How To Lower Health Care Costs If You Are Self-Employed</h1> <article> <h1>How To Lower Health Care Costs If You Are Self-Employed</h1> <p>Kenn Kowalsky — Wed, 04 Mar 2009 23:42:50 GMT</p> <p><b>State Of The (Health Care) Union </b><br />Health care insurance costs are a major headache for America's self-employed. Like their larger brethren, small firms are coping with a general wave of medical inflation due to an aging population, advances in technology, and soaring prescription drug costs. In addition, small business entrepreneurs have problems that are unique to their own. "They have to pay more for the same coverage," says Larry Levitt, an analyst with the Kaiser Family Foundation (www.kff.org), a national health care charity quoting from a recent study done by the National Association for the Self-Employed (www.nase.org) which concluded:</p> <ul> <li><i>More than 65% of small-business owners say that cost is the single most significant barrier to offering health insurance to employees. <br /></i></li> <li><i>There's significant increases in the percentage small businesses spent on health insurance premiums since 2005, with median costs rising from 3.7% of total revenue to 5.5%. <br /></i></li> <li><i>Overall, health insurance costs have increased an average of 14.7%, compared to a 20.7% increase in 2005.<br /></i></li> <li><i>Two issues respondents feel have the greatest impact on high healthcare costs are "insurance companies making too much profit" (28.8%) and "doctors/hospitals charging too much for services" (21.7%).</i></li> </ul> <p><b>The Bad News For The Self-Employed</b> <br />When a person gives the the grind of working for someone else to become self-employed, they give up having other people making decisions for them such as what kind of health care coverage are going to have. However, now that they're the boss they discover that there are other pressing matters -such as building their business- to deal with which can make it difficult for them to find that time to research purchasing cost-effective health insurance. <br />Small Businesses: Health Insurance Whipping Boy - The premiums which small businesses -less than 200 employees- have for heath insurance coverage is increasing at twice the rate that it's increasing for large (i.e. 500+) employees according to William M. Mercer Inc. (www.wmmercer.com), a consulting firm specializing in employee benefits. Not surprisingly, an estimated 40% of small business owners do without insurance, according to the Insurance Information Institute (www.iii.com), because they believe they can't afford it. <br /><br /><b>Poor Health Care Coverage Choices All Around</b><br />When it comes to purchasing health care coverage, the self-employed are left with several unappealing choices, not the least of which is not to offer any health benefits at all. According to the Employee Benefit Research Institute (www.ebri.org), a Washington, DC think tank, 60% of America's 44 million uninsured people work for small businesses. Another unappealing choice for the unemployed is to pay the extra money for health benefits and just a pass on the extra costs to employees while another option is to pay the full cost of a worker's heath insurance premium but make the employee pay the additional cost for family coverage. The difference, which can easily run $300 a month, imposes a major burden on a work force. Still another unpleasant option is for the small business to simply absorb the higher costs. They may not want to but are afraid that cutting back on benefits will cause their best employees to look for greener pastures. "In terms of getting a quality staff --folks who will stay-- it is a necessity that we offer health insurance," says Jim Amaral of Borealis Breads (www.borealisbreads.com), a bakery in Maine. <br /><br /><b>The Good News For The Self-Employed </b><br />Many of the newly self-employed are so due to recently having left full-time paid employment, in which case they can still retain their existing health insurance thanks to COBRA (Consolidated Omnibus Budget Reconciliation Act). Up until 2/11/09 when the economic stimulus package was signed into law, COBRA allowed newly laid off workers to retain the same insurance coverage at the same price that you had before. Now there is a new provision that states if you weren't laid off between September 1, 2008 and December 31, 2009, your former employer will pay 65% of your COBRA costs so long as you don't make more than $125,000 per year (or $250,000 for couples). However, this subsidy applies to COBRA premiums paid after February 17, 2009 - there is no provision for a "refund" of prior premium payments. <br /><br />The problem is that not only does one have to pay for COBRA out of their own pocket but that it only lasts 18 months, after which the self-employed --and their families-- are on their own. However, there are some options that self-employed business people have to reduce how much they pay for healthcare coverage. These options are:<br /><br />1. Use The Internet To Become Better Informed <br />Whether shopping for the lowest health insurance rates or wanting to ask medical questions of experts, learning to do research on the internet can make you a more informed consumer, thus bettering your chances of lowering your health care costs. The better educated you are about healthcare, the more you can avoid unnecessary and/or expensive medical insurance.