Macroaxis Private Story

Businesses today are moving in an uncertain economy. You have to be very practical about managing transaction expenses to avoid significant business losses. After going through the tips above, the good news is a major overhaul isn’t necessary. Even small changes like those above can help improve your bottom line.

Published over three months ago
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5 Ways Your Business Can Save On Transaction Costs

Building a profitable small business is already a challenge in itself. There’s a lot you have to set into motion to ensure profits. This can often be easier said than done, given the magnitude of expenses businesses also have to cover. If you aren’t careful with your budget allocation, you may wind up spending more than you earn. This isn’t going to be financially healthy for your business.

One of those biggest expenses relates to your transaction costs. These include customer service expenses, international money transfer services, banking costs, overhead expenses, and other related expenses. The pursuit to possibly increase profitability starts with managing, controlling, and reducing those transaction expenses.
To start with, here are five ways your business can reduce business transaction costs so you can start being profitable today.

Decrease Credit Card Fees
The merchant and processing fees charged by credit card companies can reach double digits. When your business takes this into account as a percentage of your sales, the numbers can be quite high and diminish your profits.

The most reasonable solution to this is switching to another credit card company or merchant that charges lower credit card fees per transaction, per customer. If you can’t find one, then perhaps you may want to consider accepting cash-only transactions temporarily, in times when your business needs a little room to breathe financially.Other ideal solutions to negotiating or decreasing credit card processing fees include:

Opting instead for a fixed transaction fee, rather than the usual percentage of sales, each time you process a new transaction;
Consider a markup fee, wherein the merchant bank takes a cut by charging you the fee that varies for every industry, monthly processing volume, and amount of sale.

2. Take Note Of Your Overhead Costs
When determining transaction costs, do not neglect the overhead expenses. Be sure to take note of those costs as you go through your bank statements periodically. After all, your business’ overhead expenses comprise everything needed to maintain and process your various business activities.

One of the best ways to potentially reduce overhead costs is to venture into the e-commerce industry. Yes, this isn’t going to be free, and it’s a big switch to make, but you can significantly reduce your overhead expenses with e-commerce operations.

Here’s why—when you have an online store, you have one less salesperson required. You don’t need to have one to care for and woo customers when they walk into your store. A cashier isn't needed to ring sales, and there's no brick-and-mortar store to maintain.
On top of reducing your overhead costs, there are many other advantages slated for you to enjoy, too. The most pressing relates to the attractive online market. You can widen your geographical reach by having an online store and reaching far-away customers.

3. Optimize Customer Service Channels
Customer service is very important to businesses. Begin by using the resources that you already have. Does your business have a social media account? Use that to your advantage by utilizing your direct messages to address customer service-related concerns. If you have a website, install a chatbot. That way, whenever customers have concerns at whatever time of the day, you can respond promptly.

Optimizing your customer service channels is effective at reducing transaction costs, as you’re now able to make the most out of the resources you have. There’s no need to spend any more than is necessary just to gear customers towards making a purchase.

4. Reduce Supply Expenses
Another facet related to transaction expenses is supply expenses. The more expensive your supplies are, the more costly each transaction in your business will be. On top of that, you shouldn’t have to incur expensive delivery fees with each supplier.

To do this, take the time to search through various vendors first. Don't be afraid to go beyond your usual supplier list, and if you can shop in bulk so you can enjoy a discounted price, then do so.

5. Streamline Warehouse Operations
At this point, how certain are you that your warehouse operations are optimized? Are your supply chain and inventory well-managed? If it’s not, then that could be another contributing reason why your transaction costs are so high. You have to keep it well-managed and streamlined to avoid unnecessary and excessive costs.

If you don’t have one already, using a warehouse management system helps. This ensures your supply chain management and inventory are well-managed. When you aren’t careful, you can unnecessarily increase your warehouse operations expenses, which also makes your transaction expenses soar.

Technology is there to help you out, management-wise. Once you get the hang of it, you may start to notice a significant decrease in your transaction expenses when your supply chain management is more effective.

Businesses today are moving in an uncertain economy. You have to be very practical about managing transaction expenses to avoid significant business losses. After going through the tips above, the good news is a major overhaul isn’t necessary. Even small changes like those above can help improve your bottom line.

Editorial Staff

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Please refer to our Terms of Use for any information regarding our disclosure principles.

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