Presented by: Hugh J. McGuire. President of McGuire Investment Group, a South Jersey Financial Advisor FirmAbraham Lincoln once said, “If I had six days to chop down a tree, I’d spend five of them sharpening my ax.” What Lincoln meant by that remark is that sometimes, planning for an event can take longer than the event itself. This is specially true when it comes to planning for a secure financial future. Many people put off financial planning, especially during uncertain economic times, because they either don’t know where to begin, or they don’t think they have enough funding to make it worthwhile. The truth is: there is never an ideal time or place to begin and there is no specific level of income or assets one needs to have to make planning for the future “worthwhile.” You can (and should) begin planning for the future regardless of which life stage you are in and regardless of how much money you have. To begin the planning process, you first need to identify your immediate and future financial goals. If you’re like most people, your goals will include protecting your family in the event you die prematurely or become disabled; managing your expenses while paying down debt; buying your first home or helping your children pay for college; saving for retirement; and distributing your assets to your heirs – privately, equitably, and tax-efficiently – proceding your death. Fortunately, there are measures you can take during each of your life stages that will help you build, and then maintain, your personal financial security. Let’s take a look at them:The Foundation Years: If you’re in your foundation years, you are perhaps facing the most difficult times you will ever have financially. You may be recently married or just out of school; you may be taking on debt in order to acquire – and maintain – your family’s lifestyle; and you are probably starting a new job or career. While you may be earning adequate money to live on, it could easily be taking all you have just to meet your monthly expenses (e.g. student loans, rent or mortgage payments, car loans, utilities and regular household costs). Steps you can begin taking now to plan for the future include managing your cash flow without going further into debt; establishing an emergency fund of 3 to six months income; and protecting your loved ones. To help achieve these goals, you should consider buying a combination of term and permanent life insurance. Term insurance is an inexpensive way to obtain the amount of protection your family needs, while permanent allows you to begin building cash values that accumulate income tax-deferred. If your finances permit, this is also a good time to invest in disability insurance, as you will be in a better position to lock in a lower rate based on your age and health. The Accumulation Years: Once you’ve covered the basics – protecting your family and income, establishing yourself in a job or career and perhaps buying your first home – it won’t be long before you’ll want to start setting aside a percentage of your income in tax favored accumulation vehicles such as IRAs and employer-sponsored 401(k) plans – especially if your company offers employer “match” dollars. Contributions to these plans can be made on a tax-deductible basis and plan assets grow income tax-deferred. During these years, money you were formerly contributing in rent may now be going towards your mortgage, the interest on which may be income tax-deductible to you. At the same time, you may also be building equity in your house. If you have children, you may want to think about setting money aside in a college savings program, and you may wish to begin expanding your investment horizon to include stocks, bonds, and mutual funds. While investments such as these carry a considerable volume of risk, they also come with the potential for better reward. Your accumulation years are also a good time to review your life insurance protection to ensure it is still sufficient to meet your family’s growing needs. You may also want to consider adding special riders, which might be available at extra cost, to your policy that extend protection to family members. The Preservation Years: Once you’ve reached the preservation years, you will probably have accomplished many of your early financial goals. What’s more, you may finally have the financial freedom to attain a few of the special things you may always have wanted to do such as purchase a vacation home, help your children or grandchildren get established financially, or perhaps even retire early. But your planning isn’t over yet. There are still steps you will want to take to help ensure that your future financial security won’t be compromised by a long-term illness or unnecessary taxes and penalties. Looking into your long term care and retirement distribution options, including how, when, and how much you should begin drawing from your savings, could save you a significant amount of money and make the difference between a comfortable or merely “safe” retirement. The Golden Years: When you do finally retire, you will enter what many people refer to as their “golden years”. During your golden years you can finally begin enjoying the fruits of all your hard work and planning. In this stage your debts are likely paid off; your finances are probably in order; and you likely have some discretionary funds that permit you to travel or enjoy a few favorite activities. If you’ve planned carefully, your golden years can be a time for doing what you want, when you want. During this stage, you may not only want to plan how you will pass your assets on to your heirs, but also how you might benefit a favorite charity. To achieve these goals, you will want to consult with a financial advisor about trusts, powers of attorney, and charitable giving strategies. If your income exceeds your expenses, you may also want to consider using distributions from your retirement plans to pay premiums on a life insurance policy. By doing so, you can amplify the value of what you leave to your heirs plus help make sure there are sufficient funds available to pay taxes, final expenses, and other estate settlement costs. Building personal financial security is not something you accomplish just once, nor is it something you begin once you’ve accumulated a specific amount of assets. It is something you start doing as soon as you can and keep doing throughout the various stages of your life. To that end, if you’re among the millions of working men and women who dream of one day being financially secure, I encourage you to take a few minutes – right now, right where you are – to consider your financial goals and the various life stages through which you’ll pass. Knowing which stage you are in- and the challenges and opportunities you will face during those stages – can help you make the right decisions.