<br /><br />2. Get Coverage From Your Employed Spouse <br />A common and easy way to get long term health coverage is to add yourself to your employed spouse's existing policy, and use the extra premiums you'll have to pay as a tax-write off. "Many times it's the best way," says Terri Lonier, CEO of Working Solo Inc. (www.workingsolo.com), a San Francisco strategy consulting firm for entrepreneurs. "It's the least expensive and most streamlined (method for getting health care coverage)."<br /><br />3. Join With Other Self Employed People <br />There are strength in numbers so investigate joining a professional or trade organization that offers its members coverage at a group rate discount. Three such groups are the National Federation of Independent Business, the National Association for the Self-Employed, and the Freelancer's Union. However, before joining a group just for its health insurance plan, one should consider the cost of membership in addition to the insurance premiums.<br /><br />4. Lower Your Level Of Health Insurance Coverage <br />If you are healthy and don't require much medical care, why give the money to the insurance company for low-cost claims when you could keep it yourself? Considered choosing a plan with a higher deductible or co-pay. "A high-deductible insurance policy will keep you out of the poorhouse if something goes wrong," suggests Peter McCann, president of Aquent Insurance Brokerage Services in Boston. <br /><br />Another way to lower your health care premiums is eliminating certain types of coverage, such as dental or vision, that you don't need. For example, if you don't wear glasses or contact lenses, spending an extra $200-$300 per year on vision insurance is a waste of money. Tailor your healthcare plan to your real-life health needs. <br /><br />5. Reduce Your Chances of Getting Sick <br />You know the old saying about an ounce of prevention being worth a pound of cure? Seriously, this is especially true when it comes to reducing your of health insurance related costs. According to Marilyn Furry (Associate Professor Of Extension Education at Penn State's College of Agricultural Sciences), the best advice to follow to avoid unnecessarily high health insurance premiums as well as out-of-pocket healthcare expenses is to do the following:</p> <ul> <li><i>(a) Take advantage of free health screenings at local clinics, hospitals or health fairs <br /></i></li> <li><i>(b) Know early warning signs of potential health problems and consult a physician ASAP <br /></i></li> <li><i>(c) Compare fees and costs for typical medical, pharmacy and surgical procedures </i></li> </ul> <p>6. Take Advantage Of Tax Incentives <br />If your business is incorporated, your costs and your employees' costs are entirely tax deductible. If you aren't incorporated, you're not out of luck - a portion of your costs are tax deductible. Keep accurate medical records so to itemize these deductions on your taxes.<br /><br />7. Cut Down On Contributions. <br />Your employees will most likely expect you to contribute to the cost of premiums, especially since the majority of small businesses do. But if it's absolutely impossible for you to fit contributions into your budget, at least look into insurance plans that give you a group rate.<br /><br />8. Join A Discount Health Benefits Program <br />Perhaps the best way to cover any existing gaps in your health insurance is to join what are known as "Discount Health Benefits" clubs, with AmeriPlan being the largest of its type. These organizations offer their membership deep savings on medical, hospital and dental visits, prescription drugs, and other health services by connecting members with hospitals, clinics, doctors, dentists, vision care providers, and chiropractors that are on the plan. In fact the online home of PARENTS.COM, recently recommended discount dental plans (a.k.a. discount clubs) as #3 on their list of <span style="text-decoration:underline;">25 Ways To Save On Health Care</span>. Due to their ability to supplement existing health insurance, discount health benefit programs must be considered a strong healthcare alternative for the self-employed.<br /><br />9. Get A Part-Time Job <br />Assuming you could find one, a part-time job that includes health benefits can solve the problem of acquiring health insurance. This will require you to devote a minimum of 15 to 20 hours per week to your part-time job which means you'll have less time to devote to your small-business. Although you probably became self-employed because you dislike having to work for someone else, getting a part-time job for the health benefits should not be overlooked, especially for those newly self-employed entrepreneurs who could also use the cash flow a part-time job would generate.<br /><br /><br /><b>For The Self-Employed With Employees </b><br />As the businesses of the self-employed grow, so will their need to hire workers. Whether they be full-time or part-time employees, eventually they're going to have to get health care coverage as well, thus creating a new although greatly needed business expense. Managing this expense so that doesn't get out of control will also require expertise in the area of health benefits. The lower subjects to help self-employed entrepreneurs can show the expenses associated with their employee's health benefits:<br /><br />1. Incorporate Your Business <br />Business owners who are incorporated are eligible for tax deductible employee and employer costs like health insurance.