The Benefits of Outsourcing Accounting Functions

Accounting tasks to a non-financial person can be a mammoth task. Wading through invoices, bank statements amongst others duties can be quite tasking especially for small business owners who have a lot of other things to do. Even businesses that have an in-house business team still need to manage the functions of the team to ensure they meet the business objectives at a minimal cost.

What is Outsourcing?
Prior to the 1980s, a lot of business functions were carried out in house by many organisations. Businesses will employ a temporary member of staff to carry out the duties their regular staff could not undertake. This provision obviously increases the operation costs through recruitment, training, salaries, office space and other benefits.

Outsourcing has now taken the place of temporary staff amongst other roles in many organisations. Defined as the contracting out of a business function to an independent agent or firm, outsourcing is now a popular choice for businesses who want to streamline their processes.

Many companies now outsource a lot of their business functions such as Accounting, IT, Payroll and even recruitment tasks to external agencies. Some individual agents tend to work on site whilst others outsource their work to organisations that operate in their own premises. This is common practice amongst accounting and recruitment firms.

Benefits of Outsourcing.
Outsourcing accounting functions to an external organisation has many benefits such as:

Cost reduction: The most apparent benefit of outsourcing accounting services to an accounting firm is the reduction in personnel related costs - recruitment, salaries, benefits, office space and other costs synonymous with staff. A number of businesses who outsource their business functions reported at least a 30% reduction in business costs without a decrease in productivity.

Quality of Work: Outsource companies thrive on reputation and to build their business they must offer a quality service. Businesses that outsource their accounting services benefit from a competitive market where firms must provide exceptional services to retain their clients.

Focus on core areas: Outsourcing allows a business to focus on the core business functions which can boost productivity by at least 32% according to a recent survey.

Access to innovation: To maintain a competitive edge, accounting firms endeavour to stay at the cutting edge by investing in advanced accounting systems and techniques for the benefit of their clients. Rather than invest heavily on a new accounting system and staff training, organisations now prefer to outsource these services to benefit from these new technology developments.

Pool of Expertise: Businesses tend to benefit from a pool of experts and sustainable source of professional accountants. Reputable accounting firms recruit exceptional and qualified personnel to ensure they deliver on their service contracts and retain the loyalty of their clients. Companies that outsource their accounting services benefit from such expertise without the added cost of recruiting top level staff.

Faster Turnaround: Accounting firms operate based on targets and deadlines. They know the in and out of tax deadlines and other legal requirements, so they aim to file records on time by providing a quick turnaround service to their clients.

Accounting is a vital aspect of any organisation, the outcome of accounting tasks can have a significant impact on a company's productivity and profitability. It is important that businesses retain proper balance between the core business functions and other secondary tasks.

Outsourcing is one of the most simplistic options a business can choose when the need for a quality accounting service exceeds quantity. Accounting firms have to work in line with regulatory bodies, they therefore need to maintain a high standard of service for accreditation purposes to the benefit of the client.

What is Legal Transcription?

Legal transcription has come into the public view recently being recognized for its efficient and professional influence on legal records and is steadily becoming a popular trend in the legal field. These, much like their counterparts in the medical field, listen to dictations from legal professionals and type them into documents that are edited and grammatically correct. These transcriptionists generally listen to testimonies, interrogations, court hearings, and pleadings, after which they compose what they heard into an easily understood document that will turn into record.

Legal transcriptionists generally work for larger firms or private practice attorneys who have a large number of cases. They are also widely used by large corporations, governmental departments, insurance companies, and banks that all have a need for more accurate legal records. A large number of transcriptionists work for the U.S. government attempting to establish a more organized and complete record system.

In order to be good legal transcriptionists, individuals should have a solid understanding of legal terminology. They should have impeccable grammar and a good command of the English language. After transcriptions are complete they become legal records that are extremely useful to lawyers when they are researching to win a case. Thanks to these transcriptionists, legal records are now more clearly written and thorough. The lawyers and paralegals who wrote the records before were often too busy to make sure the records were exact.

The job market is unique in that there is little competition and plenty of jobs. This fact is most likely due to the overwhelming need for accurate and more advanced legal records to help businesses keep better records and provide their clients with more protection. Other ways they are hired is by companies that choose to outsource the work for lower costs and increased quality. By outsourcing, companies will generally have a quicker turnaround rate as well because they are dividing jobs across the board rather than giving them all to one particular person. However, there has been a growing trend that has threatened the U.S. job market slightly. Many overseas companies have begun to lend their services to U.S. companies for less money and with a quicker turnaround. These companies, with the majority being found in India, have obtained many U.S. clients who choose their services for the lower costs and to get more records completed. Yet, the news is not all bad. Many other businesses look to legal transcriptionists in the U.S. because they have a better understanding of the laws and the English language, a quality that the overseas companies cannot offer.

Although no formal training is required to become a legal transcriptionist, many companies require a basic knowledge of legal terminology and excellent grammatical skills. They also tend to gravitate toward individuals who have prior experience in the medical field, writing, or an extensive knowledge of English. However, there is a new trend that is lowering the chances of less qualified individuals getting jobs. Many companies are hiring retired lawyers to join their team and write up new records. These individuals are good candidates because they know the legal lingo, the laws, and generally people in the business to help them get started. They also have the added advantage of knowing precisely what is needed in files and what is unnecessary.

Although they play a key role in the security and development of better legal records, legal transcriptionists are often underappreciated. This field has not yet gained support from governmental organizations as medical transcriptionists have, but their role as newcomers to the business is likely to blame. Despite that, they are steadily becoming permanent fixtures on law firm and government department payrolls and the need for their services will likely continue to grow even more.

