What Are Monthly Carrying Costs And How To Reduce It

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Published: Friday, 16 December 2022 07:33

Inventory is a non-liquid asset for companies that sell physical goods and must be transformed into cash through earnings. The profitability of a company is based on how well it controls this process. Carrying cost is a crucial indicator to pay attention to because it often represents 15–30% of a company's overall inventory value.

A business can maximize earnings by using effective inventory management procedures that minimize carrying costs down to 15% of total inventory. Carrying costs can rise to or even exceed 30% of the total amount in cases of inadequate inventory management, which reduces profitability.

Here is a summary of what the monthly carrying costs are and some suggestions to lower them so there won't be any unpleasant shocks once you get the keys.

What Are Monthly Carrying Costs?

Carry costs are any charges incurred by the owner while holding an investment property. Among other things, these expenses typically cover utilities, debt servicing, taxes, and insurance.

Because they have an impact on a property's budget and cash flow, carry costs must be quantified because they affect the return on investment (ROI) and capitalization rate. Given that one will be aware of the number of expenses they will incur simply by owning the property, understanding the carry cost of an asset may also aid in determining how much rent to charge a renter.

Carry costs may also be referred to as holding costs or carrying costs. It is referred to as a holding cost since it is a constant sum that the investor must pay while keeping the property (often monthly). A burden associated with owning or holding the asset is the carry cost.

Carrying costs still apply, whether the investor plans to rent out the property after fixing it up or buys it to fix and flip. The owner will want to sell the property as soon as possible in a fix-and-flip. Carry costs cause the investor's return to decline each month.

There are four categories of inventory carrying costs:

Capital Costs

Capital costs include the price of acquiring inventory or raw materials as well as related financial costs like interest and loan service charges. The largest share of the overall inventory value, or around 25%, goes to this cost type.

Inventory Service Costs

costs associated with maintaining products in the warehouse, including taxes, fees for inventory software, hardware purchases, and insurance.

Inventory Risk Costs

Costs associated with inventory risk include those associated with unsold inventory owing to obsolescence, expiration, or damage, as well as product shrinkage brought on by theft or sloppy record-keeping. Furthermore, if you keep products in the inventory for too long, their worth can decline from what it was before.

Inventory Storage Space Costs

It is the price of moving goods into and out of the warehouse, buying or renting warehouse space, and covering the costs of maintaining the warehouse's physical security, temperature monitoring, and utility/utility management. These expenses are set in stone and predictable if you own your warehouse. The price of contracting out storage and shipping operations to third parties (3PL) might vary based on usage and volume.

How To Reduce Carrying Costs and Take Profits?

Increase the Pace of Inventory Turnover

Increasing the percentage of items sold is a practical strategy to lower the carry cost of inventory. Reduce the amount of time inventory items remain on your shelves.

By unloading inventory when it still has value, you can eliminate obsolete inventory. If you don't make a decision soon enough, you might have to pay to throw them away or dispose of them.

Every month, evaluate the sales of every product to determine whether they are progressing as anticipated. If sales are higher or lower than anticipated, adjust. Promotions can help when you're using your inventory too slowly.

Once again, improving your inventory turnover rate will require the capacity to interpret unique business patterns and market forecasts. Because of this, you can avoid keeping unnecessary stock in the warehouse and save money and space by constantly inspecting inventory.

Pay Attention to the Minimum Order quantity

A supplier's minimum acceptable order size is referred to as a "minimum order quantity" (MOQ). Lowering the MOQ will result in you retaining less inventory but making purchases more frequently, which will lower your inventory's cost. Your company can be more flexible as demand shifts to smaller, more regular orders.

The best way to lower your MOQ is to establish strategic alliances with your main suppliers. If suppliers believe you are committed to developing long-term, beneficial business relationships with them, it will be simpler to negotiate cheaper orders.

You may pool your resources and divide the stock amongst yourselves if you know another business owner who needs the same stock. Offering to pay your supplier a bit extra for less inventory is another approach to lowering your MOQs. This could result in you making more money overall and lowering your cost of inventory.

Utilize Inventory Management Software

Think about the advantages of using software for inventory management and automating daily operations rather than manually managing inventories. You can increase visibility throughout your supply chain to always know what's in stock, what's on order, and where things are with a digital Inventory System.

You may use custom reports to optimize inventory levels, fine-tune pricing tactics, and identify the optimum warehousing approach to lower holding costs if your inventory management system incorporates data from purchases, order fulfillment, and supply planning.

