How Much Money Do Your Customers Owe You?

How Much Money Do Your Customers Owe You?

Dealing with someone who won’t pay you has got to be one of the worst feelings ever.

The money they owe you rightfully belongs to you, and yet you still have to be tactful about asking for it.  And, even then, after all necessary niceties (and more threatening remarks, I’m sure), 1 in 4 business owners still have trouble collecting payments from customers.  Adding insult to injury, a YouGov survey showed that in2013, 11% of business owners nearly had to close their doors because of issues with late or missing payments.  Not only is the issue of late payments pervasive – it’s also potentially deadly (for businesses).

Something You Probably Knew Already

Of course I don’t need to sit here and tell you collecting money that’s yours is important.  A dollar you earn now is a dollar you can use to fulfill all kinds of needs, from stashing it in an interest-bearing account to reinvesting it in your business – and, none of that’s possible if you aren’t being paid on time.  It follows, too, that if enough of your clients take too long to pay you for the goods or services you sold them, you may have to close your business; this not only makes logical sense, but the aforementioned study proves it as well.

And, Something You Probably Didn’t Realize

One thing you probably hadn’t considered was that when you have accountants pounding the phones just to squeeze a few dollars out of your deadbeat customers, it not only stresses them out for a marginal (or nonexistent) return, but it takes them away from the things they really need to be doing, like compiling reports or collecting payments from people who are calling you.  So, the negative effect of dealing with people who won’t pay is actually twofold: You lose productivity when you call an emergency “fundraising” session, and, there’s no guarantee you’ll actually recover the money you’re owed.

Given All That, What Do You Do?

It can be extremely stressful dealing with this kind of situation.  This article on avoiding late payments from clients details five different ways to either convince your worst customers to pay up or prevent the very situations that result in delinquent payments, like unclear business terms or lack of an electronic, integrated credit card processing system.

3 Tips For Managing Cash Flow

If you aren’t an accountant – and, okay, even if you are – managing cash flow can be a daunting task.  Cash flow management, essentially keeping your money as long as possible and being able to project how much of it is headed for your pockets at any given time, serves a few purposes.  It’s a great forecasting tool and a fine way to keep your business healthy, and, scary as it might seem, it’s important to get a feel for it.  Let’s just dive right in, shall we?  I promise it’ll be fun, and, we won’t go too far into the deep end J

#1: Project it Correctly

Projecting how much money you’ll have at any given time (or, for starters, just one specific time in the future) is important because it allows you to make other big decisions and, as the name would suggest, plan or project for the future.  Were you thinking of upgrading a piece of machinery in your warehouse?  Maybe thinking of changing vendors for a specific product?  Perhaps you’re even considering giving your employees raises.  Relying on numbers your accountant prepares for you is perfect, but, if you’re your own accountant, you’ll have to learn to project cash flow yourself.  You’ll have to make educated guesses about a number of things, including your customers’ payment histories and upcoming expenses.

Here’s what you can do in two detailed steps:

1. You’ll have to add up all of your cash on hand, plus the cash you expect to get from various other sources later on.  You’ll need to talk to all of your Sales team, Service or Support members, and of course your Credit or Finance department.  You’ll be asking the same question of all of them: How much cash (in its various forms, payments, interest, fees, etc.) are we going to get, and when are we going to get it?
2. You’ll then need to assess when your cash is going to be spent, and on what.  The more line item detail you have, the better – and, that includes items rent, utilities, inventory, salaries and wages, benefits, standard office supplies, advertising… Everything you spend money on for your business, really.

If you can be very thorough in your research (or just very honest with yourself in how your business spends its money), this is all you’ll need to do.  It’s a difficult undertaking, to be sure, but, if you can prepare one of these cash flow projections per quarter (or, more or less frequently, depending on your preference or your financial state), you’ll know exactly how much room you have to make other adjustments, like the aforementioned big purchases, raises, or anything else you might want to do.

