Would you like to have your existing merchant portfolio produce 10% more profit next year without adding a single merchant? Who wouldn't? The answer is right in front of each ISO in black and white. It's called the monthly residual report. Let me explain. Each year, our industry typically slows down before Christmas and it does not pick up again until well after New Year's Day. Merchants are busy with holiday sales and then, after Christmas, they are consumed with returns. All that distraction in the customer base makes it a slow time for an ISO. But like most businesses, we have all our staff there at the office with not much for them to do. That lull in sales presents a great opportunity to take time out for an audit of residual reports. This activity is perhaps the most boring job in the ISO task list, but it can be one of the most financially rewarding. Have you ever really looked at your residual reports? I mean, examined them merchant by merchant, price point by price point, to see what is going on? I have met ISO's who don't even know how to read their residual reports. They seem to think that because their processor is a big company or a bank, there just can't be a mistake. That is simply not true. Big companies are made up of regular people who make honest mistakes all the time. But their honest mistake could be your shortchanged residual payment.

There are two basic areas to focus on:

• Are the terms of your ISO Agreement in force? Has your processor accurately passed through your cost of doing business at all levels? In order to asses this area, you must know exactly what all the price points in your ISO Agreement are, including not just the main ones like buy rate or statement fees, but fees for more obscure areas like non-qualified transactions and batch header fees as well. Know all your prices and then check your residual report to make sure they are entered on each merchant correctly. Incidentally, it is necessary to check the costs on a by-merchant basis since your processor may re-enter your pricing with every merchant contract you send in.
• Are the terms of your merchant contract correctly in force? Was the pricing you sold the merchant entered correctly in the processor's computers? Or was there a simple mistake which might be costing you money every month? Look for all the transaction types, statement fees and communication fees as well as incidental fees to make sure you are getting paid every penny.
     This may seem tedious, even overwhelming. Break the job down into its component parts, and ask your staff to take a piece of the overall job. Make sure you check their work for accuracy. During this slow time of year when sales are hard to come by, what's so bad about adding 10% to next year's bottom line without leaving the office?