Private Equity Firms Vs Venture Capital

While both venture capital and private equity firms provide cash in exchange for equity positions in companies, the main distinction is the juncture in which the investment is made. With the exception of turnaround investments, private equity firms tend to invest in more established businesses with a history of positive, and preferably reliable, cash flow whereas venture capital firms tend to invest in earlier-staged companies with a less proven market presence.

The distinction between the terms venture capital and private equity described above applies to the vernacular used in the United States. That is, in the United States, the two terms are used as if they are distinctly different types of firms investing in different stages of corporate growth. In Europe, however, the terms venture capital and private equity may be used somewhat interchangeably in that British English uses the term venture capital to describe a specific subset of the PE market. Therefore, in Europe, when someone speaks about private equity, they may in fact be referring to what someone in the United States would call a venture capital firm.

Another point of potential semantic confusion is that "private equity" is also a commonly used term for people operating the real estate investing space. While the use of the phrase within the real estate sector has the same underlying financial meaning, the firms that provide private equity in the real estate sector are usually completely different firms than those that typically invest directly in corporate entities. There are some exceptions to this, as some investment firms invest in both companies and real estate, but they tend to be very much in the minority.

While we are discussing verbiage, we should also note that the firms that make direct investments into businesses are often called by several names, all of the same meaning, including: PE firm, financial sponsor, investment firm, buyout firm or investment company. Similarly, investment banks are often structured with a Leveraged Finance Group, which is often the same as the Financial Sponsor Group, which is often part of the Capital Markets Group. These can all be a bit confusing until someone just tells you that they are multiple ways of saying the same thing.

Website Design - Ten Ways to Identify a Quality Services Firm

An effective website attracts customers to your business, generates sales leads and closes sales - multiplying your profits in the process. Professional web design firms must combine uniqueness and innovation in design with state-of the-art technology and maintenance support to create a powerful website that produces results. Before hiring a web designer, consider the following ten factors:

1. Effective Web Designers communicate well

Experienced web-designers support multiple modes of communication for interacting with their clients. These include phone, email and live chat. Depending on your requirements, you can use the communication method that suits you best.

2. Website Design Budgets Should Focus on Results

Effective web-design teams often combine the method of flat fees with hourly billing for software design and installation. It is never advisable to enter into open-ended billing relationships with Web designers until the maintenance phase of the project.

3. Smart Web Designers and Developers Make Billing Easy

An experienced web-design company usually charges twenty to fifty percent of the project fee in advance, and accepts payment through checks and major credit cards.

4. A Web Design Company Shares Its Work

Professional design companies encourage their designers to maintain portfolios representing their best work, client information and testimonials. You can request portfolios to assess the effectiveness of the company's web design solutions.

5. Flexible Website Designers Use Time Saving Technology

Quality web design teams support the use of inexpensive and time saving technology. This includes open source publishing and e-commerce tools like WordPress for handling Weblogs and corporate information pages, osCommerce for online shopping features and Zope for building customized content management and customer interaction tools. These tools enable businesses to achieve professional standards while saving time and money.

6. Efficient Web Design Professionals Blend Stock and Scratch sources

Efficient website designers always maintain a set of stock templates and images to speed up work. When designing a website for a client, they select an appropriate stock template and customize it from scratch to meet client-specific requirements and ensure uniqueness and freshness in design.

7. Intelligent Web Professionals Distinguish Design and Hosting

Many website design firms offer complementary and low cost Web-hosting solutions, usually as part of their maintenance packages. Quality firms provide excellent uptime, reliability and service. Compare the cost and benefits of an in-house hosting solution and an independent web-host before making your decision.

8. Creative Website Designers Let Clients Handle Minor Updates

Experienced Web designers develop architectures for Websites including publishing platforms that simplify the process of making changes. These plans are so effective that they allow you to make minor updates in-house or with the help of a less expensive Web professional. These web designers often save their skills for launching or re-launching websites and major revisions requiring considerable work on design, templates and graphics.

9. The Best Web Developers Understand Standards and Accessibility

The designed website should comply with both web standards like standards for interface design and browser accessibility, and state and federal guidelines such as providing accessibility features for the visually impaired and people suffering with other medical insufficiencies. Experienced Web designers should also ensure SEO optimization of your website and prevent it from become inaccessible and unusable.

10. A Good Web Design Company Gets Honest about Rates and Turnaround Time

Even the most efficient Web designers can combine only two of the three features (High quality, speed and low cost) when designing your web-site. Professional web design teams will provide you accurate estimates about their rates, speed and turnaround time. Firms that are more expensive often have smaller waiting lists. If sufficient time is available, you can get a high quality website at a lower cost. Select a Web design firm that meets your requirements.

Focusing on Results sets Premier Website Design Professionals Apart

Effective Web designers comply with all of the above-mentioned practices. More importantly, they make clients feel comfortable about wading into unfamiliar waters. The right Web design firm can enable your business to save thousands of dollars and valuable time.

The Benefits of Outsourcing Accounting Functions

Accounting tasks to a non-financial person can be a mammoth task. Wading through invoices, bank statements amongst others duties can be quite tasking especially for small business owners who have a lot of other things to do. Even businesses that have an in-house business team still need to manage the functions of the team to ensure they meet the business objectives at a minimal cost.

What is Outsourcing?
Prior to the 1980s, a lot of business functions were carried out in house by many organisations. Businesses will employ a temporary member of staff to carry out the duties their regular staff could not undertake. This provision obviously increases the operation costs through recruitment, training, salaries, office space and other benefits.

Outsourcing has now taken the place of temporary staff amongst other roles in many organisations. Defined as the contracting out of a business function to an independent agent or firm, outsourcing is now a popular choice for businesses who want to streamline their processes.