#2: Improve Your Receivables

If you got paid for things the minute you sent out invoices, you’d never have any cash flow problems.  That’s usually not how it works, unfortunately.  Bearing that in mind, there are certain things you can do to ensure you get your money a little more quickly, if not instantly; you can start by making tweaks at the inventory level and making other adjustments at the customer level.  For example:

1. If you have old inventory, don’t just keep it around – sell it for whatever you can get.
2. Invoice customers as soon as possible, and follow up promptly if you sense any sluggishness.
3. Automate payments whenever possible,  Whether this means putting customers on a recurring payment subscription plan or simply using integrated credit card processing that plugs into your accounting system, this will get you your money more quickly.  In the case of using integrated payment processing, or even a virtual gateway, you'll save time every day too, which can translate to monetary savings in increased productivity.
4. Ask that customers make deposits on orders as soon as they’re taken; identify customers that have a history of paying you slowly and institute a COD (collect on delivery) policy.  If you’re not sure how to do that, an outside service like UPS can help.  If this doesn’t help, you can simply refuse doing business with those customers until you can be certain they’ll pay you on time.
5. Incentivize on-time or early payments by offering a small discount.

For a closer look at improving receivables cash flow, this piece on avoiding late payments from customers touches on similar ground and provides some additional tips too.

#2a: Improve Your Payables

If your sales are good, you might think everything in your business is hunky-dory – unfortunately, that isn’t usually how it works either.  Great sales can hide problems originating in your expenses, so it does good to pay close attention to how much money is leaving your pockets and when.  Here are some things you can do to lessen the strain and keep money in your pocket longer:

1. Take advantage of payment terms to the fullest extent.  That means if a creditor or vendor demands a payment in 15 days, don’t make it in 10.
2. If vendors offer you discounts for early payments, consider whether or not a discount will help you before jumping on their offers.  If you need to hold onto your money, you may want to let it ride until the payment becomes absolutely necessary.
3. Rather than send payments via post, use electronic transfers to make payments on things the day they’re due.
4. Don’t choose vendors simply on the basis of price.  Vendors with payment terms that serve you in your financial situation may be better for business overall than vendors with rock-bottom prices that need their payments now.

Let your vendors know about your cash flow situation if necessary.  If you ever need to put off making a payment, at the very least the vendors will have advance warning, and they may even be sympathetic.

#3: Survive Real Deficits

While tip #2a is designed to help prevent cash shortages, sometimes it just isn’t enough and you end up in the red anyway.  This doesn’t mean you’re a bad person or you’ve failed as a businessperson – it just means you couldn’t accurately predict the future, and, until we humans develop some form of ESP, you’re off the hook for that one.  Not being able to pay a bill is a completely normal situation, and, there are some measures you can take to lessen the stress from a bad cash flow situation like this, too:

1. Preventative loans help a great deal, but, banks will be much more apt to lend you money if you ask for it in advance – the longer time you give yourself, the better.  If you come to a bank asking for money you need that day, you’ll likely be rejected.  (You can approach third-party loan companies for next-day loans, but you’ll incur astronomical interest rates, so I would advise against this unless absolutely necessary.)
2. Your bank will come in handy for more than just loans.  You can arrange for your bank to give you a line of credit, which allows you to borrow money (like a credit card) up to a certain limit.  I would take the time to open a line of credit even if you don’t anticipate being in the red – it’s just a good business practice, akin to carrying a personal credit card in case of an emergency.
3. Ask your suppliers for help if you can’t get it from the bank, as those vendors probably know you and your business better than your bank does, anyway.  You can probably get what’s essentially a low-cost loan from vendors just by asking for it, especially if you’ve already informed them of your situation and have been a good customer in the past.
4. Using factoring may help.  Factoring is when you hire an outside service to collect payments on unpaid invoices for you.  The factoring company is compensated by taking a percentage of your invoices, but, you’ll be paid immediately for any invoices the factoring company takes over, so this is a good way to put some money back into your pockets immediately, if only as a last resort.
5. You can also ask your most promptly-paying customers to pay you more quickly, taking care to explain your situation and incentivizing them by giving them a slight, one-time discount, too.  You can also go after your very late-paying customers, offering them discounts for paying quickly as well – if you can get them on the phone.
6. In extreme situations, you can sell your machinery or offer your office furniture or similar assets as collateral on a loan.  In these situations, be sure to make your payments on time or you could risk permanently losing the items you handed over.

