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Check Processing & Payments Information

Increase Profits with Returned Check Protection

Posted by Joe Gargiulo | Fri, Jun 23, 2017 @ 09:45 AM

returned check protectionOperating small-and-medium enterprises in the United States is expensive — no great revelation there.

The plethora of general business expenses may be common knowledge, but industry and vertical-specific costs may surprise more than a few business people. Nevertheless, most merchants would agree that “the cost of doing business” is a necessary evil in a competitive marketplace. Overhead may be broken down into anticipated and hidden costs.

Anticipated Costs

Common necessities includes rent or mortgage payments; labor; phone, utility and web services; sales, marketing and advertising costs; manufacturing or processing equipment; light vehicle purchases or heavy equipment leasing; office fixtures, computers, printers and desktop devices; inventory; professional services; and a variety of insurance such as professional liability, vertical-specific liability or policy riders for home-based businesses.

The value of other overhead — such as certain employee benefits, real estate taxes, licensing, certifications and miscellaneous taxes — might be strongly debated in some business circles.

Hidden Costs

Hidden costs exist within many of the above categories while others may be stand-alone expenditures occurring infrequently:

  1. Equipment maintenance
  2. Software upgrades
  3. Interchange fees for credit and debit cards (percentage of sale amount plus an transaction fee)
  4. Shrinkage (inventory loss due to damage or theft)
  5. Legal fees
  6. Outstanding accounts receivable

Two particular hidden costs warrant further review: time and lost sales.

The Cost of Time

In its simplest form, time is a function of the hours spent by staff members conducting company business and down time attributed to a variety of unauthorized actions or distractions.

Scheduled workflows take longer to complete than estimated, fires need to be extinguished on a regular basis, and one-off projects can monopolize entire teams for days or weeks on end. Furthermore, the time lost to unproductive team meetings, staff training and turnover, computer crashes and periods of low human productivity should not to be overlooked. Consequently, the labor portion of cost of goods sold (COGS) may be grossly undervalued as a result of lost time.

The Cost of Lost Sales

Companies lose sales opportunities for a variety of reasons including failure to address the four Ps of marketing: product, price, place (distribution) and promotion (sales, marketing, public relations, advertising and social media).

The sales process alone has a thousand pitfalls for sales people to fall into: lack of product knowledge, poor closing skills and failure to provide viable solutions to commercial customers or consumers.

For example, fitting customers with products or services that offer convenience, savings, efficiency, reliability, safety and improved quality is a worthy ambition, but what good can be achieved if salespeople fail to offer affordable purchasing options?

The solution lies in applying an added level of protection to the payments process.

Complete More Sales with Returned Check Protection

First, consider the findings of the preliminary version of the 2016 Federal Reserve Payment Study:

Consumers are using checks ($1,554 per check on average) to purchase big-ticket items such as furniture, autos and building supplies, but they are using debit and credit cards (averaging $37 and $93, respectively) for everyday purchases at gas stations, grocery stores or restaurants.

Second, accepting checks is all well and fine, but merchants need to safeguard themselves from the financial liabilities of returned checks while considering the benefits of returned check protection.

 

 

CrossCheck details the scope of returned checks in the video “The Cost of One Bad Check.”

How much returned checks cost merchants depends on their profit margin — the lower the profit margin, the more merchants need to sell to make up the difference. For example, a merchant operating at a 10 percent profit margin will need to sell an additional $10,000 to make up for $1,000 in lost profits from returned checks.

Returned check protection is called “check guarantee” in the financial services industry. CrossCheck has been a leading provider of check guarantee since the company was founded in 1983. Today, thousands of merchants across the country rely on CrossCheck guarantee services as their provider of returned check protection. Learn more about Remote Deposit Capture (RDC), a fast and easy approach to processing guaranteed checks without going to the bank, by downloading our free guide.

 

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Topics: Increase Sales, Check Guarantee

Written by Joe Gargiulo

Marketing Specialist Joe Gargiulo has 25-plus years in marketing, communications and copy writing. As a writer, he enjoys connecting story leads to all aspects of the human experience.