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ARTICELS Business & Finance: March 2007

ARTICELS Business & Finance

Sunday, March 25, 2007

Year-end Health Savings Account Tax Strategies

by: Wiley Long

Year-end Health Savings Account Tax Strategies

2007 is just around the corner, and there are several issues to consider if you currently have a Health Savings Account (HSA), or are planning on getting one in the near future.

100% of the deposit you place in your HSA is deductible on your federal income taxes. All but four states also make HSA contributions tax-deductible on state income taxes. If you are looking to reduce your 2006 tax burden and put away more money for retirement, your HSA is the first place you should put your money if you have not yet maximized your contribution.

The maximum you can contribute to your HSA in 2006 is the lesser amount of your deductible, or $2,700 for singles and $5,450 for families. Individuals who are 55 or older may contribute an additional $700.

Note that contribution limits are pro-rated, based on the number of complete months during the year in which you have a qualifying HSA health insurance plan.

You have until April 15 (or later if you file for an extension) to make your 2006 contribution. If you do not fully fund your account for the current year, you cannot make a catch-up contribution for 2006 after this deadline. However, you can reimburse yourself in later years for qualified expenses incurred in 2006, even if you do not have the funds in your account to reimburse yourself at this time.

In 2007, the maximum annual HSA contribution will go up to $2,850 for individuals and $5,650 for families. Individuals 55 or older will be allowed to contribute an additional $800.

To maximize your tax benefit for 2007, it is important to have your HSA-qualified health coverage in place no later than January 1.

In order to pay for a medical expense from your HSA, it must be a qualified expense. Some of these qualified expenses include dental expenses, eyeglasses, chiropractic visits, over-the-counter medications, and sometimes even nutritional supplements.

Now is a good time to make sure you have an accurate record of your medical expenses for the year. Make sure you separate the expenses for which you have reimbursed yourself from your HSA from those that you paid for out-of-pocket. You'll want to keep receipts for all medical expenditures paid from your HSA with your 2006 tax records. Place the "non-reimbursed medical expenses" in a separate file, keeping them with the concurrent year's tax records in whatever year you decide to reimburse yourself.

The penalty for over-funding your HSA is a whopping 6%. You have until April 15, 2007 to withdraw excess funds for the 2006 tax year to avoid the penalty. Your HSA administrator may notify you of any over-funding, but they are under no obligation to do so. It is your responsibility, so make sure you check into this if you think your may have over-funded you account.

The minimum deductible for HSA-compatible health insurance plans in 2006 was $1,050 for individuals and $2,100 for families. In 2007 this will increase to $1,100 for individuals and $2,200 for families. If you currently have an HSA-qualified plan with the lowest eligible 2006 deductible, that deductible will automatically go up on January 1 to the new minimum.

Strategies to Maximize Your Tax Benefits

There are basically three different strategies you can take when deciding how to fund your health savings account.

1. Put no money in the account, except when you incur a medical expense. This strategy allows you to legally "launder" any money used to pay medical expenses. In other words, by depositing money into your HSA, then immediately withdrawing it to reimburse yourself for medical expenses, you are making your medical expenses all tax-deductible. You may want to use this strategy if you are on a tight budget and want to keep your cash outlay as low as possible.

2. Fully fund the account, or at least put in as much as possible based on your budget. Take money out of the account any time medical expenses are incurred, and let the rest grow tax-deferred. This strategy will maximize your tax deduction, while making your HSA funds available to pay any non-covered medical expenses before your deductible is met.

3. Fully fund the account, but pay all medical expenses from a non-HSA account. Reimburse yourself for medical expenses at a later date. This strategy will allow you to maximize your tax deduction, and will also allow you to maximize the tax-deferred growth of your HSA. You can then reimburse yourself, tax-free, at any time in the future for medical expenses incurred over the ensuing years.

To maximize the potential growth of your funds, you may want to make your 2007 deposits as early in the year as possible. Any growth in your account is tax-deferred, like an IRA. If possible, you should plan to make your deposit the first week in January.

posted by rizkhey wahyudi @ 8:58 PM 0 comments

The Humility Advantage - How Less Ego Creates More Sales

by: Jeff Mowatt

See if this applies to you or your team members in your organization: You've been working in your industry for several years. Your responses to requests from customers, prospects and co-workers are fast and accurate.

You know your stuff and your product knowledge is one of your greatest strengths. If this is the case, then the bad news is that your extensive knowledge may also be one of your greatest weaknesses. The reason - you may be inadvertently coming across as being arrogant and insensitive.

I'm not suggesting that you have a holier-than-thou attitude or that you are unfriendly. It's just that you are so quick with your answers and recommendations that others feel like you haven't really been listening to their needs (even though you have).

In other words, the greater your expertise, the more likely it is that you are unintentionally rubbing people the wrong way. The good news is that there's an easy way to prevent this misconception that I call The Humility Advantage©.