<br /><br />2. Choose Counseling Over Psychotherapy <br />If you or one of your employees are been seen by a mental-health therapist every week, you're probably footing much of the bill: Most health plans limit coverage to 30 visits a year. You can cut the cost by going to a certified counselor or clinical social worker (average fee: $100 an hour) instead of a psychologist (around $140). A recent survey found no difference in effectiveness.<br /><br />3. Have Copies of All Insurance Policies and Review Frequently <br />Start your review by looking at your insurance file. If you don't have a file, get one today! Make sure that you have copies of all policies in your file and that they are readily accessible when needed. Make sure there are copies of claims forms for each policy in the file. You will want to create a separate off-site location for a copy of your policies and forms in case this file is destroyed. Organization is the first step in reducing insurance premiums.<br /><br />4. Adjust Your Depreciation Schedules to Equipment Actually Owned <br />A good place to start with your premium review is an analysis of your equipment and auto schedules. Does your business still own the vehicles listed? I know of a business that insured a crane for ten years after it was sold. Maybe your line retooled and key equipment was changed which would result in premium savings.<br /><br />5. Compare Your "Key Employees" to the Employees That Work For You <br />This step involves reviewing named drivers and/or key employees identified on policies to make sure these employees are still working for you. Many employers simply fail to adjust their named insured endorsements when employees leave. But, this can result in significant savings if the loss of the employee results in lower risk.<br /><br />6. Eliminate Irrelevant or Repetitive Coverage <br />Business changes always and so may your insurance coverage. Select parts of your coverage may no longer be necessary. For example, if a portion of your business closes, operations change, or you choose to out-source, then it may be that your business carries coverage that can be eliminated.<br /><br />7. Adopt, Maintain and Publicize a Workplace Safety Plan <br />A consistent safety plan will include the elimination of hazards that can become claims. Make it a goal of your business to enforce a safety plan and follow through. I suggest developing a tracking mechanism for the safety plan because otherwise it is impossible to gauge the effect of safety on insurance premiums. A simple method is the "safe day" method. Every shift marks a calendar tracking "safe days", that is, days without injury to a worker or patron.<br /><br />8. Classify Your Workforce Correctly <br />Significant savings can be achieved by making sure your workers are correctly classified by your workers' compensation insurer and liability insurer. Your premiums are based on the type of workers used. If you are a painting company that incidentally uses ladders, then you could be incorrectly classified as a construction business and your premiums will be greatly inflated. If you have a large sales force and those sales people are being classified as line workers, then your premiums will be much higher. Classify each worker the right way and make sure your insurer does so also.<br /><br />9. Discuss Your Premiums With Your Insurance Co. <br />Too many businesses don't take the step of telling their insurer that they want a better rate. Frequently, insurers will discuss the premium in detail and will suggest ways to have it reduced or the insurer will learn something about the business they did not know that may result in lower premiums. It never hurts to ask.<br /><br />10. Make Your Employees Healthier & Save Money <br />Health insurance and workers' compensation premiums will be your highest insurance-related expenditures. Work to lower the costs through a healthy work force. Commit to setting a good example: quit smoking, become active and see your physician regularly. Adopt a no smoking policy at your company. Allow yoga or other stress reducing classes to be held on your business's premises. Encourage proper lifting techniques. Consider a partial reimbursement of health club membership as a benefit. In other words, taking active steps to create a healthy work place lowers premium dollars.<br /><br />11. Properly Train Your Employees <br />Train your employees and demand training as part of their employment. Most insurance underwriters will offer substantial discounts for a well trained workforce. For example, liquor liability premiums can be cut by 15% to 20% if servers are required to attend alcohol awareness training. Find out what type of workplace training will reduce your health insurance rates and the thin train, train and train some more.