Get Rid of Outdated Inventory

Many internet retailers encounter the problem of obsolete stock frequently. In general, when you overestimate a product's potential, you risk having a lot of unsold inventory due to a lack of consumer demand.

The drawback of this is that it raises your holding expenses because unsold merchandise is kept on hand and precious warehouse space is wasted that could be put to better use. Monitoring the life cycles for each of your goods and using more accurate estimations when making purchases are two ways you may reduce this problem.

You will actually be able to make better choices when sourcing more inventory if you have a better understanding of both the lifecycle of a product and the trends in client demand.

Conclusion

Don't let your company be in the dark about the price of keeping inventory. You may spot inventory inefficiencies and eradicate them by routinely calculating carrying costs. You can also set benchmarks to direct future business decisions. More favorable profitability and better cash flow are the results of lower carrying expenses. The advantages can then be shared with your consumers and reinvested in your company to ensure future growth.

A Guide to Supplemental Benefits Insurance

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Published: Tuesday, 13 December 2022 06:30

When injuries or diseases strike, supplemental health insurance can be a way of paying for unexpected medical expenses. Even if somebody has healthcare coverage, if they are diagnosed with a serious health condition or are injured, they may face all manner of expenses that are not covered by their health insurance plan. Copays, coinsurance, and deductibles are just some along with additional expenses at home for transportation, childcare and more. An increasing number of companies are now offering supplemental health insurance as a voluntary benefit that is covered by employees. These plans pay cash benefits directly to the employee with the coverage to be used in any way that they see fit. 

How Supplemental Insurance Works

Supplemental health insurance is designed to assist with paying for any unexpected costs that may not be covered by regular health insurance. Employees receive cash payments directly from the insurance company based on them being diagnosed, admitted to hospital, or treated for injuries and health conditions that are covered by the plan. It’s usually quite a straightforward process, and the cash can be used by the employee for any costs that they see fit, including for non-medical costs such as buying groceries or paying for childcare, reducing the financial impact of being injured or recovering from an illness. 

Accident Insurance

Accident insurance is one of the most popular supplement insurance benefits to offer. It provides benefits for a range of different accidental injuries that require medical treatment, hospitalization or urgent care, including common injuries like fractures and burns. It will also cover a range of treatment and recovery services like transportation in an ambulance or physical therapy. Payouts are based on the treatments that are covered, regardless of whether or not there is a health insurance plan in place to cover some of the costs. 

Cancer Insurance

Cancer insurance is a type of supplemental health insurance benefit that pays an employee out with a lump-sum payment upon the diagnosis of cancer. The money can be used for any purpose and is made directly to the employee regardless of any medical insurance coverage that they have. It is designed to help with the cost of diagnosis, screenings, treatment, and any other associated costs the employee incurs throughout cancer treatment. 

Critical Illness Insurance

This kind of supplemental health insurance is designed to complement existing disability or medical insurance plans. It provides a lump-sum payment that is made to the employee directly if they are diagnosed with one of a number of different chronic, major and debilitating health conditions like cancer, stroke, Alzheimer’s disease, or heart attack. 

Hospital Indemnity Insurance

This supplemental insurance benefit is designed to reduce the financial impact of higher health plan deductibles and other out-of-pocket costs for hospitalization for an employee. It is designed to provide a payout directly to any employee who is admitted to the hospital or an ICU for an injury or health condition that is covered by the plan. 

For employers, simply offering health insurance is no longer enough. When it comes to making sure that your employees have complete peace of mind regarding their health, supplemental health insurance benefits can help. 

Using QR Codes In Your Ecommerce Strategy

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Published: Tuesday, 22 November 2022 11:05

Nowadays, you can't take a stroll down the street without seeing a QR code on a billboard or storefront. From restaurant menus to business cards to employee uniforms, QR codes are becoming a common fixture in the modern consumer landscape.

Safe to say, their usage in the brick-and-mortar businesses is well established. But QR codes' potential extends far beyond physical locations – they can also prove to be a valuable tool in your eCommerce arsenal.

In this article, we'll explore how incorporating QR codes into your eCommerce strategy can benefit your eCommerce store, and offer some tips on the best practices for using them.

What is a QR code?

At first glance, QR Codes may appear to be a random collection of black and white squares. But these codes can hold a significant amount of information, from  links to landing pages with product details to payment options and promotions. All customers need is a smartphone with a QR Code scanner, and they can quickly access the information without typing lengthy URLs or handling physical materials.