Many companies now outsource a lot of their business functions such as Accounting, IT, Payroll and even recruitment tasks to external agencies. Some individual agents tend to work on site whilst others outsource their work to organisations that operate in their own premises. This is common practice amongst accounting and recruitment firms.

Benefits of Outsourcing.
Outsourcing accounting functions to an external organisation has many benefits such as:

Cost reduction: The most apparent benefit of outsourcing accounting services to an accounting firm is the reduction in personnel related costs - recruitment, salaries, benefits, office space and other costs synonymous with staff. A number of businesses who outsource their business functions reported at least a 30% reduction in business costs without a decrease in productivity.

Quality of Work: Outsource companies thrive on reputation and to build their business they must offer a quality service. Businesses that outsource their accounting services benefit from a competitive market where firms must provide exceptional services to retain their clients.

Focus on core areas: Outsourcing allows a business to focus on the core business functions which can boost productivity by at least 32% according to a recent survey.

Access to innovation: To maintain a competitive edge, accounting firms endeavour to stay at the cutting edge by investing in advanced accounting systems and techniques for the benefit of their clients. Rather than invest heavily on a new accounting system and staff training, organisations now prefer to outsource these services to benefit from these new technology developments.

Pool of Expertise: Businesses tend to benefit from a pool of experts and sustainable source of professional accountants. Reputable accounting firms recruit exceptional and qualified personnel to ensure they deliver on their service contracts and retain the loyalty of their clients. Companies that outsource their accounting services benefit from such expertise without the added cost of recruiting top level staff.

Faster Turnaround: Accounting firms operate based on targets and deadlines. They know the in and out of tax deadlines and other legal requirements, so they aim to file records on time by providing a quick turnaround service to their clients.

Accounting is a vital aspect of any organisation, the outcome of accounting tasks can have a significant impact on a company's productivity and profitability. It is important that businesses retain proper balance between the core business functions and other secondary tasks.

Outsourcing is one of the most simplistic options a business can choose when the need for a quality accounting service exceeds quantity. Accounting firms have to work in line with regulatory bodies, they therefore need to maintain a high standard of service for accreditation purposes to the benefit of the client.

How Can an Asset Based Line of Credit Help Your Company Implement a Turnaround Strategy

An asset based line of credit is an excellent strategy for any firm who is considering viable turnaround options. This finance strategy is also an excellent way to assist a firm in understand what some of its underlying problems are.

An Asset based line of credit, commonly referred to as an 'ABL' arrangement can be instituted even if the company is not profitable or in fact is experiencing financial duress.

Prior to considering an ABL many firms will find they are experiencing sever cash flow pressures. Traditional working capital is shrinking, and sometimes external factors to the business simply exacerbate the financial challenge. If the business owner or financial executive do not take charge at this point a business failure in fact is likely.

Many firms gravitate towards an ABL arrangement after their bank operating line of credit. Most business owners quickly realize both the benefits and the risk of having significant bank lines in place. Traditionally these lines of credit are secured by receivables and inventory. Businesses are told they can borrow up to a certain limit based on these facilities. Every month the company submits detailed lists of a/r and inventory and can borrow certain pre agreed upon limits against those assets.

Banks typically advance 75% of those receivables that are under 90 days. In asset based lines of credit facilities that amount is often 90- 100% of receivables, creating immediate additional liquidity.

Banks have become much more cautious on inventory, that is simply because they don't, and cant be expected, to understand each firms inventory values and products. Asset based lenders tend to have much more experience in these matters and are more often than not inventory experts. Therefore advances against inventory are much higher. Again, what does that do, well it of course creates additional liquidity.

Many, if not most, oh, lets be honest, all banks set maximum borrowing limits that are dependant on other external factors such as other collateral they hold, perceived operating risk, and the value of personal guarantees of the shareholders.

Bank operating lines are best when a firm is experience steady, but not erratic growth, and when the firm can operate comfortably within its borrowing limits as agreed upon with the bank.

When firms run into financial challenges they of course have a business that is contracting in many ways. Therefore borrowing against receivables and inventory becomes limited, and the bills that need to be paid are of course paid with less cash available and on hand.

It is at this point that many businesses realize they are starting to default on bank covenants. In many cases, for a variety of reasons, sales are falling.

It is very difficult for a business owner to both realize what is happening, and, moreso of a challenge, correct the problem. Financial losses only augment the cash flow problem. Many companies in fact aren't trouble by operating losses, but have simply over expanded. Business owners get into the mindset that if they are expanding, there can't be a problem! Most financial executives know that a company can fail not for lack of profit, but from lack of liquidity.

The time to consider an asset based line of credit is probably right now. The customers bank either has, or is reviewing its options relative to collateral and security arrangements. The bank will start to take measure to ensure it gets paid in full - this typically includes reducing operating lines of credit, formally calling a loan and setting new deadlines for the customer to 'right' the business, or exit the bank relationship.

It is at this time the customer should be focusing on alternative lending sources such as the asset based line of credit with non-bank finance firms. This facility improves liquidity, places less reliance on external guarantees and collateral, and can operate with a firm that is getting back on its track to profitability. We hasten to add that a severe financial 'death spiral' cannot be properly address by either the bank or the asset based line of credit solution.

The business owner and manager must recognize the current financial situation, and address that situation in as prompt and efficient manner as possible.

Content Writing Services by Professional Firms - Are They Worth It?

Content forms the backbone of your online marketing strategy. Because after all, words is all you have to attract visitors to your site. A we ll written copy for marketing purposes or for your website or blog or for any other reason could make the difference between the hits and the misses on your online business. And therefore, it is imperative to write content that is not only interesting to read but also keyword rich at the same time for search engine optimisation purposes.

