Good Tuesday morning everyone. I have just got back from a very productive business trip to Orange beach Alabama this past week when I received a call from one of our sales partners. He was asking me how do you read our residual reports? That’s a good question,I replied.
Each month we happily receive our residual income reports from our processors we represent. we open it and look for the total amount we’re owed. Wait, wasn’t it supposed to be higher this month?
Then we start looking through the details.
Confusion sets in.
We close it and tell ourselves we’ll review it more closely next time. Sound familiar?
Reading residual reports can be extremely confusing, and most salespeople would rather do ANYTHING other than crunch numbers in a spreadsheet. Verifying that we’re getting paid what we’re actually owed is critical though.
To try and make it less painful, I’m going to give you step-by-step instructions that a fellow rep shared with me.
What You’ll Need to start,
You will need the following:
- Most recent residual reports
- 5 random merchant statements for the same time period as the residual reports (choose merchants who process and have a monetary effect on your income, positively or negatively)
- Current Card Interchange Chart and payment network fee schedule, should be able to get from your processor.
- (Visa Interchange fees, Mastercard Interchange fees,
Follow These Steps to try and Proofread Your Residual Reports
- Begin by identifying the total fees on the statements, and compare them to the collected revenues on your residual report.
Do they match? Are all fees collected listed on the report? If the answer is no for either, make a note of the difference, but don’t act on these just yet. - Now look at the interchange, dues, assessments, and network fees on the statement.
Compare these to the interchange chart. Do they match? If not, what is the difference? Note any of these that occur, and look for consistency. For example, is every assessment fee marked up by the same percentage? Do NABU, APF, and other monthly fees have the same differential? - At this point, you need to calculate the monetary difference of any identified mark up.
Compare this total with any that had a difference in step #1. In other words, if you received credit for $1,885 in fees, but the statement showed $2,005, does this difference of $200 match the marked up fees? If so, you are not being paid for these other revenues. - If the differential amount does not match the total amount of marked up fees, go back to your residual report and see what is listed for interchange costs. If the differential amount is included in there, you are not getting credit for the revenue.
How to Handle Bad Residual Reporting
The biggest challenge in reading residual reports is often the actual residual report. The vast majority don’t provide sufficient information.
Some won’t show interchange by merchant. Others will only show your income. If this is the case, you should reach out to your processing partner and ask for the detail. If they fuss, just ask for the 5 random merchants you are reviewing. If they still refuse, it’s time to be concerned.
The key to any residual report, in fact anything in our profession, is transparency. The inability to provide that to a merchant has cost many a rep the merchant. It should be the same for you and your processing partner. You should consider this a red flag.
Even if you trust your processing partner completely, remember that all humans make errors. Once you have completed the review of your sample, and have identified concerns, uncredited revenue, or anything else that stands out, reach out to your processing partner.
Lastly, ask for an explanation.
If the explanation is lacking, let them know about your concerns. Remember it’s your money. You have a right to ask questions and expect answers. If the answer is confusing, ask for clarification.
This exercise shouldn’t take more than an hour once you get the hang of it. At best, it’s worth the confidence that accuracy can give you. At worst, you may find there are errors that either must be explained, corrected, or (if not correctable but involve revenue not credited) finding a new processing home, Like Payment Lynx.
For more information about joining Payment Lynx and growing your portfolio or to discuss working with seasonal merchants please feel free to contact me at DMatney@PaymentLynx.com or 833-729-5969 ext.2 to discuss partnering with Payment Lynx.
Happy Selling,
David
“You are your greatest asset. Put your time, effort and money into training, grooming, and encouraging your greatest asset”
Tom Hopkins
Payment Lynx Daily 