Working with over a hundred sales and service teams over the years, I've found there are at least seven key opportunities where a little employee humility pays-off substantially. Here are three that I often share in my Influence with Ease® speeches and seminars.

1. Mention your Homework

Several years ago, a couple of branding consultants approached me about enlisting their services. My first thought was that these folks knew nothing about my company or my industry, so why on earth should I pay their sizable fees. I only agreed to meet with them because a colleague said they'd done good work for his firm.

When I sat down with the consultants, they did not start asking me lots of questions about me and my industry. (That would have confirmed to me that they really didn't know my business world and would have ended their chances of selling me their services). Instead, they began the meeting explaining that, by way of preparation, they'd been chatting with some of my colleagues and customers to find out their impressions of my company's services. Then, they asked if I would like to hear the word-on-the-street. As you can imagine, that got my attention. And the ensuing conversation led me to engage their services.

When you talk with potential customers, do you begin the conversation by mentioning the homework you've done on their company? If not, you're missing an opportunity to let them know that you are truly interested in them.

Rather than starting a sales conversation by asking about their needs, try commenting on something you saw on their website or read about them in an industry journal. It's a powerful way to confirm to others that you're knowledgeable without coming across as one who brags. It's one of the first steps in applying the humility advantage.

2. Confirm your Understanding

If you've participated as an audience member in one of my live presentations, you might have seen me step off the stage pretending to be a waiter taking food orders from several audience members as if they're at a restaurant. During this skit, rather than order directly from a menu, each patron has a special request such as, “I'll have the salad with the meal.” or “I'd like to have fruit instead of fries,” etc. As the waiter, I don't write any of this down, and as you've likely guessed, when I walk away, the patrons assume that there is no way I'm going to get all the orders straight.

There's the problem. I may have listened accurately to each request, but the emotions I left with my customers are worry and lack of confidence in my service.

As an experienced professional in your industry, you may be a great listener, but are you perceived as such? Being regarded as a poor listener is a surefire way to kill a sale or curtail your career. Fortunately, by using a little humility, this is easy to correct. In the waiter demonstration, I redo the same order-taking scenario, except the second time after taking the orders, I say, “Let me make sure I've got this straight. You would like yours with fruit instead of fries...” (I then confirm everyone's special request accurately).

Suddenly, the restaurant patrons feel good about the quality of my service. Here's the key; I repeated my understanding of their needs with the phrase, “Let me make sure I've got this straight.” Fact is, I knew I had it straight, but the customer didn't. The catch is, if my ego were running my life I'd never say, “Let me make sure I've got this straight.” Hence the Humility Advantage.

Here's one more application:

3. Ask Permission to Present

You've probably heard the expression that people don't like to be sold-to, but they love to buy. That means that before you present the benefits of your products or services, remember to ask for permission. When you thread all these techniques together, a sales conversation might start by pointing out the homework you've done on the other person. Then ask about their needs, confirming your understanding with, “Let me make sure I've got this straight…” Later, ask permission to present with, “Based on what you've told me, I do have some thoughts. Would you like to hear a couple of options that I think would fit for you?” Once the other person agrees, they'll feel less like they are being forced, and more like they are being helped.

posted by rizkhey wahyudi @ 8:56 PM 0 comments

The Honeymoon Stage of Trucking Courier Services and What Every Customer Must Know

by: Deborah Petersen

A lot of in-city trucking couriers will service a new customer to death in the first few months of their business relationship, but once they feel that they are safe and secure with that customer, they begin to take them for granted and start providing shoddy service.

Some couriers believe that since there are so few local courier express companies with a fleet large enough to service their clientele that they no longer have to worry about competition or they simply no longer care. If you feel that your delivery service is leaving you with a rotten bill of goods, then you are not alone. Please keep reading to learn how you can keep the honeymoon stage alive or find a way to exit what has truly become a dead marriage.

As a customer you may feel that you were once the prize, but you are now despised. Once the honeymoon period is over, you may realize that your courier company is slow to pick up or slow to deliver your goods.

This bad service attitude often happens once the courier realizes that the new customer doesn't need their service as much as they had thought they would, hence they are not making much money from them. On the other hand, a courier company that treats all of their customers alike does not care if a customer spends $20 per period, or $2000; they will treat each customer with the utmost respect and provide the same level of service while remaining friendly, courteous, and thoroughly professional at all times.

Unfortunately, plenty of drivers (and courier express services) will often be aloof to customers when they do not feel that they are making much money from them. Conversely, a reputable courier company will impart their exemplary customer service standards to their drivers so that they will, in turn, consistently treat the customer well by demonstrating that they are happy to be there and are sincerely thankful for the opportunity to service them regardless of the amount of business that is being generated.