Concluding Thoughts on Managing Cash Flow

Okay, so I lied a little in the beginning.  Cash flow management isn't such a fun topic unless you're thoroughly in the black - and, even then, you need to continue to perform cash flow projections to ensure you remain there.  As long as you follow the steps here, you should be at least armed with some good information that will help you in the future.

3 Innovative Ways to Reduce Credit Card Processing Fees

How do you reduce your credit card processing fees?

It’s the age-old question.  How do you pay the lowest rate possible?  Can you get away with processing for free?  What’s the deal with interchange levels?  And, what the heck is a discount rate?

Suffice it to say credit card processing is a strange, multi-faceted beast.  There are lots of moving parts, and things going on that even your processing statement, which is confusing enough in itself, doesn’t detail for you.

Talking about it all would take me the length of a tome, and nobody wants that, so I’m just going to cover what you pay today.  Even what you pay has a few different levels to it – it’s not just a single rate that you sometimes hear about in advertisements on the web.  Without further ado, let’s move to the first item to look at to reduce what you pay out.

Wait too long, pay the price

Good things don’t necessarily come to those who wait – it’s best to strike while the iron’s hot, in my opinion.  While this is an adage I live by, it can very well be applied to credit card processing too.  If you’ve authorized a charge on a credit card and wait more than 48 hours to charge that credit card, you’ll be charged a “standard” processing rate – and, that can be as high as 2.95%, a fair bit higher than what you’ll usually pay.  (And, we’re just talking about the set interchange cost, not the processor’s markup!)

In order to alleviate those sorts of charges, simply make sure you’re settling authorized charges at the appropriate times, taking care not to wait too long.  If you use a virtual gateway, you can usually set it to automatically batch out at certain times (or trigger batching out for certain transactions, like pre-auths).  If it seems feasible for your business, it might make sense to nix pre-authorizations altogether and simply charge credit cards at the invoice level.  In any case, strike while the iron’s hot and you’ll come out on top in this case.

Save some money by saving time

Lots of businesses, especially B2B wholesale companies, are extremely advanced in almost every sense, except when it comes to payment processing; they’ll use systems that are quite disconnected, take too much time to use properly, and, for all their inefficiency end up costing businesses more.  This is due in part to the processing industry, what with most payment processors’ tendencies to rope businesses into contracts, lie, be ambiguous in their language, and other nasty habits – most business owners are apprehensive about doing anything differently when they’ve found a processor that’s at least somewhat fair.  It’s not uncommon to see a manufacturing company use the most high-tech equipment to fabricate their products, yet use a standalone terminal (technology that dates to the 1970s) for credit cards in conjunction with their top-notch accounting programs!  It’s unfortunate.

So, is it really possible to get two good things in one package pertaining to payment processing?  Actually, yes.  Using a credit card processing plugin for your accounting system of choice can effectively reduce your processing fees automatically while making your workload a lot lighter.  Plugins like this work with programs from QuickBooks (as an alternative to Intuit merchant services) all the way to Sage 500 (as an alternative to Sage Payment Solutions).  Here’s what happens:

1. Rather than using a credit card terminal, you input your customers’ credit card data directly into your accounting system, which you would have had to do at the end of the day anyway.
2. The plugin automatically transmits extra information like a PO number, invoice number, ZIP code, freight amount, and other information you enter anyway to the credit card-issuing banks.
3. The banks see this extra information and qualify the transactions at higher security levels, since the extra information makes those transactions harder to duplicate or make fraudulent.
4. The higher security gives you a lower interchange cost (set cost) for the credit cards entered that way – especially for business-type cards and GSA cards.

And, that doesn’t even touch on the time savings.  But, imagine how much time you might save not having to run all around your office to complete one credit card order, then stay a half hour (or a whole hour) after work re-entering credit card data to mark your invoices as paid.  And balance your GL.  It’s a lot of work you don’t really have to do!

