consultant

In 2016, I resigned from the 5th largest payment processor in the country. I left the industry without any intention of ever operating in sales or in the payment processing industry. The primary reason for me leaving the job that I had was because of a disagreement I had with my employer on how it handled the acquisition of a point-of-sale company and the service that wasn’t being provided to an entrepreneur that I was introduced to that wanted my help. When I think about the last 9 years I’ve been involved in the payments industry as an employee for one of the largest platforms in the world and as a consultant to hundreds of entrepreneurs, the one thing I think about is how complex the industry is and continues to be. This is the primary reason I believe every business owner should have a payments consultant, not just another sales agent or merchant services broker.

 

Why A Consultant, Not A Broker

 

When I talk with some people about my company PaySuite, they often compare us to independent insurance agents or multi-line insurance brokerages. I’ve always seen our role very differently from a broker and this is primarily because of the length we go to help our clients be successful beyond just providing them with a merchant account. In our view, while we provide many of our clients with a direct relationship with providers that allow us to set and manage the pricing and support for merchant services, we believe that we have a fiduciary responsibility to recommend the right products and services our clients need and this includes recommending providers like Stripe, PayPal, and Square or others in scenarios where it is in the best interest of the entrepreneurs we are serving. My view of being a merchant services broker is one of recommending only products and services that one is being compensated for even if they aren’t better for the entrepreneur. Not all brokers operate from this premise, but in my experience of being in the payment processing industry for almost a decade, not many payment processing professionals walk away from opportunities to make a sale when it isn’t in the business owner’s best interest.

 

The Benefit Of Having A Payment Consultant

 

The primary benefits of having a payments consultant or of having a payment consulting firm have to do with their understanding of the payments industry and the various methods of application that is relevant to your industry, and that they are committed to helping you do what is best for your business, not themselves or their employer. When you begin your search for a merchant services account, which is generally triggered by starting a new business or solving a problem with your existing provider, you will typically sign up for one online or you will talk with an employee that is hired to sell you a merchant account, whether their employer is the best for you or not. That’s what my role was when I worked for the 5th largest processor in the country, they never encouraged me to recommend other systems or providers that were possibly better for the merchant I was sitting in front of. In fact, the primary conversation I had with my sales leaders had to do with me being fired if I didn’t hit my quota.

Having the right payment consultant for your business will result in a number of improvements within your business operations in ways that far exceed just the fees you pay for merchant services. The right consultant will have the acumen to not only understand the different payment methods that can accelerate your cash flow and profit, but can help you accelerate your revenue by helping you innovate your products and services. This is the major difference between having a sales agent, a broker, and a payments consultant. It’s common for you to have very limited contact with a sales agent or broker beyond the sale as you generally get transitioned to the customer service number for the payment processor without much advocacy. With a payment consultant, you can have a relationship that can step in and help you as an entrepreneur to ensure your company’s mission and vision are aligned with your sales and revenue targets and the technology you need to get paid from your customers. Having a payments consultant, with the business acumen relevant to your industry and a set of values that puts you first, can position your company to maximize profitability, optimize employee productivity, and supercharge your business operations.

 

Our Mission

 

Our mission is to help entrepreneurs build better lives and businesses. If you’re an entrepreneur that wants to have a relationship that is dedicated to your personal and professional success, we’d love to serve you. If I can answer any questions about payments, technology, or growing your revenue, don’t hesitate to reach out.