One thing of special note in this particular discussion is this: couriers that provide broader services than simple parcel delivery do not really make money on the parcel delivery side of the business due to equipment costs, commercial insurance, registration, monthly payments for vehicles and equipment, maintenance, fuel, taxes, etc. The most profitable part of their business comes from the calls that include heavy freight, those that fill their decks, and on rush services. You know that you are dealing with a dependable courier company when they are just as willing to move the small stuff as they are the large freight orders.

So, now that you know about the problems faced by customers who use in-city trucking courier services, how can you ensure that you won't become just another pretty face? Truthfully, there is no guarantee that your new service provider won't drop the ball but there are some steps you can take to remedy a deteriorating situation including:

1. Contact your current courier service and let them know that you are dissatisfied with their service. Keep track of problems including if a driver has been rude or if the company has been displaying a pattern of showing up late or holding back on deliveries.

2. Start shopping for a new courier service. This is easier said than done, but if you convey to a new company that you expect nothing less than exemplary service from them and that you plan on holding them accountable to their promises, then you are less likely to be disappointed later on. If they don’t agree to your terms in advance, then simply move on to the next courier.

3. Expect to pay a decent rate for good service. Sometimes the customer is partially at fault when dealing with a new courier service as they'll demand discounts or demand a rate that matches the unreasonably low rate of a competitor. As the saying goes, "you get what you pay for" only invites shoddy service later on as the courier company looks for different ways to trim their costs, perhaps at your expense. Of course, this is not an ethical practice on the part of the trucking courier service, but it is not entirely unexpected either as someone within the company may have felt pressured to give to you their lowest rate without being able to back it up with an adequate level of service. Either way you lose, so if someone offers you a rate that is well below the industry average, you can expect service problems to crop up later on.

Finally, if your repeated request for an improvement in service falls on deaf ears, then you have little recourse but to shop elsewhere for a new trucking courier service. Changing couriers is by no means a small ordeal for a larger company as there is a lot of work involved with changing couriers, including familiarizing the company with your products and special requirements, getting to know the new company’s drivers and company staff, and contacting all of your vendors to call the new courier for their deliveries instead of the former courier. In the end, once the switch has been made to a new courier service, only regular communication can ensure that the relationship stays fresh and that no one takes the other for granted. Much like a successful marriage is dependent on open and honest communication; a customer-courier service provider relationship will only thrive if both parties are interested in seeing that it succeeds.

posted by rizkhey wahyudi @ 8:54 PM 0 comments

Scrooge's Christmas List

"Cratchit, take your Christmas grab bag and be gone. Out, I tell you, or you'll be seeking new employment!" That scene wasn't included in Charles Dickens' "A Christmas Carol" but I can easily picture crotchety old Scrooge taking Bob Cratchit to task for attempting to include him in an office holiday gift exchange.

Scrooge certainly is the symbol of someone who doesn't like Christmas.

But, if you think about it, many of us harbor Scrooge-like feelings today. We really don't want to participate in yet one more gift exchange. We're out of both time and money.

The sad fact is that for many of us, Christmas shopping has become largely an obligation. We buy presents because it's expected. Take a look at your list. How many gifts are you buying because you really want to bless the person receiving it? And how many fall into the "I gotta" category?

Part of the problem for all of us is that most of the people that we buy for already enjoy material wealth. They truly "don't need anything". In fact, your present creates a problem for them.

Yes, I know that some think only a real Scrooge would take people off of their gift list. But, I'd disagree. Many of the gifts that you will give this season will actually hurt the person you give them to.

Here's how. They really don't need whatever you bought. It's just one more item to take up closet, cabinet or attic space. You've put them one step closer to needing a bigger house (with a bigger mortgage payment). You'll consume their time and money without adding any enjoyment to their lives.

And, you'll diminish your own life, too. Whether you consider this time of year to be an important part of your faith or just a time of goodwill, rushing from store to store will take your mind from the real meaning of the season. You will be focused on things. Not on the relationships that are important to your life. So I'd argue that it's really in the spirit of the season to reduce the number of people on your gift list.

In fact, you'd be doing friends a favor by not exchanging gifts. You'd both save the time spent buying and wrapping the gift. If you truly value that person, it's much better to get together for lunch or dinner and catch up on what's happening in your lives.

OK, in some cases it's not practical to drop people from your list. So how can you make the best of gift shopping?

Before you go shopping, consider why you're buying each present. Decide which people on your list are really important. You have a limited amount of time and money. Spend them on the people who are truly important in your life.

Everyone else should be handled without a big fuss. It's not that we don't like the people in our office gift exchange. It's just that six months from now they won't remember what you bought them.

An office party is a great place for a gag gift. Thrift stores can provide an assortment of items that can be used for funny gifts. Stuffed animals, clothing, coffee mugs and toys are fertile ground for the imagination. Is the recipient a stickler for time? An old alarm clock could be good. One where the hands have been removed is even better.