Birds of a feather flock together

Ever had the feeling you just didn’t belong?  It happens most often in social situations, I’m sure, but your processor can pull a fast one on you and take you on a bad spending trip – all because you operate in a “high risk” industry, or some other industry they don’t particularly like.  Of course, in an effort to earn your business, they may not always tell you this, but they’ll sure make you pay anyway.  So, what do you do when you’re being silently shunned?

First, take a good look at your processing statement and determine if your overall costs seem fair (and, they will vary considerably depending on the type of business you’re in).  If they don’t, you might consider seeking out a processor that caters to your exact business.  Often, credit card processors will cater to specific industries, like adult novelty shops or firearms dealers, by establishing relationships with other entities (offshore or local banks) that will allow them to process transactions that other processing networks might label high-risk.  Prices will be lower with a high-risk-specific processor, for example, than with a run-of-the-mill company because they don’t have to worry about their backing network kicking merchants away, and for that reason the processor doesn’t have to worry about recouping all sorts of administrative costs by charging you.  Everyone wins.

Yours,

Jeremy

PS - I'm sorry; you still can't get away with processing for free.  When I figure that one out, you'll be the first to know, though ;)

3 Cash-Saving Tips For Adult Merchant Account Owners

Do you have an adult merchant account?  

Yes, you!

As someone doing business and taking credit cards in the adult industry, I'm sure you've heard just about everything in the book - and, I'm also sure a lot of it's negative crap, too.  Adult industries and adult merchant account owners in particular get the short end of the stick in today's wonderfully ambivalent, ambiguously sexualized-but-wait-not-really world we're a part of.  When it comes to adult credit card processing, it's a freaking jungle out there.  What are you to do?

This post is here to help address common problems adult merchant account owners or would-be-owners have with getting decent, competitive costs on their credit card processing.  It's a little more difficult to do than it is for run-of-the-mill businesses, but it's attainable.  Read on!

How to get decent rates on your adult merchant account

Take notes, 'cause this might be on the final.

Suggestion 1: Take control of your chargebacks by obtaining extra information

One of the chief reasons an adult merchant account is considered part of a high risk business is because of the chargebacks you'll often incur.  Chargebacks occur when customers (claim they) aren't satisfied with your products or, more often, when they don't remember ordering them, so they file a dispute with their credit card provider looking to get their money back for the product they ordered from you.  Winning a chargeback battle can be difficult if you don't provide adequate information about the credit card and transaction itself, so you should be absolutely sure to:

• Make sure your customer gives you the CVV code from the back of his credit card.  This is just another piece of information that helps verify the card wasn't being used fraudulently.
• Make sure the customer gives you his billing address.  You'd want this for the same reason you'd want a CVV code.
• For retail adult stores, invest in EMV technology.  EMV isn't mandated yet, and, certainly not everyone uses EMV credit cards yet, but, when the time comes, EMV will reduce fraud pretty significantly because EMV credit cards are inherently harder to replicate.  An EMV-enabled terminal costs you $200 or so.  It's a great investment.

Supplying the extra detail and using EMV card readers won't help you win every chargeback, but it will help you win more than you're winning now.  And, fewer chargebacks mean lower costs for you because your processor doesn't need that extra insurance against your would-be fraudulent transactions.  Everybody wins.

Don't let this happen to your poor customers.

Suggestion 1a (or 2): For retailers, give your business an innocuous-sounding name so your customers (or their significant others) don't freak out at their monthly statement

This may seem silly, but it can help reduce chargebacks as well.  You may not be able to control what products of yours your customer chooses to bring home, but you can control how your business is presented on his credit card statement.  Regardless of the actual name of your establishment, which I recommend you keep so as not to turn away legitimate business, you can choose to you have your adult novelty business show up differently on someone's credit card billing statement.  Using the name of a bookstore or referencing the name of the street address of the business are both tactics you can use.  Be a little creative!

Why isn't this you yet?

