Archive for the ‘Accounting’ Category

Here is to a prosperous and exciting 2009 from everyone here at the Vcorp Services team!

Two-thirds of large U.S. companies believe they need to improve their analytical capabilities and only half believe they are spending enough on business analytics, according to findings of an Accenture survey released today. The survey of more than 250 executives is the basis of a report, “Competing Through Business Analytics,” which studied companies’ use of and investment in analytics to remain competitive.

While more than half (57 percent) of companies surveyed said they don’t have a beneficial, consistently updated enterprise-wide analytical capability, nearly three-quarters (72 percent) said they are working to increase their company’s business analytics usage.

“These findings show that business analytics prowess will be a high priority in the boardroom in 2009 and beyond,” said Royce Bell, chief executive officer of Accenture Information Management Services. “While executives understand that companies with enterprise-wide business analytics have an advantage over those still relying on nebulous sources to make decisions, they face institutional challenges to reforming their processes across the board. Leading organizations are moving from a siloed approach to more inclusive information management programs that work across the entire company.”

The survey also addressed the balance between using analytics and using judgment to make important business decisions, and found 60 percent of major decisions are based on analytics and 40 percent are not. The reasons executives cited most often as to why 40 percent of major decisions are based on judgment rather than business analytics were: because good data is not available (61 percent); there is no past data for the decisions and innovation they are addressing (61 percent); and their decisions rely on qualitative and subjective factors (55 percent).

The challenge to moving from “gut decisions” to employing data goes beyond just infrastructure investments. Large businesses also face a glaring human resources challenge, as 23 percent of respondents identified “insufficient quantitative skills in employees” as a main challenge to their company, and 36 percent said their company “faces a shortage of analytical talent.”

If you read the news headlines, you have seen the recent financial crisis affecting practically every major sector:

• Finance
• Auto
• Real Estate
• Retail

However, one group has been left out of the press until recently: state governments.  State governments are seeing record setting deficits brought on by low retail sales (lower gross retail sales tax) and increasingly higher unemployment.  This compbination is creating difficult situations throughout the nation, especially for states previously flouroushing in the sub-prime loan bubble.

Jennifer Steinhauer, from the New York Times, reported,

“Two short months ago lawmakers in California struggled to close a $15 billion hole in the state budget. It was among the biggest deficits in state history. Now the state faces an additional $11 billion shortfall and may be unable to pay its bills this spring.”

And California is not alone in this situation, several other states in the US are reporting similar deficits that could cause additional job loss and further derail any economic re-development plans.

“Frankly, I thought 2001 was really awful,” said Scott D. Pattison, the executive director of the National Association of State Budget Officers, referring to the last big economic downturn. “It is even worse now.”

He added, “This fiscal year will be really bad, and what is unfortunate is that I can’t see how 2010 won’t be bad too.”

So stay tuned as we continue to follow the economy and how it affects you as a small business owner.

We talk considerably on this blog about starting a new company, however if you have a business that is no longer in operation, it is necessary to dissolve the corporation or LLC. In order to legally end your business and make a final distribution of company assets to shareholders and/or creditors, you are required to file a dissolution. If you do not formally dissolve the company, it will still be “active” on the state records (no matter if you are doing any business or not). As such, the company will still be subject to all annual reporting fees and corporate tax payment requirements.1

There are three key reasons to dissolve your inactive entities:

1. Cost. Keeping inactive entities in good standing can be an expensive proposition. Most states levy a minimum annual tax on all entities qualified to do business within their borders, and the expense of keeping up with these fees for unneeded entities can quickly mount.
2. Administrative Burden. In addition to the taxes levied on your entity, most states require the filing of annual reports and other burdensome paperwork in order to maintain good standing. Keeping up with these filings on entities that are not in use can distract you from managing your active businesses. Furthermore, failure to file all this paperwork in a timely manner to keep your entity in good standing – even if it is not conducting any business – can result in the accumulation of fees and penalties, and may prevent you from winding up the entity in the future.
3. Legal Liability. Entities qualified to do business in a state are generally subject to lawsuits brought within that jurisdiction. Even if an entity is no longer engaged in any business, as long as it still exists it can be sued in its state of formation.

This is an action that should be taken as soon as possible due to the fact that all corporations, limited-liability companies, limited partnerships, limited-liability companies, limited-liability limited partnerships and other business entities are legal entities which can only be dissolved through formal action — not by a letter or phone call. You remain liable for all taxes, assessments, fines, penalties and interest until you receive a certificate of dissolution from the Secretary of State.2

As baby boomers consider career and lifestyle shifts that extend beyond their work careers, tapping into the world of business ownership can allow them to leverage their flexibility, know- how and business acumen to go into business for themselves. Many have already joined the ranks of the nation’s self-employed and small business owners.