Many of us have far away relatives and friends. Unless you're particularly close, you might as well admit that you really don't know what they already have or what they need. So no matter what you get there's a good chance that it will need to be returned. Rather than combing the malls hoping that the perfect item will jump into your arms, why not consider a gift certificate from a national chain of stores. Or, better still, agree to a dollar amount that you will each spend on your own family. Do your buying after Christmas and send the 'giver' a photo of the gift that 'they bought'.

For local friends and relatives, think about where your lives intersect. That's the place to begin looking for a present. If you find that your lives have drifted apart, it's better to spend time catching up instead of shopping.

Then there's those very special people on your list. Your spouse, children and others who you truly want to make happy with a gift. Remember that it's not how much you spend. While it's nice to find a thoughtful gift for that special someone, what they really want is you. The people that are most important in your life want your time and attention. They want your happiness. Don't disappoint them by picking something that's expensive but impersonal.

Finally, please understand that this isn't meant to imply that you shouldn't give to those who need help. Not everyone in our world is blessed with the abundance that so many of us have. And the less fortunate would can use your gift. If you can afford to, please participate in Angel Tree, the Salvation Army kettles or other programs to help those who struggle. If you're really in the holiday spirit you'll feel much better giving that new sweater to a poor child rather than your Aunt Edna.

Nor is this meant to imply that you should ignore the holidays. This is a wonderful time of year. My hope is that you'd make the most of your resources and bring happiness to the people who matter in your life.

posted by rizkhey wahyudi @ 8:53 PM 0 comments

Getting the Most Return from Your Sales Time Investment (ROI)

by: Joe Leech

Let's face it: you are probably working for far less than you need to. And the sad thing is, you may not even be aware of it or the options you have! As of now, we're going to change that for you, and possibly share with you not only a thought but a vehicle that can change your financial life.

We are going to show you how to get much more out of your sales time investment.

This probably applies more to the part time, home based business person than the professional...but we have seen, met, and talked with professionals who really are under- valuing their return on time investment. I know.. we are using that "time investment" word alot all ready. But you MUST consider it just as you do a cash or money investment.

In fact, it's even more important because once spent or invested, you can't ever get that particular moment or minute back.

It's gone. You can always invest more money, but you only have so much irreplaceable time. Your sales time investment is one of the most precious ones you can ever make.

As we look at business models, we find on one end, the model that proposes high volume but low profit per sale.

Walmart has certainly shown this works, and many, many, many supermarkets work this same way. It will work if you have the ability to create large volumes of sales. The question is: Do you. If you are a individual sales rep or a small business, just how much of an opportunity do you have to create really large volumes. The appeal to the small business person is to do this by creating some type of a multi-level (also and probably incorrectly referred to as a pyramid) sales organization. In the ideal world, IF you can do this, you can create volume. But this could take years to accomplish, and still never guarantee any income or security because (1)The company behind it could go out of business, be taken over.. or any number of things, (2) The pay plan could change, or (3) The group suddenly dissolve, particularly if or when a heavy hitter or group leader decides to switch to another business and takes his distributors or sales force with him. Did you make a good sales time investment if you chose this model?

Of course you still have the ability to sell the product or service yourself, but (1) Can you do volume, and (2) Is the profit per personal sale worth your time?

The second business model, at the other end of the spectrum, is one that provides a relatively high profit or earning per sale. Sometimes we think of real estate people and car sales people in this category, as well as sales people of specialized capital equipment. But that's not the majority of us.

The downside here is that if we are thinking about selling a high ticket/high profit item, we have to ask (1) Is there a large market and prospect base? and if we are thinking in terms of an ability for a part time person--possibly a "stay at home mom", can this high ticket, high profit product or service be first mastered in terms of the technology, and second, is the customer prospect base readily accessible?

In most cases, the answer to those two questions is "no, not available".

But if it is or was, then here's a fact that can be virtually carved in stone:

IT TAKES NO MORE TIME OR SKILLS TO SELL THE HIGH PROFIT PACKAGE THAN IT DOES TO SELL THE MASS PRODUCT WITH ONLY PENNIES OR DIMES IN PROFIT!

Think about that! This is ALL relative to your sales time investment, and once more: It's the MOST IMPORTANT investment y ou have to make.

Ask yourself: "Am I working for pennies or dimes when instead with the right vehicle I could be working for dollars?"

If the answer is yes, and this is so true of particularly home based business entrepreneurs who are involved in sale of nutritional supplements, skin care, fad gadgets, etc., then ask yourself, "Am I doing this because I want to earn a nice income, and do it as quickly as possible... or am I kidding myself about that goal and I just want to get products wholesale or discounted and have some fun?"

Nothing wrong with that, by the way, if you have an hones assessment of what you are doing and why.

But..... If your goal is in the area of $4000-$5000 a month or more, and you also don't want to spend all your waking hours "working your business", then it's time to change.

As your article writer, I can tell you this is an article written from the school of hard knocks and one that really had us so emotionally involved with the businesses. Rah rah rah; recognition, pins, etc. Amway. Free Life. Primerica.