Suggestion 3: For wholesalers and manufacturers, use a processing method that can obtain the best base costs on business-type credit cards

Some business owners aren't aware that business cards have a few different set acceptance costs based on how much extra information is provided along with each transaction - that is, the more information you provide, the less you have to pay.  And, of the business owners who do know about these lower costs, not everyone knows if their gateway will accept the information, or even how to do it.  Here's what I suggest:

• If you don't use a virtual gateway for credit card processing (i.e. you're still keying cards into your black box terminal), start there.
• If you do use a virtual gateway, ask your processor if you're getting the lowest costs for business-type credit cards.  They may be able to help you.
• If you know you're getting some discounts from card qualifications, ask your processor what steps you can take to get all the business-type cards you take to qualify correctly.  They may be able to help with that, too.
• If your processor is unable to help you, it may be time to choose another credit card processor.

This is another solution that isn't the entire package but will help lower your costs somewhat.  Again, this is only pertinent to wholesalers, distributors, and manufacturers.

I know it's a little harder than usual to get decent credit card processing as someone who wants an adult merchant account, but, it can be done.  Cost savings are part of the battle, and, by at least utilizing point 1, you'll be doing both yourself and your processor a huge favor, because without the chargebacks, your risk level drops significantly.

Happy trails,

Jeremy

How the rise of e- and m-payments affects you...

2015 will be year of the eCommerce and mobile payments

Unless you’ve been living under a rock (and, yes, withhold your judgment because I lived under a rock for many years), you’re aware at this point that payment processing has changed considerably since the first physical credit card terminal in the 1970s.  We still use those old terminals, yes, but now there are other ways of accepting credit card payments that revolve entirely around the internet, where the cards being used don’t even have to be there.  Nowadays, in fact, you can log onto someone’s website and buy something from their online store with just a couple of clicks; you can walk into a retail store and hold your phone to a scanner and complete a purchase.  Your credit card numbers are scrambled and stored in an electronic vault, and, if anyone touches your information, your bank usually lets you know seconds after the occurrence.  The way payment security and convenience has advanced in the past decade or so has been simply astounding.

Today I want to focus on eCommerce payments and mobile payments because these two payment methods in particular represent the zenith of payment technology (at least for the moment), and as the years stack up, mobile payments will likely gain a great deal of traction, and eCommerce payments will become even more popular than they are now.

Do you wonder why that is, though?  It’s not that people embrace whatever new thing is thrust in front of them—just look at New Coke or minidiscs.  Something else is drawing people to these new technologies.  I think it’s pretty intuitive, actually.

 

eCommerce and mobile payments are EASY

I can’t prove this, but I would wager that both e- and m-payments were conceived of with the intent to make life easier, both for consumers and the shop owners who cater to them.

 

Of course, keying in credit card numbers over the phone has always been possible, and, with the advent of the online payment gateway, embedding that technology in a company’s website so consumers could purchase products directly from the site probably wasn’t much of a stretch—in hindsight, of course.  The idea is instead of looking on a company’s website and calling that company to order a product, you can now save a step and simply click, type a few things, and…you’re done.  And, you don’t have to call, wait for a human to pick up the phone, and deal with bad phone connections—none of that.  (The same goes for third party mobile wallets like PayPal.)

Likewise, pulling out a credit card and swiping has always been possible, but, having everything stored on a smart device makes for a world of new possibilities, like the “smart” choosing of the most beneficial rewards program for a particular purchase, and, not having to worry about losing credit cards because they’re all stored on your phone.  Furthermore, the possibility of integrating digital wallets with other smart apps (and hell, just being able to access everything on the same device!) has the potential to make life easier in ways we haven’t even considered yet.

Bottom line: e- and m-payments make life quite a bit easier.

eCommerce and mobile payments are substantially more secure than you might think

I can’t prove this either, but I would wager that both e- and m-payments wouldn’t be anywhere near as successful as they are (even with mobile wallets in such a nascent stage) if their extra security features weren’t working very effectively.  I’m talking about tokenization, of course.