<br /><br /><br /><i></i></p> <p><i>Murray Glick is assistant webmaster for "DiscountDental4U.net" and frequently writes about issues dealing with dental health and coverage. Born in 1962, Murray grew up in Livingston, New Jersey, where he attended public school and eventually went on to graduate with a BA in English literature from Case Western Reserve University out of Cleveland, OH. Murray has worked in many different jobs over the years including proofreader, news editor, public relations and is presently employed by Prudential Insurance as a communications officer select. In addition, Murray writes for the blog "DiscountDental4U.blogspot.com" which helps readers to keep pace with the rapidly progressing dental health industry.</i> <i>You can e-mail him at</i> </p> <p class="MsoNormal"><span style="font-family:Arial;"><i>MGlick63@aol.com</i></span></p><div style="clear:both;"></div> </article> <article> <h1>9 Ways to Reduce Chargebacks and Fraud</h1> <p>MySolutionSpot Editor — Sat, 12 Jul 2008 03:39:19 GMT</p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><span style="font-size:10pt;font-family:Arial;"></span></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><span style="font-size:10pt;font-family:Arial;">Merchant concern about online credit card fraud and chargebacks is rising at a significant rate. According to the 2001 Online Fraud Report, conducted by Mindwave Research, it revealed that, "41% of merchants say the issue of online credit card fraud is 'very serious' to their business." </span><span style="font-size:10pt;font-family:Arial;"> </span></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><span style="font-size:10pt;font-family:Arial;"></span></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><span style="font-size:10pt;font-family:Arial;">Chargeback, the word that Internet merchants fear. A chargeback is what it's called when a transaction is reversed. In other words, rather than adding money to your account it is deducted. Chargebacks can occur for a wide variety of reasons, such as double-charging, credit card expiration, bank error and customer disputes. If you get too many chargebacks against you, there is a possibility that you will lose your merchant account. Once you've lost your merchant account you are placed on the Visa/MasterCard Terminated Merchant File (TMF/MATCH list) for several years which all Merchant Account Providers have access to, and if they find you on the list they won't reissue a merchant account to you. If you are one of those merchants who have lost their merchant account, there is still hope. Imax Business Solutions specializes in helping companies who've lost their merchant account because of excessive chargebacks. </span></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><span style="font-size:10pt;font-family:Arial;"> </span></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><span style="font-size:10pt;font-family:Arial;">Here are some ways you can greatly reduce the instances of chargebacks and fraud, even potentially eliminate the risk altogether: </span></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><span style="font-size:10pt;font-family:Arial;"> </span></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><b style="mso-bidi-font-weight:normal;"><span style="font-size:10pt;font-family:Arial;">#9 Collect CVC2 and CVV2 Verification Numbers </span></b></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><span style="font-size:10pt;font-family:Arial;"> </span></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><span style="font-size:10pt;font-family:Arial;">This tactic alone can not only reduce instances of chargebacks by 26%, according to Visa, but also reduce any pass-through fees that may be charged when a credit card order is conducted. On the back of MasterCard, most Visa and Discover credit cards is a 3- digit security code located right after your credit card number. Requiring customers to give the 3-digit code acts as an additional verification measure. American Express cards also have a similar security code that is located on the front of the card right above the cardholder's account number and is usually 4- digits long. Most online payment processors support entering the security codes when processing credit card orders. Check with your payment gateway provider (i.e. Verisign, Authorize.Net, ECHO Inc., etc) for details. </span></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><span style="font-size:10pt;font-family:Arial;"> </span></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><b style="mso-bidi-font-weight:normal;"><span style="font-size:10pt;font-family:Arial;">#8 Use Address Verification System (AVS) </span></b></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><span style="font-size:10pt;font-family:Arial;"> </span></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><span style="font-size:10pt;font-family:Arial;">AVS checks to ensure the address entered on the order form matches the address to where the cardholder's billing statements are mailed to. People ordering products and/or services using a stolen card number will never use the real cardholder's billing address, so this is your chance to stop the order before it's too late. AVS only works with orders conducted in the US. Failure to use AVS when processing credit card transactions will always result in paying higher credit card processing fees. </span></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><span style="font-size:10pt;font-family:Arial;"> </span></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><b style="mso-bidi-font-weight:normal;"><span