Transaction costs are an inevitable part of the business world. While most transactions costs can be written off at the end of the year, they can still account for a large amount of your monthly expenses. Even if they can be written off, most business owners would prefer to do more with their incoming cash flow—such as reinvesting it to build more business. Below is a closer look at common business transactions costs and how to minimize them.
Credit Card Transaction Costs
Credit card transaction fees are a monthly cost that all business must incur. With few buyers using checks for purchases, and even fewer businesses accepting checks, debt and credit cards have become the go-to payment method for many buyers. While there are transaction fees for each and every debit and credit card transaction that you process, there are many advantages to electronic payment. You don’t have to worry of checks bouncing and you have significantly less cash in your register and safe which decreases your risk of financial loss via theft or burglary.
To minimize the monthly fees you pay for credit card transactions shop around on a regular basis to see what other payment processors are charging. Even a .1% difference in fees can make a significant difference in your annual transaction expenses. To minimize credit card transaction fees you could have the credit card minimum such as $5 or $10 or you could slightly increase your inventory costs to help offset credit card fees.
Online Auction And Sales Costs
The online marketplace remains one of the most impactful ways to increase your revenue streams. The ability to sell your products and services online introduces you to buyers throughout your states, across the nation, and if suitable even worldwide. While offering your products and services on high-ranking auction and sales sites allows you to gain increasing exposure, it adds to transaction costs via payment processors such as PayPal or Amazon check out, along with you paying a flat rate or percentage of your sales to the auction or sales site. While gaining exposure via these sites allows you to reach a wider client base consider offering your products and services for sale on your own website. Even when you sell items on your own website you will have to pay PayPal or Amazon checkout fees, however you can eliminate the sales per transaction fee. If your website does not yet have the exposure you desire, place your business card and marketing material in with each of the products you ship and each of your service emails to let your customers know that they can buy directly from your website. Even consider offering them a discount to their first purchase via your website instead of your auction or sales site.
Banking Fees
Banks offer a variety of fees for different transactions you need to pay while conducting your business. Just as with credit card transaction fees shop around and look for banks and credit unions that offer businesses small and large banking solutions at more affordable prices.
Transaction costs are a reality of doing business, however if you invest your time in seeking out alternatives you are likely to find competitors who are willing to offer you comparable services at a lower cost per transaction.
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Anthony Baton is an expert on business & finance. For those with an interest in the financial world, Anthony recommends that readers take a peek at the banking jobs with moneyjobs.com.
Image credit goes to market at the square.