Category: Blog

Why you should automate your accounts payables

automate your accounts payablesAccounts payable (AP) is a crucial function to any business, as errors in the process put a company in problems. Although many businesses still use manual methods as they find the system to work fine, it requires a lot of precision from the accounts payable team. There are better – and more efficient – ways to manage AP through automation.

Challenges of the Process 

An AP team is responsible for receiving invoices, reviewing invoices, approving invoices, and paying suppliers and vendors. Some AP departments also handle other functions, depending on the nature of the business. However, AP can be a time-consuming, strenuous and paper-intensive process.

An AP team helps a business control costs, maintain a good supplier relationship and analyze spending. Various challenges might indicate that your business is using outdated practices. Such challenges might include:

  • Dealing with double payments
  • Difficulties in tracking invoices, especially when your business has many transactions
  • Forgotten payments
  • Fraud
  • Disappearing invoices
  • Missing purchase orders
  • Poor business reputation as suppliers lose trust in your business
  • Negative cash flow
  • Too much paperwork taking up employees’ time to sort and organize
  • Skipped processes
  • Manual processes that result in errors and delays

These challenges not only affect your business negatively, but they also affect your supplier’s business. Consider that late payments cost small businesses $3 trillion per year, which means your late payments create a domino effect. Your business will also be subjected to late payment fines.

To avoid the challenges mentioned above, you should automate the accounts payable process.

Accounts Payable Automation 

Automation removes slow and repetitive manual tasks and lets you digitally submit and approve purchase orders and invoices.

However, when making any investment, businesses are more concerned about the return on investment (RIO). Rest assured that through automation, you can achieve ROI through reduced employment costs, fewer late fees, savings on invoice processing costs, and reduced losses caused by errors, among other non-financial benefits.

Following are the benefits achieved by streamlining the accounts payable workflow through automation:

  1. Get a more accurate picture of your finances – using automation software gives you access to reporting capability that makes it is easy to get a quick overview of business spending.
  2. Have a better command over cash flow – manage cash better with the help of reports that can be created and reviewed in real-time, which improves AP team visibility and forecasting. Automation will help in invoice prioritization as well.
  3. Improve user productivity – employees do not have to waste time sorting documents. With the data centrally stored, employees only need to run a query to find the necessary invoice or purchase order.
  4. Enable remote work – using cloud-based software makes remote access possible and enables approvals to be done remotely.
  5. Auditing is easy – all data is stored in a central database and can be easily accessed.
  6. Cost-effective – it enables timely payments and helps avoid unnecessary penalties and interest fees.
  7. Reduce overhead staff costs – automation will help reduce the accounts payable team, with no need to hire more staff even when a business grows.
  8. Dashboard and analytics tools – allow access to separate dashboards for the team and approvers, each using individual login credentials. At the same time, analytics gives a quick overview of the whole process.
  9. No manual data entry – scan documents to capture data and avoid manual data entry.
  10. Standardized accounts payable workflow – ensures consistency even if your business has different teams responsible for handling the invoicing data.
  11. Payment reminders – set your system to have reminders when pay dates are near. This will help avoid late or forgotten payments.
  12. Qualify for discounts – with a smooth workflow, the accounts payable cycle will require less time, and you may qualify for discounts from suppliers for early payments.

Conclusion 

A disorganized accounts payable process can run your business down. Choosing the right AP automation software will help improve accuracy, efficiency, quality and speed for your business accounts payable function. Your business also will have a balance between a healthy cash flow and, at the same time, maintaining a good supplier relationship.

Increasing the Debt Limit, Extending Government Funding, and Protecting Vets, Veteran Moms and the Capitol Police

Increasing the Debt Limit, Extending Government Funding, and Protecting Vets, Veteran Moms and the Capitol PoliceIncrease of Public Debt Limit(S 1301) – This bill was enacted on Oct. 14 in order to increase the public debt limit. The debt was increased by $480 billion, the amount projected by the Treasury Department to be needed through early December in order to avoid surpassing the public debt limit. Had this stopgap legislation not been passed, it would have created the potential for a severe economic crisis in which the government would have run out of money to pay back existing debts, government salaries and other pre-existing obligations. The bill was initially introduced by Sen. Sherrod Brown (D-OH) on April 22; it passed in the House on Sept. 29 and in the Senate on Oct. 7. It was signed into law on Oct. 14.

