Residual income and residual reporting might seem like hard to comprehend notions for most people. But there’s nothing to be scared about. In order to better understand what they mean all anyone has to do is a bit of research. Although most might not get it on their first try, there are several pages, blogs and forums dedicate to answering any kind of question one might have about these topics.
How to Understand Residual Income
Most people and even some businesses don’t really understand what to do with the money they have left at the end of each month, or even what that money represents. They usually just spend it without considering what other options they could explore. This is why it is very important for both individuals and companies to understand what that money actually represents and what they can actually do with it.
The residual income you are left with at the end of each month after paying off all of your bills and taxes is what you have at your disposal to spend on anything you’d like. Of course, not many people understand that that income isn’t just spending money. That money can be used in order to make even more money. All one has to do is know how to use it properly. One option is just putting it in a bank and wait for the interest to pile up. But that can take some time before seeing any actual results. Another option is taking it to a residual management company and letting it help you turn your leftover money into pure capital.
The same thing applies, in broad strokes, to a business as well. Their residual is a bit more complicated to calculate, but it kind of reflects the same thing. After subtracting what the business or department spent in a month in order to produce whatever it is it produces, the amount that is left is what the company can call their profit. By using that method of calculation a company can see how profitable it or its departments are. And, just like in an individuals’ case, the company can use that money in order to invest in other sectors or to help other struggling departments. This calculation is one of the most important KPIs a company can have and one of the easiest to verify.
What Can Residual Income Be Used For?
In the case of a person, that money can be used to help him indulge in any hobbies he might have. That is usually what most people do. Another option a person has for that money is to use it in order to make even more money. There are a few ways that ca ne done, but choosing one depends on the level of risk a person is willing to take. For instance, one could choose to lend another person. Money lending from person to person isn’t anything new. People have been doing it for years in order to avoid going through banks and having to deal with their systems. However, this option is quite risky, the lender not knowing if he will be able to recover his money on time.
A safer way of putting your money to work for you is investing in stocks. Although buying and selling on the open market can seem challenging for somebody that has never done it before, there are plenty of companies and private consultants that can help you build up a portfolio and increase your money. This option is usually a safer one because you can choose to take out your money at any moment. With minimal loses. However, if you do choose to go down this road, the best advice for you is to do some serious research before handing over your money to any kind of stock broker or analyst.
What Is Residual Reporting?
Residual reporting refers to the way you make money using your ISOs. In simpler terms, every time an ISO makes a transaction using a service you provided for it, you take a piece of that transaction. The more ISOs you have in your portfolio the more residuals you will be collecting at the end of the month. Reporting them means keeping track of everything you have to collect from all of your ISOs. But keeping track of them can be quite hard and time consuming, especially when you start having more and more. That time could be used in order to provide better services to your current customers or even to get more customers.
There are a few simple steps you can take in order to keep that time down to a minimum. They involve checking the way you do your reporting. Firstly, you should know what percentage you get from each ISO. Although some might “look the same” they don’t always calculate your percentage the same. The best thing to do is get a written agreement that clearly states how your percentage is calculated.
The next thing you could do is review your transaction reports. Your residual depend on the volume of card transactions your ISOs made that month. Be sure to check up on them every month and look out for any kind of abnormalities. There could be spikes in volume but dips in value. Make sure to get in touch with anyone that you think is doing something wrong and straighten the matter out.
Is Residual Reporting Important for A CRM?
The shortest answer to that question is “Yes, it is.” Correctly reporting the amount of residuals someone has to collect at the end of each month is very important. That is why CRM developers have started including this as a feature in their systems. What the feature does is keep track of each ISO for you and generates a comprehensive report at the end of each month.
CRM solutions, like the one offered by IRISCRM, are the next level in reporting residuals. They save up a tone of time and work, helping you focus on more important matters. Another great thing is that these features practically eliminate human error. When doing the reporting by yourself, you might skip a field or punch in the wrong numbers. With this CRM feature you don’t have to worry on losing money because of not paying attention or making foolish mistakes.