However, that is not an easy balance to maintain. It takes a lot of skill to write a copy that is search engine optimised and a compelling read at the same time. And it is this fact which has prompted the rise of professionals offering their content writing services at a cost. In fact, it has spurned a new industry of sorts catering to the content needs of the online world.

But the questions is- whether content writing services offered by professional firms really worth it? Is it a good ides to pay these companies a substantial cost just to get excellent content? After all, there are a whole lot of freelancers out there who offer their services at a fraction of the cost asked by professional firms. And moreover, can't the skill of online content writing be acquired with constant practice and experience?

Well, if you ask for the profitability factor of hiring professional firms offering content writing services, the profit is surely there. When you hire a quality content writing firm, you go beyond just keyword rich content. The content delivered by professional companies actually transforms into an excellent sales copy apart from being keyword rich. So if you look at the bigger picture, you actually end up saving because you fulfill two purposes at the cost of just one.

Of course freelancer content writers do the job for a lot less but the main issue which I have come across with freelancers is that the content written by them is usually very repetitive. Because of its repetitive nature, the article of the website copy actually does not serve its purpose of actually binding the reader with its content so that he/she develops the curiosity of knowing more about your services or product. And therefore, even though the cost is less, it actually all goes waste because your purpose is not fulfilled.

Hence, the answer to the question I asked at the start of the article is yes, content writing services bt professional firms are actually worth it, provided you choose judiciously. You need to hire a quality firm which actually has the knowledge and the expertise of writing for the online medium. Talking of companies offering excellent content writing services, a couple of names instantly spring to my mind.

The Debt Workout - How to Avoid Bankruptcy and Stay in Business

What's your worst nightmare as a creditor? How about getting a legal notice out of the blue, announcing the bankruptcy of your biggest customer and debtor? Or getting a written demand for the return of a "preferential payment" that you had received from your now-bankrupt customer.

You are unlikely to be aware of an impending bankruptcy, or be given the courtesy ahead of time to speak with the debtor firm, which received your precious goods or services on credit. As a result, you are unable to suggest alternative approaches to help and to minimize the damage to your own business. An insolvent company can stay under your radar while still ordering supplies, before all hell breaks loose and it finally disappears from view, taking your firm's capital with it.

When small corporations feel they have run out of options, they tend to close their doors or file for Chapter 7 bankruptcy liquidation. The costs of the alternative, Chapter 11 court-appointed workout, would protect from creditors in the meantime and keep the business operating. But it involves an up-front payment of perhaps fifty thousand dollars or more. Business people who have hung on too long often complain that they can't come up with the cash. Besides, the vast majority of small firms that file Chapter 11 quickly realize that they have to liquidate and close down. And it is rare, indeed, for unsecured creditors to get anything of substance from this.

If your firm is struggling to stay in business, put yourself in the position of your creditors. Don't become their worst nightmare. It can make much more sense to speak plainly and honestly with them, in a structured process outside of bankruptcy known as a workout.

The basic format can be looked at as an "unofficial" Chapter 11 workout. In our experience, many firms in serious financial trouble want the situation turned around, or "worked out", to permit them to stay in business, as would Chapter 11. Your workout process must then be tailored to resolve disputes, delay and reduce payment commitments, and maintain a good working relationships between the different parties.

The bankruptcy process is cold and methodical, as proscribed by law. There is no need for pleasantries. A voluntary workout is different. Goodwill is important. It emphasizes courtesy and good communications in an environment designed to voluntarily reconcile the needs of creditors with those of your firm. You will need to share appropriate financial information to let others make an enlightened decision. Creditors normally want to see a snapshot of assets and liabilities, and particulars of what is planned, in order for your firm to stay in business and be retained as a paying customer.

The exercise starts with a debt management plan, which is your company's road map through the process. This identifies the type and urgency of each liability, these being characterized as secured or unsecured and corporate or personal. It is important to identify those contractual obligations, such as building or equipment leases, which would permit the lessor to close you down at short notice. And you have to highlight any judgments and suits in progress.

The workout generally starts by proposing restructured agreements to secured asset holders, to ease monthly cash flow commitments. Once this is done, you will have a better estimate of net cash flow in succeeding months with which to address unsecured payables.

A workout gives creditors the opportunity to make the settlement decisions your firm needs, in their own enlightened best interests. It can be shown that they will do better to accept the proposed debt settlements, and retain your firm as a customer, than to take legal action and possibly force your company out of business. Creditors may be invited to an informal meeting, but this is not often necessary or convenient. Communication by teleconference, fax and e-mail will normally suffice.

From your firm's perspective, a workout provides a number of advantages over Chapter 11. It holds the promise of a substantially reduced and restructured debt load within a much shorter period than bankruptcy protection. Proceedings are private and away from the public scrutiny of the bankruptcy court, which could ruin customer confidence and ultimate profitability. There is no huge up-front payment, as much of the work can be completed on a contingency basis. A mountain of time-consuming and onerous bankruptcy paperwork is avoided and there is no trustee to look over your shoulder, searching for process illegalities.

From your creditors' perspective, the workout holds the prospect of a higher, faster return than in Chapter 11, and certainly more than if your firm goes under. It takes weeks, not months or years. A well-executed process ensures that there is no preferential treatment. Unsecured creditors are offered similar pro rata settlements. The process incorporates clear communication and attention to detail, so few problems can be expected to emerge. Creditors come to understand that their losses can be minimized and that there is nothing to gain by pushing the company into bankruptcy and closing it down.