The U.S. Small Business Administration today unveiled a new Web site geared to the 50-plus entrepreneur, providing useful information, links and resources vital to starting, growing and expanding a small business.

The new Web site at www.sba.gov/50plusentrepreneur features interactive information and links to help 50-plus entrepreneurs consider the benefits and rewards of business ownership, and to help them make informed choices about business ownership.

“The SBA is working hard to increase opportunities for small businesses of the baby boomer generation at every stage of their business development through better technology tools and effective services through the agency’s district offices and resource partners,” SBA Acting Administrator Sandy K. Baruah said. “We believe 50-plus entrepreneurs will drive significant new business growth in the coming years.”

Components of the new Web site include a self-assessment feature to help the aspiring entrepreneur determine his or her business readiness, information on borrowing and credit, and inspirational success stories from baby boomer entrepreneurs. The Web site will help users evaluate the reasons for business ownership after age 50, the risks involved, and how to devise a plan of action at every phase of business development.

All marketing metrics are not created equal.  If you oversee the finances of your organization, you know that marketing campaigns can be difficult to measure, however a strong marketing campaign is necessary in order to establish your brand in the marketplace.  I love reading business books that discuss this subject and one of my favorite authors is marketing expert Laura Patterson, who is her latest book shows how to master the most important marketing and business challenges of recent years: How to identify the particular marketing metrics crucial to one’s particular organization’s marketing needs and how to get the entire organization on board to make better marketing efficiency an organization wide imperative.

While no longer new, marketing accountability and marketing performance measurement remain top issues on marketers’ minds. “Marketing Metrics in Action” shows how marketing organizations can go beyond mere analytics and metrics to the actual impact marketing has on the organization in order to make marketing effectiveness an organization-wide imperative.

While lots of people have written lots of books and articles on the topic of marketing accountability, the problem is that the great majority, if not all, try to sell some sort of silver-bullet theory: just find that one “magic” number or single method or formula and everything will be fine. “Marketing Metrics in Action” does much more. It provides a realistic approach to measuring marketing effectiveness that any company can put into practice.

In three sections, the book advises how to figure out how to measure what really matters; build, support, and shape the internal culture; and then translate all of the great measurement processes and ideas into practical applications that make sense for each particular organization’s needs and circumstances. The result will be a more dynamic, performance-driven organization.

Included are process maps (data collection, measurement, and target setting) along with tips and specifications for quality marketing dashboards and guidance for the development of necessary systems, tools, skills, and training.

“Marketing Metrics in Action” does much more than just give you a single magic number or a one-size-fits-all formula. It provides wise counsel for identifying which metrics matter most to your organization.

You know that I love to give you new and innovative tools to run your business, especially when it deals with exciting technology.  So I was excited when I found out that Wells Fargo is now offering browser-based mobile banking for corporate banking customers, and they have again expanded wires and self administration features of its CEO Mobile service. Authorized CEO Mobile users can now initiate and approve federal tax wires and see which self administration dual control items they can act on using their mobile device. CEO Mobile service is a streamlined, mobile version of the company’s Commercial Electronic Office (CEO) portal.

“Our mobile customers are decision-makers who are really on the go,” said Megan Minich, who leads the CEO Channel team for Wells Fargo’s Wholesale Internet and Treasury Solutions group. “They’re also early adopters who tell us what features they need to make key decisions away from their desks. We’re building solutions for their needs.”

Earlier this year, Wells Fargo further improved its unique service to include the ability to manage and decision potentially fraudulent ACH transactions, view even more balance and reporting information, and enable company administrators to reset users’ passwords.

“The CEO Mobile service gives me freedom to balance my professional responsibilities with my personal life in a fast paced, 24-7 world,” said Tricia Bishop, manager of Treasury Operations for Visant Corporation in Minneapolis. “With a leanly staffed department, it’s critical that I have remote access to company financial information and complete transactions. With CEO Mobile service, I have that access and convenience and have logged in on planes, trains, and automobiles.”

Wells Fargo introduced CEO Mobile service to a select group of customers in April 2007, becoming the first major U.S. financial services company to offer mobile corporate banking. In addition to the new functions, the CEO Mobile service delivers key reporting information such as

• Balances
• Float
• Account activity and wire detail
• The ability to initiate and approve wires
• The image positive pay service so mobile customers can view exceptions, including the check image – an important protection against fraud – when deciding to pay or reject check exceptions.

