Every cent counts in business. You probably overlooked this fact until your business becomes cash-strapped. If you think back, you’ll realize that there were numerous unnecessary fees you incurred in the course of running your business.
Related Post: List of Deductible Business Expenses
“But, is there anything I can do?”
Sure! In fact, a lot.
Here are six of the most bothersome business fees and how you can avoid them:
1. Credit Card Processing Fees
Whenever your customers pay for goods and services using credit cards, some amount of money is deducted from what is supposed to be your revenue. Payment networks charge about 1.3 to 3.4% assessment fees for every transaction.
On top of that, your payment processor deducts some amount of money, which varies depending on the processor and exact plan you select. The issuing bank also charges some small interchange fees.
That means you can lose up to 5% per transaction. Don’t underestimate the implications of this. Take the example of credit card processing fees of nose surgery. Assume you perform 10 nose surgeries every month and charge USD$5,000 for each. You should have a monthly revenue of USD$50,000.
But, if all your patients pay using credit cards with an average processing fee of only 3%, you lose USD$1,500 every month or USD$18,000 annually.
Also Read: 5 Reasons To Continually Upskill Your Staff
Here’s what you can do to reduce your credit card processing fees:
- Pass the credit card processing fees onto your customers through a credit surcharge program. Instead of your revenue being deducted, the customer pays about 2 to 4% more so that your revenue remains at 100%.
- Negotiate with your payment processor to reduce non-processing fees such as annual account maintenance fees, equipment renting fees, and monthly minimum fees.
- Opt for swiped transactions rather than keyed-in ones. The processing fees are usually higher when you enter the transaction details manually.
- If possible, use debit cards instead of credit cards. Credit cards are known to have higher processing fees than debit cards.
- Reduce chargebacks by employing security precautions such as two-step authentication, address verification service, tokenization, IP address verification, and card verification value (CVV) verification.
2. Rent For Unnecessary Space
Has it ever occurred to you that your current office space may be bigger than you actually need? Of course, you don’t want your business premises to look congested. Elegance is key in attracting new customers and retaining the current ones.
However, you may be renting more space than is necessary and this considerably eats into your budget. Consider the following practical tips for reducing your office space without compromising your business image:
- Cut down on paper storage: With the current technology, you no longer need to keep voluminous paper files in your offices. You can convert all important documents into digital format and archive them in soft copy. This way, you won’t need the usually large file cabinets that cram your office space.
- Embrace telecommuting: Some of your employees don’t have to physically report at your business premises. If most of their work can be done on a computer, allow them to work from home, as long as they promise to be available during office hours. This reduces the number of employees you have to host at the business premises, meaning you’ll rent less office space.
- Re-arrange your office furniture: Perhaps your initial office layout was not well thought out. Look at ways you can place your office desks, chairs, filing cabinets, sofas, and business machines in a way that optimizes space usage.
If the above-mentioned tactics don’t work for you, consider negotiating with your landlord to reduce the rent. After all, the contract between you and your landlord isn’t written in stone. There’s always room for negotiation. Prove to your landlord that you deserve the discount.
3. Shipping fees
If your business involves ordering goods online, you may be spending more than is necessary on shipping fees. Nowadays, many companies view free shipping as part of good customer service. Order goods from such companies, and save your money.
But, if you must buy goods from a company that doesn’t offer free shipping, look into how you can make the most of coupons and promo codes.
4. Bouncing cheques
If you pay suppliers or your employees using bank cheques, do everything you can to ensure that they don’t bounce. This happens when the money you intend to pay is less than your current balance or when you have errors like signature mismatch, wrong dates, conflicting amounts in words and figures, disfigured cheques, or scribblings on cheques.
Most banks give you penalties for bounced cheques. So, exercise a little extra caution when writing cheques so that you don’t lose your money unnecessarily.
5. Bank Administration Fees
Banks are in business just like you are. They’ll take any opportunity to take a portion of your money. Here are some instances when they unnecessarily charge you and how you can avoid such fees:
- Breaching the minimum required balance: Always ensure that your bank balance is above the required minimum.
- Overdraft charges: You’re charged when you spend more money than you have in your account. Avoid that as much as possible. Some purchases can always wait.
- Receiving printed bank statements: You don’t need print-outs unless it’s absolutely necessary that you have stamped bank statements. Otherwise, instruct your bank to send you monthly statements on email, which is usually free.
- Using wire transfer to receive or send out money: Use other cash transfer methods if possible.
For any other legal and hidden fees by banks, make sure you know your bank policies inside out and raise an alarm whenever you notice unexplained deductions.
6. Software Subscription Fees
It’s true that IT is a critical part of any business. However, subscription fees for software can prove unmanageable as there’s not one software that does everything. You may find yourself paying monthly fees for 20 different software.
But, do you frequently use all of them? Probably no. Unsubscribe from those that you can go for a month without using. Also, look out for free alternatives that can equally meet your needs. Always use trial versions before purchasing licenses.
In A Nutshell
You can save a lot of money while running your business if you’re smart enough. Try the above-mentioned tips and see how much money you save every year.