Herbal Life. Been there, done that. Made some money? Yes, but far, far, far less than in other options. And that's just the part time side of things we did to supplement our "real" job. Made some money, but had no security, and worked for far less than we could have been doing. Plus we just sold our time for money there. No residual income.. but that's the subject for another article.

We hope this has helped you focus some thinking and our resource block will point you to one tool that will let you change your life.

posted by rizkhey wahyudi @ 8:51 PM 0 comments

Energy Savings by Use of the Correct Spray Nozzle

by: Roger Wakefield

Rising production costs and fierce competition is resulting in manufacturing companies looking at all aspects of savings, especially energy savings.

Spray nozzles of the right specification can lead to significant savings in both energy and raw materials.

One of the overlooked areas is the use of the correct spray nozzle. Whilst frequently ignored in the manufacturing process, it is often this item of equipment that is the most important. Header tanks, pumps sophisticated controls, pipe work are all immaterial if the spray nozzle “at the sharp end” is not delivering the right amount of fluid

(flow rate) at the correct spray angle and with the right spray pattern. This can lead to excessive wear on the pumps and ancillary equipment resulting in higher energy consumption and related costs.

The phrase – it sprays, is often used, but how effectively is often not considered.

In addition to these more obvious savings there are a many “hidden” savings to be made.

Expensive down time and failed equipment could be contributed to poor nozzle performance.

Production lines designed to operate continuously are expensive items if shut down owing to badly performing spray nozzles and this failure could affect the total production plant with the resulting unsuccessful distribution to customers, which in turn may affect their production.

All this from the wrong or poor performing spray nozzle!!

The correct spray configuration is essential to maximise the spraying operation and continuous spray nozzle development will lead to greater beneficial savings.

In addition, the wrong or worn out spray nozzle will eventually lead to poor finished products and possible rejection of expensive products. This could result in extra production to make good these shortfalls, with the resulting increase in energy costs. All this will reduce profit margins.

Initial investment will be required to introduce the correct nozzle, but payback can probably be counted in months and in some case weeks.

As an ongoing maintenance program, substantial savings will be made by regular inspection and maintenance of the spray operation and possible replacement when nozzles become worn, through blockages, corrosion, wear and accidental damage

Regular maintenance of the spray nozzles must be undertaken to ensure the nozzles have optimum spray performance.

All nozzle configurations should be analysed on a regular basis to ensure that the spray pattern, flow and operating pressure cannot be improved upon, possibly with new nozzle technology, or the fact that the application process has not changed. The latter being the case then a new specification should be sought.

As well as energy savings, raw material savings must also be taken into consideration and it is feasible to experience water reduction of up to 40% in certain industries and spray nozzle applications.

Also to be taken into consideration must be the application where the spray fluid is not water, but more expensive chemicals or fluids. With correct nozzle design even greater savings may be achieved.

Energy savings can be made in pump operation and it some case it is possible to reduce the number of pressure pumps, thereby saving considerable operating costs and associated maintenance cost.

To summarise, energy savings, raw material savings and a reduction in the wear and tear of other equipment can all be experienced if the correct spray nozzle is specified.

The specification must include nozzle material, spray angle, spray pattern, flow and pressure. With all these set correctly a regular maintenance programme should be undertaken. With the correct specification and maintenance schedule then energy and raw material savings can be expected.

posted by rizkhey wahyudi @ 8:50 PM 0 comments

Credit Card Fee Increases

This month on our two credit card statements are notices informing us that as of Oct. 1st we may be charged "more than two" late fees or over the limit fees" per month. What's going on?
Gwen

It's estimated that Americans charged $1.8 trillion in 2005 on the 690 million credit cards outstanding. According to a Government Accountability Office study released in September, 2006, 13% of credit card users were assessed over-limit fees and 35% were assessed late fees in 2005. So Gwen has a lot of company.

Let's try to do three things. First, understand what these fees are. Next, see how fees are changing. And, finally, what Gwen can do to keep from being hurt.

Credit cards have always had fees. Some, like for a late payment, are understandable. Others came along as credit cards took on new capabilities.

Think cash advance and balance transfer fees. Still others, like over-limit fees, seem like they shouldn't be possible. You would think that they wouldn't allow you to borrow more than your limit.

There are also 'penalty interest rates'. If you're late with a payment or go over your credit limit you could see your rate bumped to 30% or more.

The 2006 GAO study looked at fees and penalties. It said that not only were fees increasing, but the credit card companies were doing a lousy job of informing consumers about those fees.

The credit card companies are obligated to tell you about any fees or penalties and how they're triggered. Some fees, like paying your credit card bill by phone, are sometimes not clearly disclosed. What Gwen received with her statement was a notice of a change in how fees would be charged. And, as long as she's notified they can get by with almost anything.

Late fees have nearly tripled in the last 11 years. And many cards have adopted a 'universal default clause' that says a late payment on any card will trigger the penalty interest rate.