This is exciting because I know that when you’re a small business it can be stressful managing the finances of your company on the road.  So hopefully this will be a helpful tool for you.

No matter where you work in the country, if you are in the accounting or real estate industries, you know that the economy is not going to turn around overnight.  And it is during these times that having a firm knowledge of the upcoming financial forecasts is most vital.  I wanted to post an article that discussed what we could look forward to this fall in the real estate market and I came across a research report from OptHome, which is an online resource for empowering homeowners, buyers and sellers to make smart decisions for all their homeowner needs, announces that although the fall will probably not show an increase in home prices, buyer interest appears to be building, and will begin to set the stage for recovery. The areas of the country that have seen the biggest price declines have now seen the biggest increase in sales, indicating that buyers are responding to lower prices. And while it is impossible to say precisely when the real estate market will bottom out until it actually begins to go back up, the market is likely hovering at the bottom right now—begging the question—is this a good time to jump into the market?

“When mortgage payments and property taxes are around the same as it costs to rent, this is usually an indicator that it is an excellent time to buy,” said Dave Sears Co-Founder and Chief Strategist at OptHome. “While the market could still go down a bit, it can also begin to go up, so buyers may want to seriously consider taking the leap.”

OptHome cautions savvy buyers and sellers to look at a different kind of “To Dos and To Knows” checklist before making a move this fall or beyond, and offers the following tips.

Tips for Sellers:

• Now is THE time to move up: If you want to buy a bigger or nicer home, now is the time to do it. Right now you will get a better deal because the larger house you want to buy has probably taken more of a price cut than you will have to take on your current home. It’s a sliding scale – in your favor - as you consider more expensive homes.
• Pricing your home correctly has never been more vital; do your homework and listen to your agent: Well priced homes in good condition and good locations are selling faster than ones that are priced above the appropriate range.
• “Fixer-Uppers” don’t win in this market: Homes in good condition are available at very reasonable prices.
• Understanding the Home Improvement Return on Investment Index is critical in this market: Sellers may not recoup investments on many upgrades; focus your dollars and time on what will help your home sell.
• Paint before it gets cold: If you want to sell in the fall, do all your painting now. Use the last of the summer weather to do any exterior painting your home may need.
• Don’t let your house hibernate: Be careful not to give your house the closed-down, winter hibernation look. For example, don’t leave a boat wrapped and covered for winter on your lawn.

Tips for Buyers:

• Don’t try to “time the bottom of the market” – you may kick yourself later: This is a great market for a buyer. By the time you realize the market has hit rock bottom, it will already be on its way back up.
• Do research on prices of similar homes: Focus on the true value of a property rather than the percentage you may be able to negotiate off the price. You may not get the “rock bottom” price, but you will do well as the market improves in 2009 and 2010.
• Really look at ALL the numbers: Find out the price per square foot of your potential new home. Is it below what new construction or the cost to replace it would be? If so, you will build equity quicker.
• Pay close attention to your mortgage rate: Fixed rates are your safest bet and if you can afford it, going with a shorter term mortgage helps build equity in your home faster.
• Be careful with “Short Sales”: This is when a seller can’t afford to pay their mortgage and the lender agrees to accept less than what is owed. This should be disclosed, but it is important to ask before you make an offer. Otherwise you may end up at the mercy of the seller’s mortgage holder which could delay and even prevent closing as it can sometimes take weeks for a lender to respond to an offer.

The accounting industry has changed dramatically with the advent of online banking.  And with each day more and more individuals are migrating to the Internet to bank.  In fact, more Americans than ever, an estimated 63.1 million households or three-fourth of those online, are paying their bills online rather than writing checks, according to a survey by CheckFree.  This means that you, as an accountant, will have to have a firm foundational knowledge of online banking across various mediums.

The survey mentioned above indicates that consumers are more confident about online security as more Americans are gaining experience in using Internet services, making security concerns less of a barrier to online bill payment adoption than in the past. In the latest survey, only 13 percent of respondents cited online security as the top reason for not using the online bill payment service, down from 17 percent in the 2007 survey. Overall, online security ranked third among barriers to online bill payment adoption this year, compared to its number-one ranking in 2007. The primary barrier (15%) in the new study was “I don’t know enough about how it works.”

An estimated 31 million households are using online banking websites to pay bills, 47.9 million households are using biller websites and 16 million are using both online banking and biller sites to receive and pay bills. Approximately 63.1 million of Internet-using households pay at least one bill online in an average month, up from 61 million in the 2007 survey. These households collectively paid 934 million bills in a typical month, according to the survey results.