Extending Government Funding and Delivering Emergency Assistance Act (HR 5305) – The bill was both introduced by Rep. Rosa DeLauro (D-CT) and passed in the House on Sept. 21; then passed by the Senate on Sept. 30. It authorizes appropriations for federal agencies for the fiscal year ending Sept. 30, 2022, including providing emergency assistance for activities related to natural disasters and evacuees from Afghanistan. The bill is also known as a continuing resolution (CR), which prevented a government shutdown that would otherwise have occurred if the 2022 appropriations bills had not been enacted by Oct. 1, when the new fiscal year began. The legislation was signed and enacted in the nick of time by the president on Sept. 30.

Protecting Moms Who Served Act of 2021 (S 716) – This bill was introduced by Sen. Tammy Duckworth (D-IL) on March 17. The purpose of the legislation is to codify maternity care coordination programs at the Department of Veterans Affairs. Specifically, the VA must work with local non-VA maternity care providers for training and support related to the unique needs of pregnant and postpartum veterans, particularly with regard to mental and behavioral health conditions. The bill passed in the Senate on Oct. 7 and is currently under consideration in the House.

A bill to direct the Secretary of Veterans Affairs to designate one week each year as Buddy Check Week for the purpose of outreach and education concerning peer wellness checks for veterans, and for other purposes. (S 544) – This bill directs the Department of Veterans Affairs to designate one week each year as Buddy Check Week for veterans to conduct peer wellness checks. It also mandates that the VA ensure the Veterans Crisis Line has a plan to handle potential increases in calls during that week. The bill was introduced by Sen. Joni Ernst (R-IA) on March 2 and passed in the Senate on Oct 7. It is currently under consideration in the House.

Emergency Security Supplemental Appropriations Act, 2021 (HR 3237) – This legislation provides $1.9 billion in emergency supplemental appropriations for the legislative branch and federal agencies for preventive measures in response to what happened at the U.S. Capitol Complex on Jan. 6. Because this funding is designated as emergency spending, it is exempt from discretionary spending limits. The funding is allocated for expenses such as security-related upgrades, repairs to facilities damaged by the attack, reimbursements for the costs of responding to the attack, support for prosecutions, the establishment of a quick reaction force within the District of Columbia National Guard to assist the Capitol Police, and mandatory use of body-worn cameras by Capitol Police officers who interact with the public. The bill was introduced by Rep. Rosa DeLauro (D-CT) on May 14. It was passed in the House on May 20, in the Senate on July 29, and signed into law by the president on July 30.

Potential New Tax on Stock Buybacks and What it Could Mean for the Financial Markets

Tax on Stock BuybacksPresident Biden’s latest spending bill could result in a new tax on corporate stock buybacks. In its most recent incarnation, the Senate version of the plan includes a 2 percent excise tax on stock buybacks. Still, this isn’t enough for many critics of stock buybacks, who claim they incentivize short-term behavior in lieu of long-term investment.

Short-Term Incentives

Stock buyback programs have long been criticized for giving a short-term boost to share prices with funds that could have been used for long-term investment instead. Critics, including the current president, believe stock buybacks come at the expense of capital investment in new or updated factories, research, worker training, etc. These critics believe this type of long-term investment is the key to sustainable growth.

Changing Behavior with Taxes

Some critics advocate for an outright ban on stock buybacks, but they are in the minority. Instead, the recent Senate bill proposes a 2 percent tax on stock buybacks. This tax is dual purpose. First, it aims to discourage buybacks and encourage longer-term investment. Second, it’s a revenue generator to help fund the trillions in new spending in the bill.