For example, say you own an online clothing store and want to provide customers with additional product information, such as fabric content or care instructions. Instead of making them search for this information on your website, you can add a QR code to the physical clothing tag that, when scanned, brings them directly to the relevant page.

How do QR codes work?

A QR code uses a visual encoding system that can store thousands of alphanumeric characters. When scanned, this information is converted into readable text for the user to access. This transaction takes place in a matter of seconds, making it an incredibly efficient and convenient form of sharing information.

Due to QR codes' widespread use, most smartphone users already have a QR code scanner built into their device's camera app. But for those who don't, plenty of free QR code scanner apps are available for download.

Benefits of QR codes

Sure, QR codes may seem like a small addition to your eCommerce strategy, but they can be extremely beneficial to both you and your customers. How? Let’s look at a few ways integrating QR codes into your eCommerce strategy can benefit your business:

• Provide instant access. As mentioned earlier, customers can use QR codes to gain instant access to product details, size charts, promotional offers, and more. This streamlines the customer's experience and eliminates any frustration they may encounter searching for this information on their own.

• Collect data. QR codes can also serve as a tool for gathering customer data and insights. Most QR code generators offer the option to track how many times a code is scanned, where it was scanned, and even what type of device it was scanned with. This information can be valuable in determining the success of your QR code campaigns and making changes for future strategies.

• Save marketing dollars. Two of the best things about QR codes are that they are affordable and easy to generate. Many generators offer free options, and even upgraded versions are typically much less expensive than traditional advertising methods. So not only are QR codes convenient and efficient, but they can also save your business money.

How to use QR codes in your eCommerce business

Now that the basics are covered, let's get down to the practical ways you can incorporate QR codes into your eCommerce strategy. 

To increase social media engagement

Few customers will actively seek out a business's social media pages unless they have a particularly strong affinity for the brand. A QR code offers a seamless way to direct customers to your various social media platforms and encourage them to follow and engage with your pages.

Include a QR code on product packaging, cards enclosed in online orders, or other printed materials (like invoice receipts) that leads customers to your social media pages. You can also use a unified QR code to link customers to multiple social media channels, rather than creating separate codes for each platform.

To promote product transparency

Green. Sustainable. Fair-trade. These buzzwords have become important for customers in recent years, with many seeking to support businesses that align with their values. 

However, with limited real estate on product packaging, a brand can’t possibly convey all of its affiliations and beliefs. Until now, customers may have had to visit the company's website or contact customer service for this information. 

But with a QR code, all this information can be readily available to the customer at their fingertips. Midwest Dairy, for example, uses QR codes on their milk cartons to link customers to information about their dairy farm and animal care practices. This allows customers to make informed decisions and feel confident in their purchases.

To offer discounts and coupons

Of course, we can't talk about QR codes in eCommerce without mentioning their usefulness in offering discounts and coupons. Rather than sharing a lengthy url or link, customers can easily access coupons by scanning a QR code displayed on promotional materials or product packaging.

This method of offering discounts also helps to limit usage to recent customers or target demographic, as the code can only be accessed and used by those who have made a purchase or fit the desired criteria. For example, a QR code displayed on the receipt of a recent purchase can offer customers a discount on their next purchase, only redeemable by first -time customers. 

What's more, you can also track the success of specific promotions and campaigns by simply seeing how many customers have scanned and redeemed the code. That way, you can also gather insights into what kind of offers, discounts or other incentive offers are most popular with your audience.

To provide a unique experience

The Darling in West Loop provides a leading example of how QR codes can enhance the customer experience in unique and memorable ways. The restaurant uses QR codes on their to-go menus to bring the in-restaurant experience to patrons dining at home, with live stream cabaret performances and looped footage from the bar.

Consider how you could bring a similar level of engagement to your online business. For example, a beauty company may use QR codes on product packaging to link customers to video tutorials or virtual makeup consultations. Or a furniture retailer may use QR codes to link customers to assembly demonstrations or interior design inspiration.

By providing value in the form of entertainment or education, you can create a more engaging and immersive brand experience for your customers.

To streamline inventory management

QR codes can also be applied to more logistical purposes, like inventory management. After all, they started as a way to track automotive parts in the manufacturing industry. 

Generally, barcodes have been the go-to choice for inventory management. But QR codes offer several advantages over traditional barcodes. Unlike barcodes, QR codes can be edited and updated with new information, making them a more efficient and flexible tool. In an eCommerce setting, this means the ability to easily update product information and track the real-time availability of inventory.