The idea behind premium pricing strategies is that products offering more than the average also deserve top price. Luxury items are famous for their premium prices. The real question becomes are they worth the price? If business owners want to sell at premium prices, they need to explain them to the buying public. Luxury brands take advantage of brand perception. Items perceived as rare or special sell at higher prices. Consumers also choose products with premium price tags due to concrete differences in products.
What Makes a Product Premium?
Before choosing the price of a new product, manufacturers must consider several factors.
– Are there are any other products like it available?
– What does it offer that sets it apart?
– Is it a “luxury” brand offering?
All of these questions decide whether the product can make it as a premium item. Marketing is the key to generating a successful product launch. Part of marketing a premium product is focusing on the positives. Instead of discussing the faults of similar products, unapologetically phenomenal products market their own incredible features. This shows that they are comfortable as an industry leader and secure as a luxury brand.
Unique items and services can command almost any price. Couture fashion items sell for more than ten times their production cost on a regular basis, due to the limited numbers available. Pharmaceuticals also sell for incredibly high prices since they are patented and only available from one manufacturer. An item that is completely new to the market automatically qualifies for premium status, but branding is important.
Avoiding Branding Mistakes
A noted discount brand cannot successfully introduce a premium product without some intermediate marketing steps. Luxury and low prices are incompatible in the mind of the consumer. If a business has an established brand that deals with consumption quality goods, it may need to develop a new brand before introducing a top of the line product. Decide on the highest price before bringing a product to market. It is almost impossible to increase a price, but discounting it is always a possibility.
Before dropping prices, consider brand integrity importance. Devaluing a brand is permanent. A tough economy is tough for everyone, but when luxury companies drop prices to compensate, those price drops are permanent. Don’t play the pricing game with competitors. They will quickly find out the hardship that goes along with insufficient cash flow. Stand by the product and reinforce the traits that make it worth the extra cost.
Quantify the Return on Investment
With any product, a company must show buyers a reason to buy. Quantify everything that sets a product apart from any competition. For consumer products, building a brand identity is often enough to validate a higher price tag, but services need more. Customer service is one of the most commonly referenced justifications for premium pricing. Unfortunately, many companies don’t offer truly exceptional customer service. Service is about much more than a warm smile and friendly employees. Good service is encompassed by an ability to anticipate customer needs. Constantly looking for ways to improve customer experiences is an important part of offering the next level in service.
If a product is unique, a luxury item or backed by a superb guarantee of service it certainly deserves to stand as a premium offering. Build a marketing campaign to show off those distinctions, and launch the next big product today.
By letting the LOS do what it does finest (handling info and transactional workflow) and integrating the documents and info in the ECM technique to the LOS, end users are ready to keep in the organization software they are most comfy with. In the finish, you obtain efficiencies like improved productivity and happier workers.
three. Maintaining a mortgage bank loan
The LOS is developed to be transactional so the photographs are tied to that one house loan transaction. But, that frequently brings about the documents to be held hostage in that program. By transferring the images into the ECM archive and enabling workflow, paperwork can be shared with other programs – and much more importantly, other departments – that might not have access to the LOS. In addition, the LOS does not have file retention capabilities, so when the loan is paid out off there is no way to begin a retention period of time and delete the document image when the retention interval expires.