Will the 2 Percent Tax be Enough to Matter?

While a 2 percent excise tax on buybacks may not be draconian, it appears to be significant enough to drive a change in behavior. In a CNBC poll, more than half of CFOs indicated the 2 percent tax is enough for them to curtail their buyback program. Only 40 percent said they would not change their buyback program plans (CNBC Global CFO Council Survey).

Impact on the Capital Markets      

Stock buybacks have had a significant impact on the markets. Not only are companies using excess cash to buy back shares, but with interest rates so low for so long, many companies have even taken on debt to buy back shares. Still, excess cash that can’t just sit on the corporate balance sheet is the main driver of the largest buyback programs. Established, cash-flush tech companies such as Apple, Alphabet and Microsoft are the dominant players, accounting for nearly one-third of all buyback activity in the first half of 2021.

Given the recent run-up in the markets, buyback programs have not kept up. Couple this with the proposed increases in corporate tax rates from 21 percent to 25 percent, and there’s even less cash to fund buyback programs. Generally, most experts believe these macro-economic factors combined with the new 2 percent tax will cause a shift toward dividend payouts as they will be more favorable to shareholders.

Conclusion

The main idea behind the proposed 2 percent excise tax on stock buybacks is to both raise revenue and encourage corporate investment. Critics of stock buyback programs believe this is better for the economy and workers, whereas buybacks favor corporate shareholders at their expense. While a 2 percent tax might not be enough to create wholesale change, it appears to have enough teeth combined with corporate tax rate changes to change most public company CFOs.

How to Develop Company Travel Policies Post-COVID

Company Travel Policies Post-COVIDAccording to a recent U.S. Travel Association forecast, only about one-third of companies are requiring their employees to travel. With business travel still at a low, how can companies develop a travel policy that reduces the risk of COVID-19?

Occupational Safety and Health Administration

When it comes to business travelers, whether employees are traveling domestically or internationally, OSHA recommends employers consult the Centers for Disease Control and Prevention (CDC) for guidance.

Travel Guidance

The CDC advises against traveling internationally if someone is not vaccinated, is exposed to, sick with, tests positive and/or is waiting results from COVID-19 exposure. Even for travelers who are fully vaccinated, the CDC reminds us that becoming infected and/or spreading the virus is still possible.

Travelers should similarly follow all guidelines at their point of departure, on the airline, and at their destination (e.g., wear face masks, get tested to show proof of being COVID-19 negative, maintain social distancing) to be compliant with requirements during each point of the journey.

For those returning to the United States, fully vaccinated travelers must have a negative COVID-19 test taken within 72 hours of travel. Fully vaccinated individuals are suggested to test three to five days post travel, keep an eye out for symptoms and test and isolate if there are symptoms. Travelers who are not fully vaccinated must have a negative COVID-19 test within 24 hours of travel. Travelers who are not fully vaccinated are advised to test three to five days after, along with self-quarantining for seven days, post return. Even if the COVID-19 test is negative, self-quarantining for seven days after travel is advised. If the COVID-19 test is positive, travelers should isolate. If you don’t get tested, stay at home and self-quarantine for 10 days post travel. If symptomatic, test and isolate.

When it comes to domestic travel, differences exist between fully vaccinated and partially/non-vaccinated travelers. Along with masking and government mandates for fully vaccinated travelers, upon return they need to keep an eye out for symptoms and isolate if any develop. However, there are no recommendations for testing or self-quarantining for fully vaccinated or those who have recovered from an infection within the past three months.

For unvaccinated travelers, along with following masking, social distancing, hand hygiene practices, and government mandates, testing 24 to 72 hours before departure is recommended. Upon return, travelers are advised to get tested three to five days later and isolate for one week. If non-vaccinated travelers don’t test, a 10-day quarantine is recommended. If a test is done and it’s negative, a one-week isolation period is recommended.