A workout in itself will not ensure your future success. But it provides breathing space to analyze what went wrong and establish how to return to solvency. If nothing else, you get the opportunity to stay alive. Considering the alternative, what could be better than that?

9 Business Turnaround Strategies For the Small Business Owner

Many times when businesses fail, they go out not with a bang, but a whimper. They die a slow death. Many small business owners feel the overwhelm of shrinking revenues and the enveloping advance of competitors, but still refrain from making any dramatic changes until it is too late to achieve a business turnaround.

Whether you run a small manufacturing company, professional service firm, or a local retail establishment, there are at least 9 business turnaround strategies you can implement to achieve a successful reversal of your business fortunes.

1. Institute regular strategy sessions

The first time you notice your profit margins shrinking and your clients leaving you for your competitors should be a time when you consider reinventing who your company serves, what it does and how it delivers value.

2. Business model innovation

While this may be obvious for manufacturers, even very small local businesses face strategic business risk from large scale movements and trends taking place outside their industry, or among their customers, or within society as a whole. Business model innovation means that you consider changing who you serve, your position in the value chain, your differentiating value proposition, or all three (among other factors).

3. Invest heavily in customer communication

I am always shocked by just how rarely the average small business communicates with its customer base. So many entrepreneurs and CEOs simply assume that the customers "Do not want to hear from us that much". My retort to that is always, "How do you know?"

One of the most dangerous habits you can pick up as a business owner is that of turning assumptions into facts without investigation or experimentation. I have seen this one habit kill more businesses than any external conditions or competitors.

Your customers hold the most valuable business intelligence money can buy. Aggressively seeking their feedback and opinions should be your first point of attack as soon as you suspect any structural weakness in your business or your business model.

4. Conduct an audit of marketing assets

Many of the supposed weaknesses and expenses of a business just might be marketing assets hidden in plain sight. For example, a list of former customers who have not bought a thing in the last two years could easily be reactivated with a targeted and honest direct mail campaign. Instead, I often see business owners whose attitude to past clients is, "You are dead to me".

5. Establish a strategic alliance

The ideal strategic alliance partner has a business whose product or services complement your own. One of the fastest and most effective business turnaround strategies is to "force feed" your lead generation system with a series of strategic alliances. Such strategic alliances allow you to gain endorsed referrals to targeted prospects and to gain additional revenues without increasing your overhead or burdening your operational model.

6. Create a new profit center

One of the difficulties many small businesses (particularly local retail or service establishments) face is the inability to scale. For example, an assisted living facility that has only 10 beds is somewhat limited in how it can increase it revenues if all ten beds are filled and it still has financial difficulties. However, there is often expertise that can be packaged into consulting opportunities, or licensed to other establishments.

One of the simplest ways to turn product or service-based expertise into an additional income stream is through the creation of a closely related information-based business or profit center that piggy backs on the intellectual capital locked up in the business. Such profit centers usually have much higher margins and lower operational overhead than your existing business.

7. Innovate your pricing

Changing how you price your product is often a great way to build new momentum in your business. The history of IBM shows that one of the key changes made by Thomas J. Watson when he became general manager of CTR (the struggling company that would later be renamed IBM) was to convert the pricing scheme of their early machines from expensive outright purchases into more affordable long-term leases and maintenance plans.

Simple price innovations such as offering 3 tiers of price packages rather than a "take it or leave it" price, often results in greater sales conversions for many firms.

8. Factoring and asset-based financing

Sometimes, the unavoidable challenge in achieving a business turnaround is in getting better cash flow out of the assets in the business. Factoring is a type of financial transaction in which a business receives a lump sum for selling its accounts receivable to a third party.

Factoring is just one of many asset-based financing strategies that could fuel a positive reversal of fortunes in a troubled small business. Another option is to receive structured working capital by obtaining loans secured by other business assets such as inventory, machinery, and real estate.

9. Develop a unique selling proposition

Many small businesses get by for a long time on their tactical marketing efforts and only begin to appreciate the seriousness of true business differentiation when such marketing efforts begin to lose steam. A unique selling proposition or USP may be the single most powerful weapon for small business marketing success.

Having a clear reason why your marketplace should do business with you instead of your competitors or substitutes instantly makes all your advertising and marketing efforts more effective. It also gives every customer and referral partner a very powerful referral script on your behalf. If your small business is already engaged in a heavy amount of marketing and advertising, developing an effective unique selling proposition may be the most potent weapon you have for turning your business around.

You do not have to implement all 9 business turnaround strategies immediately. Pick one that seems most appropriate for relieving your profitability and performance bottlenecks, and then get to work. Over time, if you test and implement these strategies, you will find your business on the path to explosive long-term profit and revenue growth.

Six Sigma For Insurance Firms

In effect, we can say that Six Sigma is applicable in any organization, irrespective of the actual number of processes that might be there in the organization.

To understand how Six Sigma is helping insurance firms, it is essential to talk about some of the main processes where Six Sigma has been successfully deployed.

Policy Conversion Process

The main worry for most insurance firms is usually policy conversion turnaround time, which determines how well the firm is able to market and sell its policies. Since turnaround time reflects the overall time it takes for a proposal to get converted into a policy, it becomes necessary for insurance companies to undertake initiatives that will help in reducing the existing turnaround time. This is exactly where many insurance firms have felt the need to deploy highly effective process improvement methodologies such as Six Sigma.

It makes sense to deploy Six Sigma, because reducing the turnaround time depends a lot on satisfying customer needs and expectations, a tough task that can only be accomplished with Six Sigma. What Six Sigma does is that it utilizes time-tested tools such as VOC (Voice of the Customer), which go a long way in satisfying customer needs and expectations.