The day has come: Credit unions have had the large “aha” moment: Even the greatest core systems can not get rid of paper and the fees and slow processes that go along with it. Now, it is time to place these ideas in to apply and get benefit of workflow and other credit union software.
Banks hate credit unions with justified reason. Banks are in business to make money for their businesses and owners. Bank customers are viewed as a source in income. Credit unions on the other hand are not-for-profit entities brought together to share resources and benefit members. In short, if you’re banking using a commercial bank, you’re a source of income. If you’re banking with your cooperative financial institutions, you’re among friends.
A credit union is an accumulation of individuals with a commonality. Perhaps they are all employees of certain company or live in a certain area. There financial organizations have grown to well over 72 million members in the, so it stands to reason there are plenty of unions these days to potentially join.
A credit union is a cooperative entity owned and managed through the people who actually use its service. A group of people attended together to share money. If you belong to one of organizations, you’re a member, and as a member you get yourself a voice in how the union is run. And because these banks are owned by those people using it, there is terrific incentive for those organization to offer high rates of return on savings, low rates on loans and allow terrific customer service. The not for profit charter that governs these businesses means fortunately they are not trying to profit from loans or accounts, which boosts better than average rates. You can see why banks aren’t enormous fans.
Credit unions offer the same basic services as standard banks. They may not have the full range of investments plus more obscure options for investment and savings, but they do possess checking and savings options. But unlike traditional banks, the not-for-profit cooperative schools don’t actually call their services “checking” and “savings. ”
At the credit union, a checking account is called a share draft account and a savings account is a share account. Considering that these cooperative organizations are simply an accumulation of people sharing money with each other at reasonable rates, the names make a certain amount of sense.
Changes in the last few years make doing your own small business bookkeeping generally a waste of time and money. A variety of services allow you to keep top-notch bookkeeping either online or remotely at a fraction of the cost of a local bookkeeper. Although a local bookkeeper allows face-to-face time, new tools and a cost savings of 30-60% generally mean going with online bookkeeping services is often the best choice. It used to be that some of the online bookkeeping software, like QuickBooks, made it worthwhile if times were tough. That might still be true if your small business has so few transactions that you just do the work yourself. Otherwise choosing a reputable online bookkeeping service for your online accounting is the best choice. Many of them will even give you back your processed books in Quickbooks or other software if you so desire. For my money, I would go with for price, features, and quality of service. They are among the most inexpensive of the pack and one that is at once both reliable and loaded with features. They provide you coded, postage-paid envelopes. You simply put copies of all your paperwork in the envelope and they literally do all the rest: secure scanning, machine read documentation, human verification, and processing through QuickBooks. ( I believe they may also work with additional software programs as well). Their pricing starts at about $150 per month for smaller businesses. Their customer service is also quite responsive. The number is 888-994-8626. There are also other firms that do outsourced accounting bookkeeping online but not at that pricing and I have heard mixed reviews on some of them. It is also nice to be able to deal with a US firm (Boston in the case of ) as I’ve heard some real horror stories of folks trying to get their own bookkeeping outsourced to India. I know the trend is to use outsourced bookkeeping overseas (and many of the big accounting firms now push a lot of their backend work there anyway) but I like being able to deal with a person in the US. If you really need to see your bookkeeper (or certified public accountant) face-to-face, you may also try visiting . They offer a free referral service for US and Canadian small business seeking help with their accounting bookkeeping. You could also try your local CPA association but CPAs tend to be a lot more expensive than online bookkeeping services.
Retirees that are about to exchange their pension pot for their retirement income would be well advised to use a pension annuity calculator to help them figure out how much income they will get.A pension annuity calculator is a simple piece of software that quickly displays the annuity rate that an individual might get for a certain size of pension fund given the options they require.