Assessing Financial/Legal Risk

Employers must determine if the work that requires travel is truly essential, and if it is in all jurisdictions, it should be documented. There are a few types of potential financial and/or legal liabilities if employees travel to perform their work duties. If an employee becomes infected, a workers’ compensation claim could be opened. If an employee does not receive an accommodation, either not having to travel or unable to work safely in the office with a worker who may have been exposed to COVID-19, legal issues may develop. Additionally, a whistleblower lawsuit may exist if an employee alleges the company has violated public health requirements. However, if business travel can’t be delayed, there must be guidelines to reduce the risk of travel becoming a way to catch COVID.

Protect Employees Before Travel Begins

Businesses are advised to give their employees adequate personal protective equipment (PPE). Depending on how and where the employee is traveling, he or she is required by federal law to wear a mask in and on mass transit (e.g., airplanes, trains). It also may help to provide gloves, hand sanitizer and wipes.

Study Transit and Destination COVID-19 Policies

Whether it’s domestic or international travel, different cities, states and countries have different requirements for those who are vaccinated and those who are not. Depending on where the traveler has a layover, there could be testing, proof of vaccination or masking/social distancing requirements in place at various spots.

Agree to Travel-Related Activities

By highlighting the risks of visiting certain venues that may pose higher risks (e.g., restaurants, gyms), an employer also can mandate employees to wear masks, socially distance, wash hands frequently, etc., regardless of the locale’s requirements.

Plan Ahead for Post-Travel Office Work

Another important component of a travel policy is how the business and its employee(s) will return safely to work and interact with co-workers and clients. For the most extreme cases, there could be a 14-day work-from-home policy to reduce the risk. Businesses can mandate testing for employees as long as they cover testing costs and testing requirements are applied fairly companywide.

While the world is reopening to commerce, especially instances when business deals necessitate face-to-face meetings with people from different cities and continents, safety with COVID-19 is paramount.

Sources

https://www.ustravel.org/press/new-forecast-signals-long-road-recovery-business-travel

https://www.osha.gov/coronavirus/control-prevention/business-travelers

https://www.cdc.gov/coronavirus/2019-ncov/travelers/travel-during-covid19.html

https://www.cdc.gov/coronavirus/2019-ncov/travelers/international-travel-during-covid19.html

Flood Insurance: Insuring Your Home

Flood Insurance: Insuring Your HomeDid you know that homeowner’s insurance doesn’t cover flood damage? Because of this, homes located in a Special Flood Hazard Area (SFHA) are required by lenders to purchase a separate flood insurance policy. However, there are millions of homes at risk that also experience periodic flooding but are not located in the most hazardous zones.

Regardless, any homeowner can purchase flood insurance and the good news is that, for some, rates will be reduced this year.

Starting on Oct. 1, the National Flood Insurance Program (NFIP) launched a new program called Risk Rating 2.0. This program is designed to encourage communities throughout the country to deploy measures that help mitigate potential damage due to flooding. The lower the risk resulting from these efforts, the higher the rating. This means that many homeowners who live in highly rated areas may benefit from lower premiums going forward. However, be aware that there is only one source of insurance sponsored by the government, rates are standardized and payouts are capped at $250,000.

But not to worry, flood insurance also is available in the private market. Private insurers are able to customize premium quotes and the forces of competition help keep premiums reasonable, so it’s a good idea to comparison shop. Private flood insurance policies also offer additional coverage options that the NFIP does not, such as:

  • Up to $1 million or more in building coverage
  • Enhanced coverage for detached structures
  • Replacement cost for contents and secondary residences
  • Additional living expenses
  • Pool repair and fill
  • Business income coverage

If your home is not in a SFHA and you are wondering whether or not to purchase flood insurance, consider how much you can afford to pay out-of-pocket for flood damage. Use this statistic as a guide: 1 inch of floodwater can cause as much as $25,000 in damages to a home.