Credit card companies say that the higher interest rates and fees are appropriate based on risk factors. If it weren't for the higher fees, they claim that they wouldn't be able to offer credit to riskier consumers.

In fairness, the GAO's survey found that (at least among 6 of the largest card issuers) 80% of accounts paid interest rates of less than 20%. So the vast majority of card users are not paying penalty rates.

But the study also found that the disclosures were written well above the eighth grade reading level and (surprise!) featured small print. They recommended that the Federal Reserve Board revise rules on credit card disclosures.

Now that we understand what's going on we can try to help Gwen avoid problems. The first thing is to recognize that the card issuers get to make most of the rules. And, whether those rules are fair or not isn't relevant. The best she can do is to avoid getting hurt by those rules.

Get familiar with each account. The only way to know exactly what's allowed is to read and understand the "Card Member Agreement." Tough duty. But necessary.

Watch out for unexpected fees. Like for balance transfers or increasing your credit limit. Know what could trigger fees or penalty rates.

Know exactly when your payment is due. Keep a list of due dates for your credit card accounts. If you don't get the bill, it's your responsibility to contact the company and still make a timely payment.

If possible, the best thing to do is to join nearly half of the cardholders who paid little or no interest. That's because they do not carry a balance.

Obviously, for many people that's not immediately possible. Then it's important to send in your payment as soon as possible. Being seven days early is better than being one day late.

If you find it difficult to get your payment in on time, you might want to authorize the credit card company to automatically debit your checking account for the minimum payment each month. You'll probably pay for the service, but that way the payment can't be late.

Talk to your card issuer. If your due date falls at a bad time of the month, they'll move it.

If Gwen is near or over the limit on any card, she should try to shift part of the debt to a different card. Some fees are even being assessed when an account is merely getting too close to the limit. Your best bet is to keep balances to less than half the available credit.

Although the higher late fees are infuriating, they do minimal damage. The real problem is in the universal default clause. Most credit card accounts now have a universal default clause.

Suppose your rate went from 15% to 30% on every open credit account. For every $1,000 you owe, an extra $150 interest would be charged each year. So if you're the type of person carrying a $10,000 balance, that one late payment could cost you $1,500 per year. For as long as you have the balance!

Gwen is right to pay close attention to her credit card accounts. With newer fees and penalty rates in place, it becomes more important to manage your credit. In fact, it's critical to your financial wellbeing.
_______________

Gary Foreman is a former financial planner who currently edits The Dollar Stretcher website . If you'd like to stretch your day or your dollar visit today! You'll find hundreds of articles to help you "live better...for less".

posted by rizkhey wahyudi @ 8:48 PM 0 comments

Cargo Cults and Management Practice

by: Wally Bock

During World War II, US forces took over islands in the Pacific where the residents had never see airplanes, or canned food, or any of the tons of material that a military force needs. The islanders were careful observers, though, and they figured out what the military did to cause the goods to show up.

This is what they saw. The military folks would go up into towers they'd built and talk into a box. Soon the material, or "cargo," would arrive.

When the war ended, the military went away and the cargo stopped coming. But some of the islanders figured that they could make the cargo come back. All they had to do was exactly what the US military people had done.

So they went up in the abandoned towers and talked into the dead radios that were there. Sometimes they "built" radios from wood or other available materials.

They did everything just like the military and they waited for cargo to arrive, but it never did.

Those islanders were members of something we call "cargo cults." They were bright, observant people who copied a behavior they believed would bring back the cargo. It seems silly to us, because we understand what airplanes and control towers and radios are.

But it was magic to the cargo cultists and they tried the best they could to make it work. Just like lots of managers do with the practices of other companies.

Everybody, it seems, copies General Electric (GE), often in the area of forced ranking. At GE, managers are required to rank their employees into three groups. Twenty percent should be top performers. Seventy percent are in the middle. And 10 percent bring up the rear.

The idea is that you treat the top 20 percent as stars and they get the lion's share of the bonuses, stock options and rewards and opportunities of all kinds. You work to keep the middle 70 percent engaged. And the bottom 10 percent have to go.

This system works at GE, much to the chagrin of many commentators. Because it works at GE and because GE has been a successful corporation for decades, some businesspeople decide to introduce forced ranking in some form into their organization. They want to get some of that GE magic.

The science fiction writer Arthur C. Clarke has said that "Any sufficiently advanced technology will be perceived as magic." When you don't understand what goes behind the success of the forced ranking system at GE, it looks magical, and magic always looks better than hard work.

So companies adopt the forced ranking system without paying attention to any evidence about how it might work in their place. But, alas, there is evidence that forced ranking is more likely to create problems than to magically create profit.

The Novations Group surveyed two hundred human resource professionals who worked at companies with more than 2500 employees and asked them about how forced ranking worked. Half of the companies used some kind of forced ranking system. Respondents to Novations' survey found that forced ranking caused lower productivity, lower levels of employee engagement, and increased distrust of leadership.