Retirement planning is a confusing time for many retirees,it is not something they do every day,it is a once in a lifetime event.There are many options that can be selected and you need a way to figure out what each might cost you,this is where the pension annuity calculator can use the calculator you need to enter all your personal details such as name,address,postcode,date of birth, if you are married your spouse date of birth,the amount of pension fund you have to purchase an information is the fixed information that will not change,you then need to consider the options you wish to purchase with your pension fund. The option choices are:
Single or joint life � you need to make a decision on whether you need an income for a spouse or partner in the event of your death.
Level or escalating income � you will get a higher income from a level pension but its purchasing power in 15 or 20 years will be much less than when it starts
Guaranteed payment period � choice of none,5 or 10 years
Payment frequency � do you want your income paid monthly,quarterly or annually,also do you want it in advance or in will get more income if you choose arrears but will have to wait longer for the first payment.
These are the main options and the pension annuity calculator will allow you to select and deselect the options to see how it affects the retirement income you will way,you can decide if the options you wish to include will be value for money or not.
Every business from its commencement and through its development and growth will need finance. But what type of finance is best suited to the development of your business, and who should you approach for funding?
Finance is very often necessary but consider what it will entail. Additional funding requires a commitment in terms of capital and interest payments. Embarking on this course of action must therefore be planned carefully.
The business must be capable of sustaining any additional commitment to growth or expansion, and consideration will need to be given to effects on manpower, materials and space.
Before seeking outside finance, a business must consider whether it could improve its working capital from within. Particular attention should be given to stock and debtors to ensure that both are kept to a minimum. Consider how long it takes to bill customers and collect debts and look at ways to reduce this time.
If there are periods of time when surpluses of cash arise, review your affairs to try and ensure these are being used to generate income by investing on temporary short term deposit.
Assuming external funding is necessary, planning is essential in achieving success. A well drawn up business plan not only crystallises in your own mind the nature of the project and the timing of any required funding, but is vital to any lending institution. They are unlikely to provide any assistance without a properly drawn up business plan.
The plan will include details of:
??? the objectives and aims of the business
??? the purpose of the required funding
??? the business ownership and history
??? management and responsibilities
??? products and market share
??? sales plan and strategy
??? the financial position of the business with detailed cash flow forecasts and past accounts.
Finance is available in many forms, but it is important to make sure that it is right for your business. Onerous terms and inflexibility can often hinder a growing business.
The more obvious sources of finance include bank overdrafts and medium to long term loans and mortgages, but rates of interest can vary considerably.
Specific methods of finance are available for acquiring assets or releasing cash from debtors. Carefully consider the options available which include:
??? leasing assets
??? hire purchase
??? outright purchase
??? debt factoring
??? invoice discounting.
Each method of funding has advantages and disadvantages including implications for tax purposes.
Other means of finance may be available for your business from government sources, through the issue of shares or even your own pension scheme. Government assistance can be in the form of grants, loan guarantees or an enterprise capital funds. Other grants may be available on a regional or local level. Raising finance by issuing shares may be another option to consider.
Whatever form of finance is offered, the lender will always require some form of security. However the level of security sought may vary beware the lender asking for unreasonable guarantees.
Fixed and floating charges
Most bank loans and overdrafts are secured by way of a fixed charge over land and buildings with floating charges over other assets of the company such as stock and debtors.
For some businesses little security may be available because of insufficient assets. Consequently the security will be given in the form of personal guarantees.
Take extreme care before signing these guarantees as they can be difficult to amend at a later stage and many have suffered as a consequence.
In particular, personal guarantees are best if they are limited by time or amount. Unlimited guarantees are the most dangerous.
It may be possible to use other assets as collateral such as life insurance policies or by taking a second mortgage over your home.
Whatever the means of security pledged, it should be carefully considered and advice from an accountant sought.
