Risk Management Can Put Thousands in Your Pocket
Do you think shoplifting is just for brick and mortar stores? Guess again! Cyber-Shoplifting allows criminals to buy from you, then call their bank to charge it all back, leaving your business holding the bill. Then again, they may use your services on a contract, and decide to never even pay the bill in the first place.
In the cutthroat world of business, whether online or offline, credit card companies are not your friend, and lawsuits and lawyers get expensive. It’s best to not let the bad guys win in the first place, and that’s why today I’ll discuss 3 strategies to help you keep your cash in your pocket with risk management.
Strategy 1: Chargebacks
Think refunds are bad? A chargeback is worse, and over time (sometimes even right away from my personal experience), you’ll have the shoplifter’s chargeback damage your merchant account reputation. Credit card companies penalize you for having too many chargebacks, but no one will penalize you for a refund which still costs you just as much.
I know what you’re thinking, but hang in there with me. Chargeback360 is a company specializing in issuing a refund when their network detects a pending chargeback. They’ll monitor your account, and reverse the transaction as a refund so you get to avoid the penalties. The reason I recommend Chargeback360 isn’t just because we use them for Dragon Cloud, but because they’ll help companies of all sizes. (Chargebacks911 and Kount are alternatives, but they require a higher volume to service your account.) Chargeback360 uses the same alerts networks as Chargebacks911, but they only charge you one-off fees (around $30) for using their services to reverse a transaction.
Strategy 2: Collections
Great… now you just lost all of that cash to someone who doesn’t feel like paying their bills. Feeling jaded, annoyed, and like there’s nothing you can do? Guess again! You’ve got people on your side to make it right.
That’s where Rocket Receivables comes in. Rocket Receivables is a TSI-owned company, and for only a couple hundred dollars, you can order credits to place 10 accounts with them for their service to start sending letters to the debtor. If the debtor pays up based on the letters, then you don’t pay them anything more. They’re rated the best debt collection service by business.com, and they’re also who we use for our collections needs everywhere at Dragon Cloud. Oh, and they have a web interface to simply enter the debtor’s information.
If the debtor doesn’t pay after multiple letters, they have the option for you to send the account to their manual collections service. That’s where a person will work on calling the debtor until the debt gets paid. They take a portion of what they reclaim for you because they have to pay someone to chase down the debtor, though. If you decide to allow the account to automatically go to their manual collections process when the “letters” service ends, then they give you a discount on their percentage for the manual collections process.
According to a message on their dashboard, they recommend at least having a phone number or Social Security Number for the debtor to make it easier to find them. If you have both of them, that’s even better. Make sure you at LEAST have a phone number for this risk management strategy.
Strategy 3: Arbitration
Debt collections could upset your debtors, and they might seek to attack you in court. In that case, you’ll want to talk to your attorneys about how you can add an arbitration clause. Be sure to ask them how that protects you, even if the debtor files a case in a civil court. Often times arbitration is less expensive than a civil court case, and it works in a similar fashion. Arbitration can be an awesome risk management strategy if you know how to do it right.
For reference, at Dragon Cloud, we always have an arbitration clause in all of our contracts, and it was approved by our own attorneys at Anderson.
Arbitration still makes you pay for everything out of pocket, unless you use…
Bonus Strategy: Insurance
Insurance in my opinion should be something all companies carry. The mere mention that you have insurance often thwarts people from trying to attack your company.
One unscrupulous client threatened to sue us for discontinuing his services, even after we gave him $2,500 in free services. He even showed his filing with the court for a different case he filed. When I mentioned to him that we’d inform our insurance company, we never heard from him again, and he never filed a case against us. Maybe it was because he knew he was in the wrong; maybe he didn’t want to go up against a major insurance company. Whatever the case, we were well protected from an attack.
Talk to your insurance salesperson about getting proper coverage for your business. Need a salesperson who can help? Check out Landy or Bremke Insurance. Also try searching for insurance on Google or contacting your payroll provider for integrated services with your existing platform.
That suit you’re wearing is full of tracking devices. Still, it’s better than going naked in this place.
Erm… wait, that was the wrong conclusion to draw from all of this!
The correct conclusion is that you should always have an arsenal of companies protecting you. We use the services listed here and then some. Other ways you might consider protecting your business are to open an account with CloudFlare to protect your website, use Stripe’s Radar system to stop credit card fraud in its tracks, or even partner with TransUnion to perform ID verification for you.
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