Tokenization breaks credit card information into disconnected bunches of random numbers that can only be unscrambled with a special formula.  If a hacker ever breaks into a server that utilizes tokenization, the credit card numbers he comes across would be completely unusable.  Ironically, it’s the e- and m-payments’ perceived lack of security that prevents them from advancing even more quickly—at least in today’s age.  Tokenization makes credit card data virtually indecipherable to wrongdoers, but older generations who are used to things done a certain way might not choose to believe it.  (And, I’m not bagging on older or more stubborn folks here.  Point in case: I refuse to buy one of those newer TVs with the higher frame (refresh) rates because I’m not used to how the picture looks, and I don’t particularly like it!  I don’t give a damn if the quality’s better.  It just doesn’t seem like a TV anymore with that kind of picture.  And, by the way, I just learned you can turn that feature on and off.  Still don’t trust it…yet.)  I don’t doubt at all that as new generations are indoctrinated into the e- and m-payments mentality, they will embrace it easily, without a second thought—unlike folks who have experienced something different in their lives.

The net effect of these new technologies

We’re living in some pretty pivotal times right now, and, barring the world ending unexpectedly, these payment technologies will soon become the norm—or, even more the norm than they are now.  PayPal, which is already the standard on so many websites, will be even more prevalent, as well as other, similar services like Amazon Payments.  And, as more companies begin to utilize tokenization—on its own or as a byproduct of adopting Apple Pay or something similar for in-store purchases—transactions will get even easier for consumers to perform on their own, without the help of a salesperson.  And, they’ll be safer than ever before.  So, essentially, everything is going to be easier and safer.  That's how technology tends to work.  Eventually.

I know this is a bit of a departure from my normal doom and gloom stance on most aspects of credit card processing, but developers really nailed these e- and m- ideas.  The potential for safer transactions for all merchants is simply enormous, as is the potential for integrating payments into other apps and aspects of life with digital wallets.  This is truly an exciting time…and, I’m really curious to see what happens next on the payments front.

COST Versus PRICE in Payment Processing: They're Not Interchangeable

(or, a brief sojourn through time is the only way I can make this point)

Why, yes, I did borrow this image from 1995.

Today I want to talk about the differences between costs and price and how those two factors stack up against each other in credit card processing.  What does that even mean?  It’s quite simple, really, but I can explain it better with an analogy than I can with algebra.  Let’s pretend we’re at a furniture store for a minute…

At IKEA

I can feel you cringing.  Hey, I’m on a budget here!  We’ll let you shop at Restoration Hardware in a minute.  Anyway, we’re here at IKEA and I’m looking at a chest of drawers.  I see something that looks pretty decent, does everything I want it to do, and it’s only $200.  Before you ask, yes, I’ve shopped around a little bit and this is the best deal I’ve found, so I’m pretty proud of myself.  I think I’m going to have to put it together myself, but I’ll survive.  After doing a little work, I’ll throw this in my room where it will proudly store all of my clothes.

Now, let’s turn the clock ahead five years.  I know I didn’t tell you we were getting into a time machine, but just ride it out; I swear it’ll be a good experience.

Five years later…

Don't worry, these are stunt doubles, not even from IKEA.

Here we are, back at my house, and my dresser from IKEA has moved around town a few times.  I’ve used it endlessly, and it’s operated tirelessly for me—well, as tirelessly as it could.  It’s quite banged up, and the cheap black finish is scratching off.  Also, I didn’t tell you this, but two of the drawers have never quite closed correctly, so the paint is really coming off around those edges because of all the excess friction.  If we take a step back, this thing looks beaten.  It’s a little embarrassing, actually, and if I have company over I might have to cover it up just to save face.  I guess it’s just the way things are, though.

Now, let’s go back to the present moment and, instead of going to IKEA, let’s go across the parking lot to Restoration Hardware like you wanted in the first place.