In other words, paying for flood insurance is kind of like paying a fee to protect your home equity and investment portfolio. Compare a flood policy to buying a warranty for a new appliance. The risk is that the cost of repairing or replacing that appliance would put a strain on your finances. If you apply that same logic to 1 inch of flood damage, you can see that a flood policy would offer a much higher return on the amount you invest in its premium. Since a single flood event could wipe out all of your assets, it stands to reason that insurance is critical for perils that pose high financial risks.

If you still need more data to help decide whether to buy a flood insurance policy, consider the impact that extreme weather events have had on your property in recent years. In many areas, flood damage isn’t caused by a hurricane, but rather by storm surges or heavy rainfall. Even if you haven’t experienced significant events, that could change due to the constantly evolving environment. Rising sea levels and new weather patterns are expected to produce higher intensity flooding from hurricanes and offshore storms.

One way to see the local flood patterns in your area is to visit Floodfactor.com. Navigate the Floodfactor map to pinpoint your home’s exact location, and compare patterns based on past, recent, and projected future weather events. 

New Proposed Tax Laws

New Proposed Tax Laws 2022The House recently released a nearly 900-page proposed bill that would make major changes to current tax laws. The bill is intended in large part to help pay for both the Biden Administration’s budget and infrastructure stimulus bill.

It’s important to keep in mind that the provisions and changes outlined below are by no means settled. Changes can (and likely will) still be made as the Senate ratifies the bill; however, the remainder of this article should give readers a good idea of the most significant provisions.

Income Tax Rates are Rising

The increase in the top income tax rate is probably the most talked about proposed change in the bill, bringing it up from 37 percent to 39.6 percent. The top marginal rate would apply to single filers with taxable income over $400,000, heads of household over $425,000 and married filing jointly taxpayers making over $450,000. The impact starts with income earned on Jan. 1, 2022, and after.

Capital Gains

The highest capital gains rate would increase from 20 percent to 25 percent and apply to qualified dividends. The increase is effective on gains made from sales that happen on or after Sept. 13, 2021, but any gains from sales incurred before or that result from binding contracts executed before this date fall under the old rate. For example, gains received post-Sept. 13, 2021, under an installment sale entered on Aug. 31, 2021, would be subject to the old 20 percent rate.

Expansion of the Net Investment Income Tax

The bill also would redefine net investment income (NIIT) to include any income earned in the ordinary course of business. Currently, the 3.8 percent NIIT surcharge applies only to passive income. The NIIT is applied to single taxpayers with more than $400,000 in taxable income and joint filers with over $500,000, and would start Jan. 1, 2022.

New 3 Percent Surcharge on High Income Individuals

Starting after Dec. 31, 2021, a new 3 percent tax will be placed on Adjusted Gross Incomes (AGI) over $5 million ($2.5 million if married filing separately).

Small Business Tax Increases

Under the bill, the current 21 percent flat corporate (C-Corporation) tax rate would change to a three-tiered system. The structure would tax net income at 18 percent up to $400,000; 21 percent from $401,000 to $5 million; and 26 percent on net income over $5 million.

Other Miscellaneous Changes

As you can imagine in an 881-page bill, there are only so many changes that can be covered in this article, but here is a smattering of miscellaneous provisions.

  • Crypto currencies would become subject to the constructive and wash sale rules (like most marketable securities such as stocks) starting Jan. 1, 2022. This means that if you are holding a position at a loss, you have until the end of 2021 to harvest the loss and immediately buy back in.
  • IRAs will no longer be allowed to invest in an entity where the IRA owner has a 10 percent or greater ownership interest (down from the current 50 percent threshold) or if the IRA owner is an officer of the entity.
  • $80 million is earmarked for the IRS to step up enforcement and audit more taxpayers.
  • Smokers will feel the pain as the bill also doubles the excise taxes on cigarettes, small cigars and roll-your-own tobacco.

Conclusion

Remember that this is only the House version of the bill, and nothing is final. Also remember that Democrats control the House, and the Senate is split 50/50 with the Democratic VP as the tiebreaker. As a result, while there will be changes, the major provisions outlined above will likely be in the final law in some form or another.