If you're going to adopt the practices used by another company, no matter how successful, you need to do some research into why it works there. In GE's case, the answer may involve things you can't replicate overnight.

Forced ranking works at GE because there are two characteristics of the company that support it. First, there is a culture of candor. Unlike most other companies, GE values and rewards candid conversations about performance.

GE also has used an extensive and rigorous evaluation system for years. Combine candid communication with rigorous evaluation and you get evaluations that don’t come as a surprise. In other words, people know when they're not performing and don't fit.

There's one other thing. Despite the rhetoric, GE doesn't automatically fire people who are in the bottom ten percent. There's often the opportunity to improve or try a different assignment before firing becomes the option.

If you want to adopt the practices of another company or industry you have two choices. You can do it like the cargo cults, mimicking behavior and hoping it will get the same result. Or you can do a little due diligence and increase the odds that you'll make the right choice.

Do a little research. Academics, consultants and graduate students are doing research all the time about what works and what doesn't. If you read the Novations' study as part of your due diligence, you'd know that forced ranking isn't the magic it might appear.

Check out the companies where the practice works and a few where it hasn't worked. What are the differences between them? Which companies are like your company?

If you're still not sure about adopting a practice, review the history of how it came to work in companies where it's successful. Tracing that history will often help you see organizational and cultural pre-cursors necessary for success.

In this age of management fads, it's easy to take a cargo cult approach to adopting some new practice. But with a little bit of work and research you can choose wisely which practices you'll adopt and how you'll adapt them to your own company.

posted by rizkhey wahyudi @ 8:47 PM 0 comments

Bank Operating Line of Credit and Letters of Credit

by: Jay Chatterjee

Banking - Business Loan Application

Operating Lines of Credit and Letters of Credit

You are probably wondering what a series on business banking essentials is doing on a natural health website.

Well, stress caused by financial worries will eventually adversely affect your health. Many business owners operate under constant financial pressure, and this series on commercial banking and commercial finance will arm them with the knowledge that they need to deal confidently with diverse business situations, and with their bank managers. Knowledge is comforting, it is the fear of the unknown that is stressful.

How can I help you? I obtained my Chartered Accountant designation (I'm retired now) in Australia. Upon moving to Canada, I worked for a wholly owned Canadian subsidiary of an American bank.

Over time, I rose to become the Senior Vice-President responsible for the commercial finance division. This division granted flexible operating lines of credit, which included letters of credit for importers. In this career, I encountered numerous different types of businesses including trading, manufacturing and importing.

This is not intended to be a detailed accounting or banking course. I have put together the essential information you need in order to give yourself the best chance of succeeding in your business. I shall tell you what your bank manager would like to hear from you at your meetings. I shall tell you the early warning signs that your business needs positive action.

These comments are not for retail business; they apply to wholesalers, importers and manufacturers.

To cover the vast amount of banking information, even in thumbnail format, I shall break it down into various segments. Some will apply to your business, others may not. I am intentionally phrasing the segments in very simple layman's terms. I would advise you to discuss my advice with your accountant, or even your banker, before you decide to act on it.

This first segment deals with the initial loan application. It is assumed that you are applying for an operating line of credit, which may, or may not, include letters of credit. The actual loan within the line of credit will fluctuate at different times, depending on the cashflow, but the bank will put an upper limit which you cannot exceed without special authorization. The limit of the operating line of credit is determined by the bank after evaluating various aspects of your business, including your equity in it.

There is certain basic information that the financial institution requires in order to make the decision to finance your business. You must come to the appointment with the bank armed with this information, ideally accompanied by your accountant who prepared the information package.

" Financial Statements for the past three years

" Pro forma financial statement for the year to date

" Cashflow projections for the current year

" List of aged accounts receivable

" List of aged accounts payable

" Summary of inventory

From the above documents, the bank will ascertain whether your business was profitable in the past, and whether it appears to be profitable this year.

The cashflow projections will show how high the financial involvement will peak at, and how well the loan will be collateralized at any given time.

The accounts receivable list will disclose the quality of the customers and whether a significant percentage of them is delinquent.

The accounts payable list will reveal whether your business is up-to-date with its payments to suppliers.

The inventory summary will show the nature of the inventory and give an indication of whether it can be sold readily.

In addition to examining the above documentation in detail, be aware that a credit check will be done on the business to ascertain if there is any outstanding litigation, and as to its creditworthiness.

Knowing all this, be sure to have satisfactory explanations for any aspects that may appear detrimental to the bank.

It is important to keep in mind that the ideal customer for an operating line of credit, as far as the bank is concerned, is one who:

" Is profitable

" Needs the credit to finance profitable growth

" Does not require too high a loan/equity ratio

" Has adequate collateral to cover the loan at all times

" Has collateral that can be liquidated easily

" Has excellent credit rating

Your strategy? When making the loan application:

" stress the good value of the assets that support the equity of the business.