style="font-size:10pt;font-family:Arial;">#7 Scrutinize orders from developing foreign countries </span></b></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><span style="font-size:10pt;font-family:Arial;"> </span></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><span style="font-size:10pt;font-family:Arial;">A large percentage of fraudulent Internet purchases are made from Indonesia, Russia, and other eastern block or developing countries. Accept orders from such countries at your own risk until a worldwide AVS system is developed. </span></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><span style="font-size:10pt;font-family:Arial;"> </span></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><b style="mso-bidi-font-weight:normal;"><span style="font-size:10pt;font-family:Arial;">#6 Let customers know what name will appear on statements </span></b></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><span style="font-size:10pt;font-family:Arial;"> </span></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><span style="font-size:10pt;font-family:Arial;">Many merchants who use 3rd Party Processing companies have run into problems because the company name that appears on cardholder's monthly statements is usually the name of the 3rd party processing company and not the company name of the site the cardholder made their purchase from. This isn't always the case, but in many cases it is. If you use a 3rd party processor, and even if you don't, make sure the customer knows what name will appear on their credit card statement at the end of the month. This will help to reduce any confusion that might would otherwise occur. </span></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><span style="font-size:10pt;font-family:Arial;"> </span></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><b style="mso-bidi-font-weight:normal;"><span style="font-size:10pt;font-family:Arial;">#5 Handle suspicious orders accordingly </span></b></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><span style="font-size:10pt;font-family:Arial;"> </span></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><span style="font-size:10pt;font-family:Arial;">If an order seems suspicious the best way to handle the situation is to either call or e-mail the customer and attempt to verify that they placed the order. As a rule of thumb, if in doubt, check things out. It may be a good idea that if a customer makes an unusually large volume purchase from your site to follow-up with a verification call. </span></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><span style="font-size:10pt;font-family:Arial;"> </span></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><b style="mso-bidi-font-weight:normal;"><span style="font-size:10pt;font-family:Arial;">#4 Watch out for orders using free e-mail addresses </span></b></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><span style="font-size:10pt;font-family:Arial;"> </span></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><span style="font-size:10pt;font-family:Arial;">Be wary of accepting orders from people who used a free e-mail address when ordering (i.e. Hotmail, Yahoo, etc.). Tracking people who used a free e-mail address is almost impossible, it's much easier for them to get away then if they used their Internet Service Provider (ISP) or their own company web site e-mail address. To check whether an e-mail address is a freebie or not just take the part of the address after the "@" symbol, add "www" to the front of it and see what website it brings up (i.e. joe@yahoo.com = www.yahoo.com). </span></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><span style="font-size:10pt;font-family:Arial;"> </span></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><b style="mso-bidi-font-weight:normal;"><span style="font-size:10pt;font-family:Arial;">#3 Signatures on delivery </span></b></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><span style="font-size:10pt;font-family:Arial;"> </span></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><span style="font-size:10pt;font-family:Arial;">If your business delivers products use a carrier that requires a signature on delivery, and allows you to have a copy of the signature. Retain these for your records. </span></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><span style="font-size:10pt;font-family:Arial;"> </span></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><b style="mso-bidi-font-weight:normal;"><span style="font-size:10pt;font-family:Arial;">#2 Request fax copies of ID and credit card </span></b></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><span style="font-size:10pt;font-family:Arial;"> </span></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><span style="font-size:10pt;font-family:Arial;">You may want to request your customer to fax a copy of both sides of their credit card and driver's license. This tactic usually works best in a B-to-B (business to business) sales environment. While this is not a defense under Visa or MasterCard rules, it is yet another way to deter fraud. </span></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><span style="font-size:10pt;font-family:Arial;"> </span></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><b style="mso-bidi-font-weight:normal;"><span style="font-size:10pt;font-family:Arial;">#1 