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Every $100 in fraud now causes $279 in losses for merchants

(Business Finance) Not only does fraud cost big dollars, but not addressing it can lead to more fraud. Learn how it works and what you can do to stop the cycle.

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Fraud is causing major losses for merchants

According to dispute mitigation company, Chargebacks911, for every $100 of fraud today, companies are losing an average of $279 during the dispute process. This challenge is tremendous, especially for the rising number of online businesses.

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Studies show that merchants are letting at least half of all chargeback cases go unanswered, which is one of the primary causes of the increasing losses. Chargebacks911 calls these “hesitation costs,” which can be avoided by using services like theirs or others that are third party chargeback specialists that can save companies substantial amounts of money in the process.

What happens when merchants fail to respond?

Failing to respond to chargebacks not only hurts the bottom line, but can lead to more chargebacks, causing a loss in several ways, because when merchandise has already shipped, a buyer is highly unlikely to return an item, and the credit card processor assesses chargeback fees and penalties for every transactions.

A company’s reputation can take a hit, and the ability to process credit or debit cards may be revoked.

Having a strategy in place

Chargebacks911 co-founder, Monica Eaton-Cardone, says that while chargebacks aren’t completely avoidable, having a strategy in place helps businesses minimize chargebacks and their associated risks. For merchants who are contemplating whether or not to hire a chargeback analyst, Eaton-Cardone suggests considering the following:

  • Are there enough team members working to prevent chargebacks or fight them?
  • Are the designated employees educated about chargebacks?
  • Could previous chargeback cases have been handed better?

Three types of solutions are available

Finding a suitable chargeback manager is possible, Eaton-Cardone says, and she notes that they come in three types:

  1. The first type includes retaining a risk mitigation consultant. This is a qualified individual with ample experience in chargeback processing who can advise or assist in reducing the negative impact of chargebacks. This is a preferred option for merchants already experienced in handling chargebacks. The employees are trained in fighting chargeback cases, but require the consultant’s input on how to proceed in order to generate the best results.
  2. The second option is to outsource a company that contracts chargeback processing agents who verify the validity of each chargeback, and then formulate a response to be sent to the company’s acquirer (the bank or financial institution that processes credit and or debit card payments) that either accepts responsibility for the botched transaction, or provides proof that the transaction was legitimate.
  3. The last option is more along the lines of a chargeback system that completely relieves the merchant of the burden of handling chargebacks. These providers have staff members research and analyze cases, and then make an educated decision on how to best settle those cases on the client’s behalf. This is an end-to-end solution.

Eaton-Cardone maintains that the above methods will render chargebacks controllable, leaving merchants free to do what they do best: providing quality services to their customers. In addition, continued Eaton-Cardone, they help merchants avoid the chargeback fees that can range anywhere from $15 to $100 per transaction.

“With all of the details that factor into a company’s wellbeing, keeping track of everything in-house is extremely difficult,” said Eaton-Cardone. “The last aspect of your business that you want to slack on is the finances and hiring a chargeback specialist takes the guesswork out of the equation.”

Marti Trewe reports on business and technology news, chasing his passion for helping entrepreneurs and small businesses to stay well informed in the fast paced 140-character world. Marti rarely sleeps and thrives on reader news tips, especially about startups and big moves in leadership.

Business Finance

How small companies can compete with free shipping

(BUSINESS FINANCE) When running a smaller shop online, how can you compete with free shipping from giants like Amazon that can afford it?

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It’s hard enough for small businesses to compete with big retailers. But online shops also have to consider the additional cost of shipping. With stores like Amazon and Walmart.com offering very cheap or even free shipping, how is a smaller shop to compete?

Shopify, an e-commerce platform for online shops and point-of-sale-systems, posed this question to Thea Earl, product manager for Shopify Shipping. On the AskShopify blog, she offered some tips for managing shipping costs.

First, Earl points out that while “free shipping is an excellent marketing tool,” if you can’t afford to offer free shipping, it helps to offer a “really clear flat rate.”

Customers who think they’re getting a good deal may balk if they’re surprised by an exorbitant cost to ship. If you can consistently offer a flat rate, and let the customer know right off the bat, they’ll “know what to expect when they hit checkout” and won’t get sticker shock at the last minute, causing cart abandonment.

If you want to offer free or very cheap shipping, consider raising the prices of your products, even by a dollar or so, to help cover delivery costs. Note the ratio between the profit margin and the cost to ship.

Perhaps for highly profitable items, you can afford to absorb the shipping costs, while slightly raising the prices of less profitable products to offset the balance.

Lastly, Earl realizes that small business owners have no control over whether or not a carrier raises its prices to ship.

You do, however, have control over the packaging. Be smart about the types of packaging you use. Measure products and buy envelopes and boxes that are just the right size to save money on weight.