By using VOC, insurance firms are able to assess the exact needs and requirements of their customers, which in turn allows them to make the necessary changes in their service offerings, i.e. insurance proposals. This automatically results in increased customer interest and consequently increased policy turnaround time, often the main objective of insurance companies.

The Claims Settlement Process

This is another area where insurance firms need to be extra cautious - because inability to process claims in a timely manner can easily tarnish the brand image and reputation of the concerned insurance firm. By communicating the lack of efficient services to their family, friends and associates, even a single unsatisfied customer can seriously affect the firm's future business prospects, something that makes it all the more important for insurance firms to deploy Six Sigma.

Six Sigma helps because it enables insurance firms to streamline their claims settlement process that normally comprises of various other sub-processes, often leading to complexities and time delays. Off late, Six Sigma has started utilizing automated tools and techniques that have enabled insurance firms to make even more improvements in their existing claims settlement process.

For the best results, insurance firms need to deploy Six Sigma right from the time when a new policy is being designed and developed. Ongoing deployments are no doubt possible as is evident from changes made in existing policies, but since not much can be said about the effectiveness of such deployments and since there is plenty at stake, it makes sense to implement Six Sigma right from the beginning. It is only then will the concerned insurance firm be in a better position to ensure the success of its insurance policy proposals.

Business Turnaround - Maintain a Strong Relationship With Your Creditors

A strong business turnaround requires creating a plan your creditors will use; then, you must prioritize whose debts you will pay. It is your responsibility to apprise your creditors of your business turnaround plan and company forecasts so they can extend loans, grant more, or even forfeit some of the debts.

Be Forthcoming with Creditors
The goal of creditors is simply to make back their investments in some form, and they understand that this objective may not be reached should you be overly burdened with their debts. If you provide current updates on your business turnaround plan and methods for turning your company around, then they will be more apt to help you on your way or at least alleviate some of your burdens. Business turnaround plans often depend on creditor concessions.

For your business to become profitable, your creditors may have to make certain concessions and financial sacrifices or else their investment may go sour. However, you must look at the situation from their perspective. If they don't receive any information about your company's financial well being, forecasts and benefits of turnaround plans, then they may not put their full trust in you and they may refuse these concessions. That is why an open and honest relationship with your creditors is so key, which your business turnaround plan should note.

Show your books. Prove how extending certain loans or forgoing some debts will result in their receiving back their investment. Keep them regularly updated. Make your own concessions in order to appease your creditors. A business turnaround depends on this open and trusting relationship - it is very unlikely that you will achieve financial success otherwise.

Prioritize your Creditors
That is not to say that all creditors are the same. The reality of business turnaround plans is that you will have to prioritize your creditors and sort out which ones are important to your business. If they don't like your business turnaround plan, then everyone loses; thus, your business turnaround plan will require that you choose which creditors get paid and which will not.

You must separate creditors into two groups, the former of which include individuals and companies integral to your business. Those are the people you need to impress, to share your plan with, and to have an honest relationship. You should personally meet with these specific creditors and sell them your business turnaround plan. Be honest and show them how they will be repaid.

The people and firms in the second group, however, are simply not a priority and you should make every attempt to get out of those debts - hiring a debt negotiator is a common practice for such situations. It is very important that you separate these firms and people into the two groups, and you must act carefully. Before you potentially end a relationship with a creditor whose business isn't essential and thus whose loan isn't a priority, you must be absolutely sure that you can negotiate a good settlement.

Keep the Goal in Mind
The goal is redeveloping your business so your company becomes profitable again. Additionally, most firms price in the chance of their debts being vitiated; in other words, this is a practice that companies understand, expect, and factor in with their prices.

Turnaround Equity Investors

Investors in turnaround equity have to both understand this area and its risks and limitations, and be prepared to move swiftly enough to make a deal work. This article covers what distressed equity investors exist in the UK and how to obtain turnaround investment.

With turnaround as with any other type of equity, potential investors can be divided into a number of categories:

Business Angels

Business angels are individual investors (think Dragons Den) who have their own funds to invest in business proposals. In practice since business angels are investing their personal funds and the decsion is solely theirs, getting all the way through to completion with an angel is a notoriously uncertain process.

While individual angels obviously vary enormously in their interests, ability to provide funding, appetite for risk, sector interests and so on, as some rules of thumb business angels are the usual source of equity funding for requirements up to say £250,000 or even £500,000.

Since it is their own money, angels will usually want to have a fairly active involvement in the business and its affairs and this is even more so where the case is some form of a turnaround situation. You need to think of a business angel as being as much a new partner in the business as a source of finance. So you have to ask yourself, is this a partner I will want to, or even be able to, work with in the long term.

Trade Investors

They are often overlooked but other businesses in your industry, sector, or sometimes even supply chain, may have both money and an appetite for investing in your situation. Indeed while debt for equity swaps between customers and their suppliers are not exactly common, we are seeing more of them that we used to in business restructurings.

As with business angels, a trade investor may not be an investment professional, which is to say that making investments is not their core activity. So getting a deal all the way through to completion may be tricky.

You will also need to carefully consider the commercial implications of any such investment and in particular, how this may affect your ability to trade with other parties, whether suppliers or customers, who are in competition with your new investor.

Venture Capitalists / Private Equity

Sources of institutional investment into businesses in the UK have generally been referred to as venture capital while in the US the term venture capital tends to be used to refer to firms that provide funding for start ups and early stage businesses (think Silicone Valley), whilst private equity is used to describe the firms providing funding for large leveraged buyouts (think RJB Nabisco and Barbarians at the Gates).