Posting a warning message </span></b></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><span style="font-size:10pt;font-family:Arial;"> </span></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><span style="font-size:10pt;font-family:Arial;">Taking the time to post a warning message on your order page to those who may attempt to make a fraudulent order will greatly deter the number of instances of fraud. Be sure to mention that IP (Internet Protocol) addresses are being logged. IP addresses can come in handy when locating people about fraudulent orders. </span></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><span style="font-size:10pt;font-family:Arial;"> </span></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><span style="font-size:10pt;font-family:Arial;">Taking measures to deter and eliminate fraud and chargebacks from occurring are a necessity in order to operate a successful online business. Each day companies dedicated to risk management are developing solutions to provide merchants, like yourself, with extra protection because of the financial burdens chargebacks and fraud can bestow if ignored. </span></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><span style="font-size:10pt;font-family:Arial;"> </span></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><span style="font-size:10pt;font-family:Arial;">For more information on how your business may benefit from reducing chargebacks and fraud. Click over to http://www.cmscreditcards.com </span></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><span style="font-size:10pt;font-family:Arial;"></span></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><span style="font-size:10pt;font-family:Arial;"></span></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><span style="font-size:10pt;font-family:Arial;"> </span></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><b style="mso-bidi-font-weight:normal;"><span style="font-size:10pt;font-family:Arial;">About The Author </span></b></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><span style="font-size:10pt;font-family:Arial;"> </span></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><span style="font-size:10pt;font-family:Arial;">Scott Burke, President of MAXX Business Solutions is committed to making the merchant experience a pleasure and one that will build long-lasting business relationships. MAXX works as a trusted partner in merchant account credit card processing and strives to provide merchants with the best support, the best rates, and the best service in the industry. http://www.cmscreditcards.com/payment-processing.html </span></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><span style="font-size:10pt;font-family:Arial;"><span style="mso-spacerun:yes;"> </span></span></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="> </p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style=">Source: http://www.articlecity.com/articles/business_and_finance/article_8927.shtml</p> </article> <article> <h1>CFO insights for Corporate Profit Engineering...made simple</h1> <p>Russell Morris — Thu, 14 Aug 2008 20:03:53 GMT</p> <p>As President of CFO Partner, I have spent most of my professional career working as a CFO, Interim CFO, Corporate Turnaround Consultant and Chapter 11 Bankruptcy Workout Consultant for small to mid-sized corporations. </p> <p>If I have gleaned one "bulls-eye" from my target of executive level experiences it is that companies lack information and insight into the current financial position of the firm. Either owners don't know how to best orchestrate the business of their business or they simply don't like the process of working with "numbers" so to speak, or they are not aware of the financial strategies that successful firms employ. </p> <p>In most firms I have turnaround, budget baselines were not development and implemented that establish clear performace criteria, variances from budget goals are not addressed on a real-time status and windows for making key adjustments are missed. Moreover, profitability is not measured based upon accurate costs, whether cost of goods sold or overhead and new Sales Projects are not isolated comprehensively in order to effectively manage true costs and subsequent profitability. </p> <p>Additionallly, cash flow is not projected on a weekly, bi-weekly and monthly basis and breakeven points are not defined in order to control sales and measure receivables. In other words, companies are run by accounting software systems not by strategic financial controls.</p> <p>CFO Partner has developed corporate strategic financial models for pro-active privately held corporations as well as for government contracting firms that are controlled, in essance, by Government Compliance regulations. These models have been developed from hands on executive level CFO experience over the past eighteen years. They are designed to allow business owners to control their financial destiny in a straight forward manner without the headaches associated with new software applications or costly consulting fees.</p> <p>Succinctly put, we make good sense out of nonsense and this is accomplished very economically. </p> <p>As president of CFO Partner I am dedicated to making sincere, caring, hardworking owners of companies strategically knowledgeable, in control and utimately as successful as they want to be and as much as the marketplace will allow.