Additionally, QR codes can hold much more data than traditional barcodes, allowing for more specific and detailed inventory tracking. And since QR codes can be read with a smartphone, there's no need to invest in dedicated scanners.

Steps to create a QR code campaign

Itching to get started on your own QR code campaigns for your eCommerce business? Fortunately, the process is fairly straightforward. If you need a little guidance, follow these steps:

#1: Determine the type of information you want to share.

Depending on the data you want to share, you'll select the corresponding QR code type. Suppose you want to share a coupon code for your online store. In this case, you'll create a Coupon QR code. If you want customers to download your mobile app, you'll create an App Store QR code. 

#2: Choose between a static or dynamic QR code.

Static QR codes can only contain fixed information, while dynamic QR codes can be edited and tracked. If you want to frequently update the information or track how many people are accessing it, you may want to go with a dynamic QR code. But if the information will remain constant, a static QR code might be more appropriate. 

#3: Generate and design your QR code.

You'll find plenty of free QR code generators online. These tools will allow you to input your chosen information and even customize the design of your QR code. 

#4: Test and implement your QR code.

Test the QR code with a scanner before using it in your eCommerce strategy. Then, you can start incorporating it into your marketing materials and product packaging to offer your shoppers a more streamlined experience.

#5: Track and analyze QR code performance.

If you opted for a dynamic QR code, you'll be able to track how many people have scanned your code and view metrics such as location and scanning device. This data can give you insight into the effectiveness of your QR code campaign and inform future strategies.

Tips to get the most out of your QR campaigns

Here are a few key tips to keep in mind as you start incorporating QR codes into your eCommerce strategy:

Figure out if using QR codes is a good idea

Not every campaign or brand will benefit from using QR codes. Consider your target audience and the purpose of your campaign before deciding if incorporating a QR code is the best approach. 

If your target audience skews older or isn't as tech-savvy, they may not be as likely to use a QR code. In that case, sticking to more traditional marketing tactics may be a better fit. However, if your target audience is technologically adept, incorporating a QR code can add an element of novelty and innovation to your campaign. 

Keep it simple and mobile-friendly

When designing your QR code, bear in mind that most people will scan it with their smartphones. Make sure the landing page or content it leads to is mobile-friendly and easy to navigate. Additionally, try not to cram too much information into a single code. Keep it simple and direct, with one clear call to action or message.

Organize your resources ahead of time

QR codes may be cost-effective marketing tools, but if you're new to using them, you may want to start small and test their effectiveness before fully committing to a full-scale campaign. Just like any other marketing project, it's important to have a clear plan and budget in place before you get started. 

Also, if you aren't particularly tech-savvy and data tracking isn't your strength, you may have to allocate resources to train employees or outsource some tasks. Before launching your first QR code campaign, make a resource schedule outlining who will be responsible for each stage of the project. That way, you can ensure that everything runs smoothly and avoid any last-minute scrambling.

Choose the right printing material

The material you print your QR code on can greatly influence its scannability. Choose a material that won't reflect too much light or distort the image, and avoid uneven surfaces like ribbed cardboard. Always test your QR code before fully committing to a printing material to ensure it can be easily scanned.

Pick the right size and placement

Avoid making your QR code too small or placing it in an area where it may blend in with other designs or graphics. Your code should stand out to catch the attention of potential scanners. A good rule of thumb is to make your code at least 2x2 inches and consider placing it in a prominent location such as the center or top corner of your packaging or advertisement.

Use QR codes to your advantage

Ecommerce is one sector that's constantly evolving. What worked five years ago may not work today, and what works today may be obsolete in five years. That's why eCommerce leaders always have to be on the lookout for new trends that could potentially disrupt the status quo.

QR code is one such trend that's been gaining momentum in recent years. And rightly so! By providing value and an interactive customer experience, QR codes can boost brand engagement, drive traffic to your website, and potentially increase sales. So, if you're ready to shake up your marketing game, give QR codes a try and see the results for yourself.

Everything you need to know about Small Business Insurance

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Published: Tuesday, 04 October 2022 05:29

Introduction

Businesses, big and small, are at constant risk of financial loss. Certain losses are unpredictable, making small businesses vulnerable to permanent damages. It is very hard for them to bounce back from such unforeseen risks and get back to shape. Therefore, every small business should invest in Business Insurance.

Business Insurances is a form of risk management that protects against uncertain losses. But before opting for a Business Insurance Policy, you must understand the various insurance types based on your needs. This article provides you with the essential information you need before making a Business Insurance decision.