If you are thinking of starting a business then you will have considered forming a limited company. There are a number of benefits, but my experience is that the majority of business owners are not aware of the issues that need to be considered. Here are the main benefits:
1. Using a company makes it easier to bring other investors into the business by selling them shares. There can be various classes of shares conferring different benefits such as voting rights or rights to dividends, depending on how you want to structure the business.
2. It also provides you with a possible clearer exit from the business by being able to sell your shares in the company, and that is a tax-efficient means of exit too.
3. A company will also provide you with the benefits of limited liability, protecting your personal assets from any possible business failure.
4. There are financial benefits to you too as taking a basic salary up to the National Insurance threshold and then any remaining drawings as dividends. As long as there is enough profit in the company the this can be a very effective strategy with tax and NI savings of several thousand pounds possible if your profits are high enough,
5. You can organise your remuneration to suit your tax planning more easily too by leaving money in the company until you need it and only withdrawing funds when you are able to do so at a lower tax rate.
6. You may also be able to involve your spouse or other family members as shareholders and use their lower tax rate for income.
So the case for incorporation is obvious. But there are pitfalls for the unwary or unprepared. Running a limited company brings with it legal responsibilities and you need to be sure that you understand these and are happy to take them on. If you treat the company finances as your personal bank account you are almost certainly going to find yourself in difficulties which may turn out to be expensive. And if you miss out on deadlines set by Companies House or HMRC, there will be potentially serious consequences. So you need to carefully weigh up the pros and cons carefully before starting.
You also need to have a reasonable level of profit in order to realise the tax gains and you should be aware that tax rules change regularly. So it is always wise to form a company because there is a clear business case for doing so, rather than for what may prove to be a short-term tax gain. Make sure you do your research and obtain good professional advice to understand the implications for your situation.
If you have good advice and set up proper systems, you ought to be able to fulfil your legal obligations routinely and concentrate on making money from your business. Many people run successful companies with valued advisors working alongside them and without any difficulties. Others struggle, often because they do not listen to advice nor are careful in their record keeping. So you must do your research, choose your advisor carefully and make sure you act in a businesslike manner. If you do these things there is no reason why you should not succeed. Good luck!
As we all know, a company’s receivables count for approximately 40-50% of their actual assets. With the economy in chaos we need to revise the rules of the game. Or at least start the game over and play by the rules! Face it friends, businesses are sinking, and if you wish to stay afloat, you must safeguard your “life jacket”. In this day, age, and market, our life jackets ARE our receivables. Let’s talk about how this differs from previous years though. It USED to be that we needed to ensure that potential clients that we bring in and extend credit to were financially “healthy”. We would insist that we had credit applications, personal guarantee’s signed, received business credit analysis reports on ALL new clients BEFORE extending credit terms to them. We would set terms and conditions and didn’t look back UNTIL there was a red flag signal. Today we still must ensure that we do all of this pre emptive research before we extend credit terms and conditions to possible new clients HOWEVER we also must make sure that our clients ( even long term customers) receive their daily financial checkups!
For instance, when a baby is first born, they are checked out thoroughly by the Doctor before they leave the hospital. Once they receive a clean bill of health, they are sent home to begin their new life with their family. Yet there are many checkups along the way. Several the first year and then as the child grows, although they are seen less, they still receive annual physicals. We should treat our clients with the same care. In the beginning of a new relationship, after credit is extended, we should monitor their habits closely in the beginning but we should also ensure that we “check up” on our clients as the relationship matures. In my business, you constantly receive calls from clients that say, “They have been our clients for 15 started getting behind I simply blamed the economy, I never would have thought they would buy from me in November and file Chapter 11 in December”. I have heard that constantly this month. So HOW can we ensure that our receivables are “healthy”?
First ensure that your Front Line work is Clear and Complete ….
