The First Thing That You Need to Know Is What Is Residual Income Management!
As an ISO, your company’s income sources are somewhat different from other types of businesses. Depending on the level of your company, the main source of profit is different. New ISOs must focus on finding as many clients as possible. The more clients they find, the higher their revenue and profits will reach. But after your company reaches a higher level, the main source of income will slowly change. The amount of money that Residual Income Management will bring to your company will grow much faster than the income brought by new clients. So, it will slowly replace it as the main source of income. For this reason, you need to be prepared and learn as much information as possible about what is residual income. And how it can be managed.
The residuals of your company are indirect profits that your ISO makes. Every time your clients make use of your software and services to make or receive payments, they will need to pay fees. So, the more clients you have, and the more successful they become, the more fees you will receive. From these fees, the costs are subtracted, and the remaining amount is the residuals. But this process is extremely complicated. Without proper tools, it is almost impossible for a big ISO to find all the indirect revenue sources and all the costs associated with them. Moreover, the complexity of the calculations that must be done will increase exponentially compared with the growth of your company.
After Knowing What Is Residual Income Management You Need to Know How It Is Managed!
Knowing what is residual income does not stop at knowing its definition. You need to at least know the process that your ISO needs to follow to be able to manage it properly. Only then will you be able to understand how complicated this process is and why should you use tools like a CRM to help you take care of the tasks. There are only 3 steps that your company needs to follow. Doing that will ensure that you can properly maximize the profits of your company and accelerate its future growth.
- The first task that must be accomplished is the tracking of all the residuals in your company. You need to find all the sources that produce money for your company indirectly. Also, you need to detect the amount of money that each source produces. So, if your company has hundreds of clients, you will need to find all the residuals produced by each one of them. As you can imagine, this task will require a lot of time and effort for a human. But if you use a reliable CRM, this task is taken care of in seconds.
- The second step of the process is to calculate the Residual Income Management of your company. All the indirect income streams are not enough. Although your clients will have to pay fees, your company will also pay specific fees to the banks and other companies. So, you will need to find all the costs associated with the residuals and subtract them from the total amount of money brought by the indirect income sources. Proper software can take care of everything in a few minutes. But if you want to use a human for the tasks, then he may need days or even more than a week.
- The last part of the process is to decide and implement the management of the residuals. After the calculations are done, you need to start managing the profits. Each ISO is different, so the ways through which the residuals are used differ from company to company. But a reliable software will be able to help you automate a large chunk of the process. You will only need a few clicks to distribute the residuals in the places where they are needed the most and where they bring the biggest returns.
Features That a CRM Must Have to Manage Your Residual Income Efficiently!
By now, you know almost all the basics about the what is residual income of an ISO. So, the next step is to find out the features that your company can use to simplify the processes of residual income calculation and management of its residuals. There are many options on the market. But not all of them can maximize the benefits brought by the residuals. So, you need to make sure that you find the best CRM in the field. There are 2 types of features that you need to take into consideration while you search for CRM. Each one of them will bring specific advantages and benefits to your company.
- Reporting features. The first type of feature in this category is an overall overview of your ISO’s Residual Income Management. But the software must also allow you to see and manage the residuals at the payment processor level or even at the merchant level. The next feature should allow you to directly pay your agents through ACH to maximize efficiency. Lastly, the calculation of the residuals can be completely automated or at least semi-automated. Only after the CRM can cover all the reporting needs and features mentioned above should be taken into consideration.
- Metrics features. In this category of features, the focus will be more on your company and less on the clients. The features of the CRM must be able to provide you with all the information about the growth of your company. That includes the tracking of the growth for the merchants, confirm the results of the strategic decisions. Also, it must be able to empower the decisions made by your team and maximize the results brought by them.
You need to keep in mind that there are only the features that a CRM must have concerning the residuals of your company. There are other parts of your company that could make use of different features brought by reliable CRM. So, you should also take them into considerations while you make your choice.