At Restoration Hardware

Now, we’re looking at some nice pieces of furniture, and we happen upon a new wooden dresser, and…wow, it looks classy as hell.  Really nice veneer on the wood, really straight, and of course all the drawers are perfectly flush with the body—and, I can tell this because the thing’s already put together!  I hold my breath and glance at the price placard and my eyes bulge—it’s $600.  You assure me it’s a good deal, though, because—well, look at the quality!  You’ll have this thing forever, you assure me.  I fret for a minute but ultimately succumb to peer pressure, and you warmly reassure me I made a really smart purchase.  I feel a little better as I watch the complimentary shipping service guys wrap the chest up and load it into their truck.  The thing’s going to make my room look awesome…

Now, back to the time machine, obviously.

Five years later…

Yes, it is.

Well, when I first got the dresser into my room, it was pretty fantastic, and I guess it shouldn’t surprise you that, for the price, it’s held up incredibly well.  I’ve had to move it a couple of times, but it doesn’t have anything but superficial scratches on it.  All the hinges still work well, and none of the finish is flaking off, due in part to the fact that there isn’t any excess friction from shoddy workmanship (my own in an alternate scenario!).  I haven’t even thought about replacing it—and, why would I?  It’s an awesome piece of furniture, and it perfectly complements my room.

Okay, one more trip back to the present.  This is where we heroically apply what we’ve learned to the present moment to change the future for the better.  God, I should be a screenwriter.  Anyway, I’ve learned that buying furniture isn’t something to sneeze at—it’s more of an investment for the future.  My RH dresser hasn’t crapped out on me once, and I don’t expect it to unless my house burns down.  I’m in pretty good shape.

I haven’t mentioned credit card processing ONCE yet

And here you thought you were going to fall asleep at your desk.  Not so this time!  But, like all good things, this one must come to an end too.  The reason I told such a flowery story is because I like doing stuff like that, but, the story’s meaning really can be applied to picking a suitable payment processor.  So many times—in fact, the vast majority of times—merchants in need of payment processing go shopping at IKEA.  It’s the only place they ever shop, and, if the folks over there or any other big bin store come out with a better-priced chest of drawers or a lamp, merchants are sure to at least give it a once-over and probably even take it home because, gosh, it’s just so cheap.  Processors might cold-call you and remind you you can come to Restoration Hardware and you’ll have an attentive salesman there who isn’t bogged down with putting inventory away, who can tell you exactly how their special couches are stitched, the thread count of the sheets on their display beds, and the kinds of wood that go into their armoires.  “But,” a merchant might counter, “What are your rates?”  The sales guy on the phone answers, and the number he quotes makes the merchant a little flip.  “Don’t even bother me with that nonsense,” the merchant might say, and hang up the phone immediately.  “Serves him right for trying to swindle me out of my money,” the merchant says to himself.

The thing the merchant does not realize, and what you now do realize by now, is that choosing the choosing the right vendor for your company, much like buying furniture, is a solution for now and an investment for the future.  Not next year, not something to tide you over till you’re out of college, but…the future.  When you shop for payment processing, you’re not just shopping for the lowest price or lowest rates: You’re shopping for low costs, a solid company behind the services offered, a good pricing plan for those costs, technology that fits your business goals, a more-than-adequate support team: a solution that can grow with your business.  You may very well end up paying a little more than you would have, but your choice will pay back your business in spades.  And, you might even take pride in your choice like you'd take pride in buying a piece of furniture that really improves your room instead of simply serving a purpose until the next plebeian piece of furniture comes along.

Jeremy

Disclaimer: I shop at IKEA.  I take good care of my furniture but I know very well I'll have to replace it if I ever share my space with anyone else permanently.  That's analogous to, say, accepting over $30,000 monthly in credit card payments.

MOTO Credit Card Processing is Dead

(or, 3 tips to make it in MOTO business today)

Well, you heard me.  MOTO credit card processing as it was known at its inception is dead.  What comes to mind when one pictures MOTO credit card processing?  A businessperson typing a card number into a credit card terminal, right?  The technology in those terminals is approaching the age of dirt.  And, even more importantly--because some of us enjoy collecting classic items--that old technology is responsible for 85% of the card-not-present downgrades on monthly processing statements and 75% of the shoddy reports generated by harried accounting staff members.