</p> <p>If you have questions about how CFO Partner can provide insight and help for your company, email me with questions and I will do my best to be of assistance in short order. I look forward to your questions and comments. </p> <p>You can also visit the company website at: <a href="http://www.cfopartner.net">www.cfopartner.net</a> for additional information.</p> <p>Respectfully,</p> <p>Russell T. Morris, President</p> <p> </p><div style="clear:both;"></div> </article> <article> <h1>Building Equity Value For Your IT Service Company</h1> <p>MySolutionSpot Editor — Sat, 12 Jul 2008 03:39:43 GMT</p> <p>If you are just starting your company, the idea of equity value is probably not on your radar screen. If you have owned your company for 10+ years, it has probably occurred to you that you might want to sell your company and do some world travel and work on that golf game. In either case, if you are thinking about how to build equity value in your IT service company, there are some basics you need to know about. </p> <p>The first thing to know is that the real value of your company is not going to show up on your balance sheet. All service companies have this issue – law firms, consulting firms, and IT service companies included. Generally service companies have no major capital assets like manufacturing equipment or production facilities. </p> <p>Most don’t even have any significant inventory. Without assets the only way to build equity is to accumulate earnings in the company. But usually that is not a good idea because of the tax implications. As a result, service companies use a different approach to defining value. Usually this is done with the help of an outside accounting firm that specializes in company valuations (a “valuation” is different than an “evaluation” – experienced accountants get a lot of humor out of people asking for an evaluation). </p> <p>The accounting firm uses several methods to calculate the market value and then they usually summarize their process in a report and present a final number along with a range from high to low. This report can become the basis for pricing the stock of the company, for taking out a loan, for buying another company to mention a few possibilities. </p> <p>Company owners often don’t think about the value of their company until a critical need or opportunity arises. But then it is usually too late to do anything that will make a big difference. The informed owner, however, will think about this way ahead of time and will make minor adjustments that will have a huge impact on future company value and they will be ready to respond when an opportunity arises. </p> <p>There are many reasons for getting a formal valuation – some obvious and some less obvious: </p> <p>• selling your company </p> <p>• obtaining financing for expansion </p> <p>• bringing on a partner </p> <p>• adding new shareholders </p> <p>• setting up an employee stock option plan </p> <p>• acquiring another company (especially if stock is part of the deal) </p> <p>• merging with another company </p> <p>Key to all of these scenarios is knowing the equity value or market value of your company ahead of time - that is your ultimate bargaining chip. It is what you will trade or sell or use as collateral. If you have a low value, you won’t have much to bargain with. If you have a high value, you can get a lot and potentially give up very little. We will discuss more of the math of these concepts in future blog postings. So what specific actions can you take to build equity value? Before bringing an accounting firm in to do a valuation, what actions can you take to create the best results? </p> <p>Here is a very basic list of actions you can take: </p> <p>1. Maximize recurring revenues – this has much greater value than one-time revenues such as special projects and on-call support. </p> <p>2. Put your customers on formal service agreements that define recurring fees and special project fees. </p> <p>3. Customer agreements should include a term of service (such as 12 months) with automatic renewal if there are no changes. </p> <p>4. Distinguish owner base salary from bonuses and dividends. All forms of incentive pay need to be viewed as part of the profits of the company for analysis purposes. </p> <p>5. Create a business plan that emphasizes steady growth. Lumpy growth or no growth can have negative effects on valuation. </p> <p>6. Plan for growth to come from existing clients as well as from new clients. Ideally you should be getting about 60% of your growth from existing clients or you are leaving money on the table. </p> <p>7. Be sure that overheads and direct costs are not increasing faster than your revenue growth. </p> <p>If either of these are growing faster, it can be a “silent killer” for many companies. 8. Know how your business performance compares to industry benchmarks. This can carry a lot of weight in valuations. We will be providing more detail on these concepts in future blog posts. The key message here is to not wait until a situation arises that requires a valuation. The earlier you get started learning what affects valuation and taking steps to increase valuation the greater the benefit to you will be when a need does arise.</p> </article> </main></body></html>