Online bill payments continued to outpace check bill payments for the second consecutive year. Online bill payments made at both bank and biller websites rose to 42 percent of the total volume of household bill payments made each month, up from 39 percent in the 2007 survey. Online bill payment adoption has significantly grown since the 2002 survey, when only 14 percent reported paying their bills online.

Check payments among survey respondents who use the Internet fell to their lowest level in six years, accounting for only 31 percent of the total volume of household bill payments – down from the 34 percent recorded in the 2007 survey. Check bill payments have fallen by half on a percentage basis since January 2002, when Internet-connected Americans made 61 percent of their bill payments by check. Still, 59 million online households pay at least one of their household bills each month by check.

“As more consumers gain experience and become more comfortable using the Internet, their confidence in online security grows and we see an increase in the adoption of online banking and bill payment services,” said Todd Lesher, division president, CheckFree electronic Banking Services, now part of Fiserv. “For a minority of users who haven’t used the Web as long, we see that security concerns remain a significant barrier to online banking and bill payment adoption. We continue to work closely with our financial institution customers on joint programs that help educate consumers that online financial services are safer and more convenient than traditional, paper-based methods.”

Survey findings include:

• Internet-using households pay an average of 11 bills per month. Consumers use an average of three different ways to pay bills, with online, check, automatic debit and in-person topping the list of popular bill payment methods. Online bill payments at bank and biller websites comprised 42 percent of total monthly payments, followed by 31 percent of bills paid by check. [See Chart, “How Consumers are Making Their Monthly Bill Payments.”]
• Fifty-one percent of survey respondents cited the environment as a reason why they chose to view and pay bills online. Of these, 72 percent identified paper and clutter reduction as chief benefits, followed by tree conservation (19 percent) and reduction in gas consumption (16 percent).
• Saving time and gaining control over their finances were major online bill payment benefits cited by 44 percent of respondents. Consumers surveyed also cited other important reasons for paying bills online, including eliminating the hassle of writing checks, enabling them to pay all bills in one step and saving the cost of stamps.

The large component of the accounting industry is the credit and lending industry.  And with the current economic state, it is important to have a solid understanding of what current consumer habits are domestically.  Call it survival of the financially fittest, or financial Darwinism. Consumers are adapting to a changed economic landscape by cutting back on their credit card spending, attempting to pay down debt and monitoring interest rates, according to a new nationwide poll from CreditCards.com.

The findings are from the Second Annual Taking Charge survey, an in-depth investigation of America’s relationship with credit cards. The national study was fielded by GfK Roper Public Affairs & Media for CreditCards.com, the leading online credit card marketplace and consumer information source.

Taken as a whole, the poll shows most consumers are reacting reasonably to financial difficulties by pulling back on discretionary spending, and express little concern about their ability to pay down debt. But those who can’t or won’t adjust are finding themselves in deeper and deeper debt trouble. To put it in Darwinian terms, consumers must adapt or they simply won’t financially survive.

“As the use of plastic becomes more prevalent in American daily life, consumers who implement healthy credit card habits will be more apt to financially survive in a cashless society,” said Ben Woolsey, Director of Marketing and Consumer Research for CreditCards.com.

Consumers appear to be taking proactive steps to avoid the credit crunch in their credit card affairs:

• 25 percent of U.S. cardholders say they spent less on household living expenses last month compared to normal.
• One-third of cardholders report that they ended the previous month with a lower outstanding balance than the month before.
• 34 percent say they spent less on discretionary expenses, such as eating out or shopping at the mall; 46 percent say they spent less on major purchases, such as appliances or furniture.
• Some consumers are giving up on credit: The proportion claiming to be current cardholders has dropped 4 percentage points since the 2007 Taking Charge survey.
• Only 7 percent of Americans say they worry “a lot” about paying off their credit card bills; 63 percent say they are not at all worried.
• People are hunting for low interest rates. Nearly 4 in 10 surveyed agreed that they are always looking for low interest rates to transfer their existing balances, while 67 percent of cardholders agree that they “actively monitor” the interest rates on their credit cards.
• Despite all the bad economic news of the past year, American cardholders are no more worried than last year about paying their credit card bills, with 27 percent agreeing with the statement, “At times I worry about how I’m going to pay my credit cards.” That figure is unchanged from last year’s poll.

Who does worry about paying credit card bills? According to the poll, those with the greatest credit card bill worries are people:

• With household incomes below $75,000.
• Who have four or more credit cards.
• Who are older than 40.