Okay, so I’m totally lying about the numbers.  The point—that transactions are downgraded terribly and reporting tools are nonexistent with physical terminals—is absolutely valid.  If there were a way to measure shoddiness of reports as a function of harriedness of accounting staff from the general crappiness of the quality of life due to the oldness of your physical terminal, there would probably be a positive correlation.

MOTO credit card processing as you probably know it has outlived its expiration date.  If you know it as something else than what I’ve described, be happy you didn’t have to live through the golden (expensive, stressful) years.  You don’t have to take notes today.  However, if you have no idea what could ever replace your credit card terminals in the scheme of your business, you’ve arrived at the right place.  It’s time to get down and dirty.

MOTO credit card processing tips

1.  With the internet all things are possible (especially improved payment technology)

The internet has improved human life tremendously—or, rather, it’s sped everything up and made it easier to pass information around.  How does this apply to MOTO credit card processing?  Well, nowadays, you have options other than the physical terminals you might be using.  Take, for example, the virtual terminal:

If you're not familiar, it'll look something like this.  Pretty nice UI, and intuitive reporting tools.

Important to know about your virtual gateway:

• You can access your online gateway from anywhere with an internet connection, not just your office.
• Most virtual gateways are equipped with built-in searching and reporting tools, which are absolutely invaluable for copy requests, other audits, and simply reporting things at the end of the day or month.
• Some virtual gateways can be equipped to integrate to your accounting system (like QuickBooks, or wherever else you might create and reconcile invoices), which brings about a whole host of other benefits.  There’s no better way to catapult your business into the 21^st century than with a payment integration—and, your accounting staff will agree.

2. You can utilize payment channels other than mail and telephone

I know MOTO stands for Mail Order/Telephone Order, but in the past decades, that business model has expanded to include online orders, either via email or shopping cart.  Strongly consider whether or not your customers would benefit from the addition of an email payment portal, or a web shopping cart.  Maybe your website isn’t much to look at, or—good heavens—maybe you don’t even have a website.  Whereas payment integration can help almost everyone, adding a web shopping channel might not be for you if you have a well-established client base and you aren’t worried about not attracting Joe Average consumers.  But…I would wager that this idea helps more businesses than it hurts.  I mean, adding visibility and more payment methods can never hurt.

Shopping carts give you access to SO much useful data!  Makes me want to start my own business.

Important to know about an online payment method for your customers:

• This is the age of automation.  Usually, if people have the opportunity to use an email portal or shopping cart for payment, they will.  That means orders come to you without you having to answer the phone.  And, that saves time.
• You can automatically import your online payment data to your virtual gateway with information from other payment channels (like telephone) and make your reporting even easier.
• Some shopping carts (like Magento) are designed to lower the base costs of accepting certain credit cards for payment.  Depending on your potential for online orders, this could be a great windfall.

3. The importance of PCI compliance can’t be overstated, so use a compliant solution

In light of the mainstream data breaches you've undoubtedly heard or read about, this point can't be stressed enough.  Using a virtual gateway or an integrated processing solution has the potential to significantly increase your data security, and decrease your chance of becoming the next mainstream news story.

Important to know about PCI compliance:

• It’s easy to believe you’re invulnerable to hacks since you use a physical terminal—but, it simply isn’t true.  Hacking into phone lines isn’t terribly difficult; an entire subculture of phreakers could attest to that in the 1980s. 
• Using a virtual terminal secures your data, and, using a tokenized data solution makes the data even safer than with a conventional virtual terminal.
• Solutions like these are in high demand given the past few years—and, contrary to what you might believe, these solutions are usually available at no additional cost, as modern processors have adopted PCI compliance as a standard.

The beginning of something great

When something dies, something invariably takes its place, and we’re witnessing the implementation of some really cool payment processing options.  (I don't know about you, but I really like it when I can get a machine or a computer program to do instantly the work I would have spent 30 minutes doing, all while offering me a higher standard of data protection.)  Request a virtual terminal demo from the merchant services provider of your choice, and talk to several companies about what new MOTO credit card processing options will do for you.  I think if you give these options a chance, you’ll be pleasantly surprised at how much your business is improved.

Until next time,

Jeremy