What is Small Business Insurance?

Business owners use Small Business Insurance Premium to protect themselves, their business, and their business assets. It helps you to protect your business against bodily injury or property damage. It can help cover losses incurred if your company damages someone else’s property or your property and income. 

Small Business Insurance can protect the business's Financial, Physical, and Intellectual property. It can be a natural disaster, lawsuit, theft, injury or loss of income.

Things you need to Know about Small Business Insurance

Before choosing the right policy to insure your small businesses,you need to try new marketing strategy to increase your business sales and you must understand its various aspects.You can use several recruitment software to hire people to make it easy for you to run your business.  It would be best if you also were vigilant while selecting the Insurance Provider. Make sure you buy your policy from a reputed company that provides maximum coverage at minimum cost. Choosing the right policy from the right Insurer might be overwhelming. Read through the following factors that should be considered before finalising your Small Business Insurance. 

1. Types of Business Insurance

Based on the needs and requirements of your business, you have to choose the best type of insurance. The insurance you select depends on the type of industry and what the insurance covers.

• General Liability Insurance

Covers lawsuits over

• Third-party injuries

• Third-party property damage

• Defamation lawsuits

• Copyright Infringement

• Business Owner’s Policy

It combines General Liability Insurance with Commercial Property Insurance at a lower cost than purchasing them separately.

• Commercial Property Insurance

Covers for repair or replacement of stolen, lost, or damaged business property, including,

• Office or workspace equipment

• Inventory equipment

• Furnishings

• Business Interruption Insurance

It covers your business's operating cost in case of a temporary emergency closure due to fire, storm, or other happenings. It can be included in a Business Owner's Insurance or Commercial Property Policy.

• Professional Liability Insurance

Also known as Errors and Omissions Insurance, it is opted by professional services offering companies. Covers lawsuits due to

• Work mistakes

• Negligence

• Cyber Liability Insurance

Covers lawsuits over

• Data Breach

• Other cyber issues

• Client’s data breach

• Workers’ Compensation Insurance

  • Medical expenses for employees due to work-related injuries or illness

  • Pay for lost wages due to work-related injuries

  • Covers employees’ lawsuits for negligence

• Commercial Auto Insurance

Covers for damages caused due to company vehicle, like

• Medical expenses

• Property damages

• Legal bills

• Hired and Non-owned Auto Insurance

Covers damage caused by personal, hired or leased vehicles while being used for business purposes.

2. Assess the Industry Risks

Each industry requires different Business insurance depending on its industry type. Before buying a policy, businesses should study the risks associated with their industry. They should opt for Cyber Liability Insurance if they are a data-based company. But, in the case of firms offering professional services, they should opt for Professional Liability Insurance.

3. Insurance Cost Vs Coverage

The cost of Business Insurance is essential to consider when choosing the right Insurance Policy. The budget of the firm should be considered while making the decision. But, it would be best if you also considered the fact that risk management is important. The insurance will protect your business from severe financial implications due to unforeseen losses. 

While weighing the cost implications, you must consider

• Risk coverage

• Claim processing time

• The credibility of the insurance provider

• Premium hike policy

You should choose a policy that does not compromise the above criteria to avoid future vulnerabilities. 

4. Factors affecting your Insurance Rates

Apart from the risks associated with each industry, some factors will affect the premium amount payable. These factors are listed below. 

• Size of your business

• Location

• Assets to be covered

• History of claims

• History of Insurance lapses

• Security systems installed in your firm

• Safety of the work environment

• Deductibles, etc.

Apart from uncontrollable factors, make sure to follow good business practices to reduce the cost implications. 

5. Insurance Providers

Trust is a significant criterion in evaluating an Insurance Provider. Go with reputable companies by verifying the ratings and financial stability. There are various platforms where you can assess the credibility of the insurance providers. Compare and rate them on multiple criteria. Choosing a reliable and consistent Insurance Provider is important.

6. Read the Policy Documents thoroughly

Every firm is different in its insurance offerings. You have to read through the Policy Documents before choosing one. The deductibles, coverage, premium, and exclusions differ from one Insurer to another. So, make it a point to read through the documents to have a hassle-free experience.

Final Words

Small and Medium Businesses need to get their businesses insured. Stay prepared for any unforeseen losses or disasters. Specific policies also cover legal expenses. Learn in detail about all your options, and compare the policies offered by different Insurers before choosing one.