With all the stress of managing and building your business, it can be tough to keep track of the many ways you may be overpaying and could potentially save money. Shawn Galley, Lead Funding Advisor at The Business Backer, shared three of the most common cost-savings opportunities he finds when speaking with merchants.
1. Get a lower cost of funding by staying ahead of your potential funding needs.
Whether it’s capturing a profitable opportunity or experiencing short-term cash flow stress due to a variety of factors, having a line of credit or approved working capital in place can help you with any immediate needs that may come up. When underwriters see cash flow stress or a sharp decrease in sales, the cost of funding tends to go up to cover the risk. Merchants in this situation could have received a higher dollar amount of funding at a much lower cost if they applied for funding sooner. While you cannot foresee every potential financial situation in your business, being prepared and having ongoing access to capital could potentially save thousands in funding costs.
2. Shop around for the best credit card processing rates. It is worth your time.
I see a lot of merchants who are being consistently charged higher than average credit card processing fees month after month. Merchants who are more than comfortable shopping for lower prices on supplies and other business necessities seem to neglect this arguably much easier opportunity to save some cash. Even a small difference in fees can result in several thousands of dollars in savings month after month. Processors are very eager to show you savings and want your business, so spending some time comparing offers and negotiating rates is well worth the effort. Typically, all you need is your last 3 or 4 months of processing statements and a little time dedicated to the task.
3. Avoid unnecessary fees – Reduce your number of bank accounts.
I’ve spoken hundreds of merchants over the years and I’m surprised by how many have several open bank accounts when one or two accounts would do. These merchants are constantly moving money between these accounts on a weekly or daily basis or sometimes even by “overdraft protection.” Opening multiple accounts makes it difficult to manage minimum account balances, which can result in overdraft fees, insufficient funds fees, transfer fees, monthly fees, and other fees depending on the institution. Infractions, particularly insufficient funds, can also make it more difficult to get approved for funding. And let’s not forget fraud; multiple accounts put you more at risk. Consider consolidating multiple business accounts if possible. You could save time, money, and stress by simply reducing to one account.