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Credit card transactions are an important and generally growing part of the way rental stores do business today.  It follows that they have become a significant part of the cost of doing business.  They also have the potential to do significant damage to rental businesses.   Discussed below are some proven strategies for both significantly reducing the costs associated with credit cards as well as ways to reduce the risks of fraud which can result in large losses.

Reducing Credit Card Processing Costs.
It is imperative that rental businesses conduct competitive bidding processes at least once every three years – more often is better.  It is really quite simple to do.  In fact, you can get a third party to do all the work for you.  All you need to do is hire a reputable Broker.
The broker will ask to see your current credit card statement.  The first thing he or she will do is compute the actual rate your current vendor is charging you; this may be different than you are currently being told.  Second you will be told if a lower rate can be obtained for you.  With your agreement he or she will take your current plan to several different merchant banks and ask them for a bid. When the lowest cost merchant bank is identified,  the broker  will calculate the savings you can expect and ask you if you want to switch.  Many of our clients have reaped very large savings from this process; some have saved many thousands of dollars per year.
I am guessing that there are many reputable Brokers who can perform this review for you.  Many of our clients are currently working with a company called Approval Code; their representative’s name is Kirk Moore.  He can be reached at (800) 535-6233. (As a matter of principle we do not accept kick backs from vendors.)

Protecting Yourself From Charge Backs.
As the use of credit cards rises, so too do consumer claims involving credit cards.  Some claims are honest and legitimate.  Others are fraudulent.  They are all potentially damaging to a small business owner.   Credit Card Insurance (Errors and Omission Insurance) is one way to help protect your business.  This approach is discussed in greater detail below.  Short of insurance, however, there are several important business practices that you can adopt to prevent or at least minimize consumer claims.

Practice safe credit card procedures. Many credit card companies give their customers the benefit of the doubt nowadays.  So, when a consumer claims a fraudulent charge, the credit card company quickly initiates a chargeback to the original merchant.  The way you handle credit card transactions can be a very effective defense against charge backs.  Are your employees currently practicing all of the following?
1.    Provide documentation for every credit card transaction you complete.
2.    Even when you process phone orders, make sure that your employees are completing paperwork and keeping it on file.  On the documentation, employees should make note if the sale was a phone order.
3.    When reasonable and possible, require the physical presence of the card at the time of the transaction.  A physical card-swipe or imprint is much more effective when defending your business against a chargeback.
4.    Always request the credit card’s security code on the back of the card
5.     Request a customer’s ID when they present their credit card.  Not only does this help you to ensure that the owner of the credit card is the same person using it, but it helps to raise that customer’s confidence in your safe business practices.
6.    Respond to customer calls promptly.  In the absence of a prompt return call, a customer may feel forced to call their credit card company, initiating a process that is much more difficult to reverse.
7.    Pay careful attention to payables.  Without careful attention you may not notice a chargeback, fraudulent or otherwise.

Errors and Omissions Insurance. Claims of fraudulent charges may sometimes get elevated to the point of a lawsuit.  In the event that the actions of your employees have caused the fraudulent charge, your business could be named and liable in the lawsuit.  This is a situation where Errors and Omissions Insurance, a specific type of liability insurance, can help by bearing some of the financial burden of a lawsuit.

Errors and Omissions Insurance should be your last line of defense.  It won’t solve every single problem.  The best way to determine whether Errors and Omissions Insurance is a good fit for your overall business needs is to speak to your insurance agent directly.

We welcome your feedback. Have you changed the way you handle credit card transactions?  Let us know by leaving us a comment!

Cell phones have rapidly become a necessity in the business world.  They are no longer an expense that can be completely eliminated from the budget.  Cell phones give employees the ability to stay in touch, regardless of whether they are in the office or not.  In addition, the newest smart phones give employees unequaled resources at the touch of a button.  We in the rental business industry certainly rely on our cell phones.  I am sure that other industries have a similar dependence.

For all of these reasons, I do not consider simply eliminating cell phones a feasible option.  However, I would review how much is being spent on the current cell phone plan and look for places where the plan can be changed to save money.

Here are just some areas where cell phone customers typically overspend:

• Automated directory assistance: For convenience sake, many people choose to use the ‘411’ information option when they need to find contact information.  These calls, while convenient, are only available for a charge.  Depending on your carrier, charges can total almost $2 per call.  If you or any of your employees use this feature regularly, you might be experiencing a significant expense!  What can you do instead? Google offers a free 411 information service, available by calling 1-800-GOOG-411.  Google began providing this service to discourage people from using the internet feature of their smart phone while driving.  So, not only is it free, but it’s safe!
• Plans including huge numbers of minutes: If you or your employees are light cell phone users, chances are that you are never using all, or even most, of your minutes.  So, you’re paying for something that you’re not using.  What can you do instead? Investigate prepaid cell phones!  The option of a prepaid phone requires you to be vigilant in your research.  Make sure to read and compare plans carefully, as some carriers may easily “hide” add-on fees.  But, you may find that paying for only the minutes you actually use reduces your cell phone related expenses dramatically.
• Plans not meant for companies/networks: If you started your company cellphone network with just one or two phones and have since increased the number of phones within your company, there’s a possibility that you’re paying for the wrong type of plan.  What can you do instead? Some carriers have plans that are created specifically for businesses or networks of people.  These plans are generally more competitively priced than just the run-of-the-mill advertised plan.  As an example, some carriers offer companies the option to purchase a “pool” of minutes, which is made available for all the company cellphones.  Using this method may help you to provide consistent coverage for your heaviest and lightest cellphone users, but still remain in your budget.  Contact your carrier and ask if they have a plan like this that you might be able to use.
• Your employees use “extras”: Extras are items like ringtones, games and text messaging.  Things like this have become so commonplace that some employees don’t stop to consider that if they use or download these services, they may incur hefty charges.  This is especially true if your employees use text messaging, but it is not included on your plan.  Items that are not included on your plan are charged at a per-use price, which is generally very expensive.  What can you do instead? Check your cellphone bill to see if these types of items are being used, but are not included in your plan.  Next, determine if these items are necessary for your employees to do their jobs.  Something like text messaging may be worth adding to your plan, if it helps your employees communicate.  If something does help increase productivity (and, therefore, profitability), then contact your carrier and make the necessary change to your plan.  The sooner you can stop per-use charges, the better!  If the item is not necessary, ask your cellphone carrier if there is an option to block the service or download.  Then, make your employees aware of your decision!

Changes you make to save money during a recessionary time will benefit you and your business long after the recession is over.  While it might seem more important to make money-saving decisions right now, it never hurts to examine your expenses to ensure that your money is being spent in the best way.  It is never too late to pick up habits that help to increase your bottom line!  Keep visiting our blog for more tips on how you too can increase your profitability, simply by managing your expenses to spend your money wisely.

What are some things that you’ve done to save your business money?  Let us know by sending a comment!