While there is no firm distinction, it can be useful to categorise venture capitalist in to either:

financial investors, where they are essentially simply providing the finance for the business and its management team or

Owners who will seek to be actively involved in the management of the business, usually by proxy in the form of controlling the appointment of the business's directors (who will usually have options or some other arrangement giving them an incentive to drive up the capital value of the company). In some cases these VC firms are beginning to look a bit more like small industrial conglomerates than finance firms.

Unsurprisingly, VCs interested in turnaround situations will tend towards the ownership model and will normally want to involve experienced professionals to manage the turnaround.

Private venture capital firms tend to be interested in larger transactions than business angels and some cases can fall into the 'equity gap', being too large for business angels, but too small for VC houses.

In some regions, much apparent venture capital, particularly at the smaller end, is in practice quasi public development funding which has been outsourced to VC houses to manage. Specialist consultants exist who can conduct searches to identify these sources of funding.

As professional investors, while the screening and negotiation process will be rigorous, such funders are set up to put money out to work so providing a deal makes sense, there is less danger of it falling away before completion for unforeseen or emotional reasons than with individual investors.

The Benefits of Outsourcing Accounting Functions

Accounting tasks to a non-financial person can be a mammoth task. Wading through invoices, bank statements amongst others duties can be quite tasking especially for small business owners who have a lot of other things to do. Even businesses that have an in-house business team still need to manage the functions of the team to ensure they meet the business objectives at a minimal cost.

What is Outsourcing?

Prior to the 1980s, a lot of business functions were carried out in house by many organisations. Businesses will employ a temporary member of staff to carry out the duties their regular staff could not undertake. This provision obviously increases the operation costs through recruitment, training, salaries, office space and other benefits.

Outsourcing has now taken the place of temporary staff amongst other roles in many organisations. Defined as the contracting out of a business function to an independent agent or firm, outsourcing is now a popular choice for businesses who want to streamline their processes.

Many companies now outsource a lot of their business functions such as Accounting, IT, Payroll and even recruitment tasks to external agencies. Some individual agents tend to work on site whilst others outsource their work to organisations that operate in their own premises. This is common practice amongst accounting and recruitment firms.

Benefits of Outsourcing.

Outsourcing accounting functions to an external organisation has many benefits such as:
Cost reduction: The most apparent benefit of outsourcing accounting services to an accounting firm is the reduction in personnel related costs - recruitment, salaries, benefits, office space and other costs synonymous with staff. A number of businesses who outsource their business functions reported at least a 30% reduction in business costs without a decrease in productivity.

Quality of Work: Outsource companies thrive on reputation and to build their business they must offer a quality service. Businesses that outsource their accounting services benefit from a competitive market where firms must provide exceptional services to retain their clients.

Focus on core areas: Outsourcing allows a business to focus on the core business functions which can boost productivity by at least 32% according to a recent survey.

Access to innovation: To maintain a competitive edge, accounting firms endeavour to stay at the cutting edge by investing in advanced accounting systems and techniques for the benefit of their clients. Rather than invest heavily on a new accounting system and staff training, organisations now prefer to outsource these services to benefit from these new technology developments.

Pool of Expertise: Businesses tend to benefit from a pool of experts and sustainable source of professional accountants. Reputable accounting firms recruit exceptional and qualified personnel to ensure they deliver on their service contracts and retain the loyalty of their clients. Companies that outsource their accounting services benefit from such expertise without the added cost of recruiting top level staff.

Faster Turnaround: Accounting firms operate based on targets and deadlines. They know the in and out of tax deadlines and other legal requirements, so they aim to file records on time by providing a quick turnaround service to their clients.

Accounting is a vital aspect of any organisation, the outcome of accounting tasks can have a significant impact on a company's productivity and profitability. It is important that businesses retain proper balance between the core business functions and other secondary tasks.

Outsourcing is one of the most simplistic options a business can choose when the need for a quality accounting service exceeds quantity. Accounting firms have to work in line with regulatory bodies, they therefore need to maintain a high standard of service for accreditation purposes to the benefit of the client.

The Debt Workout - How to Avoid Bankruptcy and Stay in Business

What's your worst nightmare as a creditor? How about getting a legal notice out of the blue, announcing the bankruptcy of your biggest customer and debtor? Or getting a written demand for the return of a "preferential payment" that you had received from your now-bankrupt customer.

You are unlikely to be aware of an impending bankruptcy, or be given the courtesy ahead of time to speak with the debtor firm, which received your precious goods or services on credit. As a result, you are unable to suggest alternative approaches to help and to minimize the damage to your own business. An insolvent company can stay under your radar while still ordering supplies, before all hell breaks loose and it finally disappears from view, taking your firm's capital with it.

When small corporations feel they have run out of options, they tend to close their doors or file for Chapter 7 bankruptcy liquidation. The costs of the alternative, Chapter 11 court-appointed workout, would protect from creditors in the meantime and keep the business operating. But it involves an up-front payment of perhaps fifty thousand dollars or more. Business people who have hung on too long often complain that they can't come up with the cash. Besides, the vast majority of small firms that file Chapter 11 quickly realize that they have to liquidate and close down. And it is rare, indeed, for unsecured creditors to get anything of substance from this.

If your firm is struggling to stay in business, put yourself in the position of your creditors. Don't become their worst nightmare. It can make much more sense to speak plainly and honestly with them, in a structured process outside of bankruptcy known as a workout.

The basic format can be looked at as an "unofficial" Chapter 11 workout. In our experience, many firms in serious financial trouble want the situation turned around, or "worked out", to permit them to stay in business, as would Chapter 11. Your workout process must then be tailored to resolve disputes, delay and reduce payment commitments, and maintain a good working relationships between the different parties.