" Point out that the inventory is current, or can easily be sold.

" Explain that your accounts receivable are up-to-date and that delinquent receivables have been provided for.

" If you have unencumbered fixed assets, point out that there is additional collateral for the bank in them.

" Advise the bank that you have adequate fire insurance to protect the assets, and personal life insurance that could be used to protect the bank, if necessary.

" Recognise that the banker looks to collateral to repay the loan if the business fails. The banker is not really interested in intangible assets, such as goodwill, even though they could be very valuable.

posted by rizkhey wahyudi @ 8:44 PM 0 comments

Are Your Strengths Under Control?

by: Brian Strachan

During World War II, US forces took over islands in the Pacific where the residents had never see airplanes, or canned food, or any of the tons of material that a military force needs. The islanders were careful observers, though, and they figured out what the military did to cause the goods to show up.

I first learned of this particular concept of strengths and excesses in the context of annual performance appraisals. Periodic performance feedback, coupled with an annual performance appraisal, is an integral part of a well-run business. Honest appraisals which inform the employee of his or her development needs are critical to helping the employee improve. They also help the business improve because its employees are improving their performance. It’s a “win-win” proposition.

Unfortunately, not all appraisals are honest. The one for the outstanding employee is easy to conduct and is a pleasure. The one for the marginal employee can be difficult because the discussion can become argumentative and contentious.

I have seen too many managers avoid the tough performance appraisal by simply deeming an employee’s performance to be satisfactory and avoiding any discussion of development needs.

This is unacceptable because it is unfair to the marginal employee. Sooner or later the true assessment will come to light and it will be a shock to the employee. Perhaps it will come in the form of a layoff notice. Perhaps it will come with a new manager who believes in giving honest performance assessments. Whatever the form, the day will come and it won’t be pretty.

I never understood why many managers don’t give honest appraisals. Again, the employee deserves honest feedback. If a manager can’t conduct an honest discussion, he should not accept a position as a manager.

In one particular staff discussion this subject was being discussed. The general manager stated that he expected his managers to conduct honest performance appraisals with their people. He further stated that there is no need for the discussions with marginal employees to be contentious if the discussion is in terms of strengths and excesses.

The theory he was discussing is that no one inherently has any weaknesses. We develop weaknesses when we carry strengths to an excess.

Self-confidence is a trait we admire, we strive to have, and we count as a strength. If we carry the strength of self-confidence to an excess, it becomes arrogance, and a weakness.

Consider one’s ability to trust others. This is a strength and one which you need to develop as you need to delegate more to others. If you carry trust to an excess it becomes gullibility.

Being strong and forceful are strengths.
Carry them to an excess and you become a bully.

Being cautious is a strength. Carry it an excess and you become indecisive.

Being cooperative is a strength. Carry it to an excess and you become a pushover.

Taking risks is a strength and a necessary ingredient to being an entrepreneur. If you carry risk-taking to an excess you can become reckless.

Having ambition is a strength. In this case I’m thinking of the person with the desire and ambition to get ahead. You’ve recognized that in some people and you admire their drive. However, I have seen some people carry their ambition to an excess. They become obsessed with getting ahead and start doing some pretty dumb things which have hurt their chances. They carried their strength right into a weakness.

Again, this was presented in the context of having performance discussions with marginal people in a positive manner.

Like many of the lessons I’ve learned I have thought about them long after and have extrapolated them beyond their original context. In this case I have tried to self-assess my weaknesses to see if they are indeed strengths carried to an excess. Not surprisingly, the theory fits the case.

I feel one of my strengths is the capacity to speak out when I don’t agree with something being said. In other words, I am not a “yes-person.” I think of this as a strength which adds value to the organization.

In my later years I came to the realization that this strength was of value to me if I utilized it in moderation. If I carry my outspokenness to an excess I become argumentative. I have learned to speak out more sparingly and with more caution. I will speak out when I think something is wrong or if I think something can be done in a better way. However, I don’t play devil’s advocate as much as I used to and I’ve learned to pick my fights.

I think it is a very healthy exercise for everyone to periodically make a list of his or her strengths. You should know yourself pretty well and should be able to easily list your strengths. Which of your characteristics make you proud? What do you do well and which characteristics contribute to your doing that well?

Once you have your list spend some time thinking about what those characteristics would become if they were carried to an excess. Then ask yourself, “is there any characteristic on the list that I might be carrying to an excess? Are any of these strengths becoming weaknesses?” If there are, you need to consider what you are going to do about them.

From time to time you must ask yourself, “are my strengths under control?”

From the book “IT AIN’T OKAY TO FAIL”
By Brian Strachan

Visit http://www.brianstrachan.com for more information about “IT AIN’T OKAY TO FAIL”

posted by rizkhey wahyudi @ 8:41 PM 0 comments

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