� Have EVERY new potential client complete and sign credit applications. These credit applications should not only give you the necessary information to “check” their financial health but it should also outline your credit terms and conditions in detail. Add a clause that states if accounts are past due by 30/45 (your preference) days there will be an interest charge. Explain that the client will be held responsible for any and all legal or collection fees if the debt exceeds credit terms. Make sure that you secure your rights in the very beginning, because once terms are giving, it is hard to change them (or get an additional signature down the road).Also, in the credit application process, ask identifying questions, such as how much product do you expect to purchase on a monthly, quarterly or annual basis? Do you expect your purchases to grow as time passes? Give them additional space to explain their answers. This allows you to also see what the client will expect of you along the way. It can also be used when determining credit terms. We will address this shortly.
� Although it used to be extremely difficult to have new clients sign personal guarantees, most understand this request in our “rocky” economy. I have suggested to many clients to simply add the PG statement at the bottom of the credit application. This seems to work best then giving a separate form for the potential client to complete.
� Of course having a client complete a credit application is only � of the work. YOU MUST FOLLOW THROUGH! Make sure that every single reference is called. KNOW what questions to ask! Then take the extra steps. If you do not have access to credit business reports, you can still check online with the secretary of state in their licensing state to ensure they are active and check for any recent judgments or liens. Google them. Take those few extra steps to give your receivables “peace of mind”.
Now we need to work on slowly “training” our clients moving forward…..
� Once you establish their financial things slow. Allow your client to earn your trust through a quarterly reviewed credit line. This will give them something to work toward and protect you along the way. You would be surprised how many of my clients simply extended new clients a full credit line of up to $100,000.00, the new client placed two orders, never paid and disappeared. In these cases, we implemented a new process. This may work for some, and not others, if you have particular challenges, call me and we can discuss at no cost!!! The process they began (and has been working quite well) begins with the credit application process, where they asked those predictive purchasing questions. They utilized this information and offered 50% credit terms (based on average predicted order cost) for the first 6 months. This means the client would pay 50% upfront COD and were extended the remaining 50% on credit with either net 15 or net 30 terms. Additional orders are not accepted until the balance is paid in full for the first 6 months. Then at the end of their 6 month term, there is a review. Were payments made on time? Were orders consistent? Were there any invalid dispute claims? Take all of this information into consideration before moving forward with a 75% credit line the second half of the year. And the process continues and is revisited upon their one year anniversary. This process has worked well for many clients in not only safe guarding their receivables but earning the respect and trust of their clients. It also gives you time to “get to know” your clients. If they order 100 crates for 9 months and suddenly order 1000 is a red flag. If the first six months they pay by net 30 and suddenly they are late the following two months, this may be a red flag. Taking the time to learn your clients’ habits is important because the slightest change, in this economy, could be trouble.
� Last but certainly not least, just as a child needs structure and boundaries to mature and thrive, so do clients! When boundaries are set and then broken, there must be consequences. Although there is the occasional exception to the rule (if client has a valid dispute, if they request payment arrangements ONCE and follow through, if there was an error on your part) but the occasional exception should not be the norm. If your clients know that at 35 days past due there will be a hold placed on their credit, at 55 days there will be a final demand notice offering them a “last payment option” to avoid collections, and as 65 days they will be sitting in the collectors office (so to speak) they will ensure that YOU are their priority! If your clients know what to expect (as you should outline in the beginning as a part of your credit application), then you will only earn their respect through the process. If your clients see that you waiver many of your policies, they will utilize you as a second bank. This is not healthy for either of you. So you must have a WRITTEN Receivables POLICY in place and ensure that everyone involved with your company follows this structure. Keep in mind that your sales department should also be aware of these guidelines, and not make false promises or speak of your policy as if “anything really goes”. If everyone in your organization is united regarding receivables, it will only strengthen your company’s bottom line as a whole!
So the rules may not be changing, as much as we have to adapt to actually live by them. These are all basic Accounting 101 procedures, however for so long we have been complacent and so concerned about our clients that we have lost sight of our own bottom lines. We must restructure, reinvent, and reinforce our A/R process if we wish to survive and thrive in the years to come.