The bankruptcy process is cold and methodical, as proscribed by law. There is no need for pleasantries. A voluntary workout is different. Goodwill is important. It emphasizes courtesy and good communications in an environment designed to voluntarily reconcile the needs of creditors with those of your firm. You will need to share appropriate financial information to let others make an enlightened decision. Creditors normally want to see a snapshot of assets and liabilities, and particulars of what is planned, in order for your firm to stay in business and be retained as a paying customer.

The exercise starts with a debt management plan, which is your company's road map through the process. This identifies the type and urgency of each liability, these being characterized as secured or unsecured and corporate or personal. It is important to identify those contractual obligations, such as building or equipment leases, which would permit the lessor to close you down at short notice. And you have to highlight any judgments and suits in progress.

The workout generally starts by proposing restructured agreements to secured asset holders, to ease monthly cash flow commitments. Once this is done, you will have a better estimate of net cash flow in succeeding months with which to address unsecured payables.

A workout gives creditors the opportunity to make the settlement decisions your firm needs, in their own enlightened best interests. It can be shown that they will do better to accept the proposed debt settlements, and retain your firm as a customer, than to take legal action and possibly force your company out of business. Creditors may be invited to an informal meeting, but this is not often necessary or convenient. Communication by teleconference, fax and e-mail will normally suffice.

From your firm's perspective, a workout provides a number of advantages over Chapter 11. It holds the promise of a substantially reduced and restructured debt load within a much shorter period than bankruptcy protection. Proceedings are private and away from the public scrutiny of the bankruptcy court, which could ruin customer confidence and ultimate profitability. There is no huge up-front payment, as much of the work can be completed on a contingency basis. A mountain of time-consuming and onerous bankruptcy paperwork is avoided and there is no trustee to look over your shoulder, searching for process illegalities.

From your creditors' perspective, the workout holds the prospect of a higher, faster return than in Chapter 11, and certainly more than if your firm goes under. It takes weeks, not months or years. A well-executed process ensures that there is no preferential treatment. Unsecured creditors are offered similar pro rata settlements. The process incorporates clear communication and attention to detail, so few problems can be expected to emerge. Creditors come to understand that their losses can be minimized and that there is nothing to gain by pushing the company into bankruptcy and closing it down.

A workout in itself will not ensure your future success. But it provides breathing space to analyze what went wrong and establish how to return to solvency. If nothing else, you get the opportunity to stay alive. Considering the alternative, what could be better than that?

How Can an Asset Based Line of Credit Help Your Company Implement a Turnaround Strategy

An asset based line of credit is an excellent strategy for any firm who is considering viable turnaround options. This finance strategy is also an excellent way to assist a firm in understand what some of its underlying problems are.

An Asset based line of credit, commonly referred to as an 'ABL' arrangement can be instituted even if the company is not profitable or in fact is experiencing financial duress.

Prior to considering an ABL many firms will find they are experiencing sever cash flow pressures. Traditional working capital is shrinking, and sometimes external factors to the business simply exacerbate the financial challenge. If the business owner or financial executive do not take charge at this point a business failure in fact is likely.

Many firms gravitate towards an ABL arrangement after their bank operating line of credit. Most business owners quickly realize both the benefits and the risk of having significant bank lines in place. Traditionally these lines of credit are secured by receivables and inventory. Businesses are told they can borrow up to a certain limit based on these facilities. Every month the company submits detailed lists of a/r and inventory and can borrow certain pre agreed upon limits against those assets.

Banks typically advance 75% of those receivables that are under 90 days. In asset based lines of credit facilities that amount is often 90- 100% of receivables, creating immediate additional liquidity.

Banks have become much more cautious on inventory, that is simply because they don't, and cant be expected, to understand each firms inventory values and products. Asset based lenders tend to have much more experience in these matters and are more often than not inventory experts. Therefore advances against inventory are much higher. Again, what does that do, well it of course creates additional liquidity.

Many, if not most, oh, lets be honest, all banks set maximum borrowing limits that are dependant on other external factors such as other collateral they hold, perceived operating risk, and the value of personal guarantees of the shareholders.

Bank operating lines are best when a firm is experience steady, but not erratic growth, and when the firm can operate comfortably within its borrowing limits as agreed upon with the bank.

When firms run into financial challenges they of course have a business that is contracting in many ways. Therefore borrowing against receivables and inventory becomes limited, and the bills that need to be paid are of course paid with less cash available and on hand.

It is at this point that many businesses realize they are starting to default on bank covenants. In many cases, for a variety of reasons, sales are falling.

It is very difficult for a business owner to both realize what is happening, and, moreso of a challenge, correct the problem. Financial losses only augment the cash flow problem. Many companies in fact aren't trouble by operating losses, but have simply over expanded. Business owners get into the mindset that if they are expanding, there can't be a problem! Most financial executives know that a company can fail not for lack of profit, but from lack of liquidity.

The time to consider an asset based line of credit is probably right now. The customers bank either has, or is reviewing its options relative to collateral and security arrangements. The bank will start to take measure to ensure it gets paid in full - this typically includes reducing operating lines of credit, formally calling a loan and setting new deadlines for the customer to 'right' the business, or exit the bank relationship.

It is at this time the customer should be focusing on alternative lending sources such as the asset based line of credit with non-bank finance firms. This facility improves liquidity, places less reliance on external guarantees and collateral, and can operate with a firm that is getting back on its track to profitability. We hasten to add that a severe financial 'death spiral' cannot be properly address by either the bank or the asset based line of credit solution.

The business owner and manager must recognize the current financial situation, and address that situation in as prompt and efficient manner as possible.