Paper and poly envelopes are lighter, and therefore usually cheaper than cardboard boxes. Also, Earl points out that most carriers have at least a few options for free packaging. Utilize these free options whenever you can.

And of course, you could always join a group like Shopify to take advantage of their bulk mailing partnerships with carriers like UPS, USPS, and DHL.

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Business Finance

Calculator for what your freelance rate should be

(FINANCE) When every second on the clock counts and saving is imperative, where can you go to figure out your optimal freelance rate?

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The issue of what your freelance rate should be is daunting for most, but is especially stressful for those who aren’t particularly mathematically gifted. When every second on the clock counts and saving is imperative, where can you go to figure out your optimal rate? A new calculator has an answer.

What Is My Day Rate is a salary calculator which determines the hourly (and daily) amount you’d have to charge in order to meet your optimal salary.

The calculator itself is intuitive enough: upon landing on the What Is My Day Rate webpage, you simply enter your preferred annual income and wait for the results to load. You’ll see both a daily and an hourly sum appear shortly thereafter.

The process of figuring out how much to charge is simple, but that doesn’t mean the process is simple.

What Is My Day Rate draws from similar geographical, workplace, and demographic data to give you a number which reflects post-holiday, post-fee, post-non-billable work results.

By clicking the “See how we calculated this” link at the bottom of the page, you can see a specific breakdown of how What Is My Day Rate determined your rate.

You’ll notice that they take into account weekends, holidays, sick leave, bonuses, benefits, and more.

If division is a strong suit for you, you may also notice that What Is My Day Rate operates on a 40-hour workweek model, meaning your rate might even be optimistic for your standards.

One problem with the calculator is that it doesn’t account for taxes of any kind; while it factors in a rather generous benefits percentage and adds in things like mandatory vacation time and unpaid sick leave, there’s still a noticeable gap between the calculator’s projected expenses and what you would probably have to pay.

On the plus side, tax brackets change, so you’ll be able to plug the day rate results into a separate tax calculator without worrying about accuracy issues.

What Is My Day Rate is a valuable tool for any freelancer looking to establish their daily freelance rate without necessitating a spreadsheet and several hours of botched accounting—or a more expensive alternative. If you’re worried about undercharging, head over to their site to lock in your rate ASAP.

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Business Finance

7 ways to quickly get outstanding invoices paid to you

(FINANCE) It’s easy to feel uncomfortable bringing up money with your superiors, but for a freelancer, it’s more important than ever to bring up the issue. Here are 7 tips to get your invoices paid quickly.

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For many, an awkward topic of conversation revolves around money. Whether asking for a raise or asking to borrow money, people often feeling uncomfortable when talking money.

This is equally, or possibly even more so, true for freelancers who are solely in charge of their finances. Without a system of weekly direct deposit, freelancers have to work overtime to keep their earnings in order.

The issue with this is that clients also have a lot on their plates, and something as simple as a freelancer’s paycheck is common to fall through the cracks. This causes freelancers to have to work friendly reminders into their repertoire.

However, freelancers may not always be knowledgeable of the best ways to keep their finances in check (no pun intended). Below are seven ways to enhance payment methods.

  1. You have to be willing to make billing a priority. Due to the fact that money is awkward to talk about, as aforementioned, many let this fall by the wayside. The best way to do this is to keep up to date with your invoices and send them as soon as they are done. Making a calendar specific for billing can help with this idea.
  2. This second bit dates back to when we were young and learning our manners: it is crucial to be polite. Not only is it the right thing to do, but it also increases speed in payment. Using “please” and “thank you” in invoicing emails are said to get you paid five percent faster.
  3. It is best to try and keep a complicated concept like finance as simple as possible. Make sure you are creating specific due dates. This will help to signify importance of payment.
  4. Now that virtually anything can be done online, it would make sense to use electronic payment verses an old-school check. Accepting online payments will get a user paid, on average, eight days faster as opposed to a check.
  5. This is an important notion to keep in mind for any aspect of your business life: be professional. Invoices are often seen by many eyes so it is best to include your business’s logo on said invoice. This has been found to increase chances of being paid on time by 10 percent.
  6. Specificity is urged again in the form of transparency. Make sure you are giving detailed descriptions on each invoice so that anyone looking at it knows exactly what you are being paid for. By doing this, you are 15 percent more likely to be paid on time.
  7. While you may be invoicing month by month, try to avoid sending on the 30th or 31st. Being that everyone, generally, sends their invoices in on these dates, it takes 10 – 20 percent longer to be paid. With everyone sending it at the end of the month, it has a tendency to back up payroll.

The most important thing to remember is that while the topic of money may be awkward, it is your money. If you let a few invoices fall behind because you are uncomfortable reminding your client, this has a way of adding up. Be sure to keep on track with your finances to earn what you are working for.

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