How Businesses Can Help Employees Improve their Skills

Employees Improve their SkillsBased upon a recent McKinsey Global Survey, nearly 9 in 10 (87 percent) of management and above level respondents affirmed they are currently, or within the upcoming five years, dealing with the skill gap among their employees. With the vast majority of businesses experiencing or forecasting a skills-gap, how can they close or reduce this challenge?

Due to the so-called “Fourth Industrial Revolution,” as the World Economic Forum (WEF) explains, the best scenario it sees is 54 percent of workers requiring “reskilling and upskilling by 2022.” However, the WEF points out that 3 in 10 workers susceptible to occupation disruption due to advancements in applied science obtained additional training in 2018.

It’s important to clarify the differences between re-skilling and up-skilling. Re-skilling is where workers who are displaced by industries becoming obsolete, such as coal miners, are forced to retrain for a new career, such as coding, teaching, etc. Up-skilling, in contrast, involves building and staying current in one’s field – a programmer learning the newest programming language or a marketing manager learning the latest search engine optimization (SEO) techniques.

Carve Out Skill-Improvement Time Blocks

Even for companies that strive to provide their employees with flexible time for a work-life balance, it doesn’t always guarantee companies foster a culture of self-improvement and upskilling. When personal, professional and/or global crises occur, there’s not always time for employees to learn new computer programs or the latest programming language. However, by providing employees with a few hours a week dedicated to professional development, businesses give employees the opportunity to up-skill, leading to more satisfied employees, along with limited strain on the budget.

Arrange Worker-Guided Study Groups

When it comes to learning a new skill, according to Degreed via Harvad Business Review (HBR), workers will go to their peers 55 percent of the time, second only to reaching out to their supervisor for guidance, when looking to up-skill.

Few businesses are known to have developed a system for peer-to-peer learning in the workplace. According to McKinsey, “Learning & Development officers” reported businesses letting their employees put their skills into practice to develop additional skills, along with holding academic-type instruction and “experiential learning” for developing role competency. When it comes to structured peer-to-peer learning, fewer than 50 percent of businesses have anything established. Thirty-three percent of those surveyed responded that there’s no system established to facilitate skills development opportunities between co-workers.

From HBR’s “The Expertise Economy,” one reason that peer-to-peer learning is not the first choice for employee learning is due to a common belief that those who are proficient at a particular skill often exist outside the organization, such as a paid training consultant. This belief also is reinforced due to external educational experiences normally condensed into a single session, compared to smaller and more frequent in-house sessions.

HBR argues that peer-to-peer learning leverages the business’ internal expertise more effectively. If more experienced employees share their expertise with less seasoned co-workers to increase their skills, it can be very productive. In fact, HBR lays out a four-point plan for peer-to-peer learning to maximize employee up-skilling.

By using HBR’s “Learning Loop,” businesses can help employees learn new skills and knowledge through four steps:

  1. Employees obtain new information.
  2. After assimilating the new information, they practice implementing the new information.
  3. After it’s been applied, they obtain feedback on the application.
  4. The employee then reflects on what has been learned to further assimilate the new information.

While this program must be tailored to every organization, it shows that by taking a personal approach to up-skilling employees and building on their existing knowledge and skill sets, peer-to-peer learning can be one effective approach to helping employers and their employees close the skills gap.

Sources

https://www.weforum.org/agenda/2019/04/skills-jobs-investing-in-people-inclusive-growth/

https://www.mckinsey.com/~/media/McKinsey/Business%20Functions/Organization/Our%20Insights/Beyond%20hiring%20How%20companies%20are%20reskilling%20to%20address%20talent%20gaps/Beyond-hiring-How-companies-are-reskilling.ashx

https://hbr.org/2018/11/how-to-help-your-employees-learn-from-each-other

Strategies for Paying Off Student Loans

Paying Off Student LoansToday, 70 percent of college students graduate with an average of $30,000 in student loan debt. The average payment is nearly $400 a month and will take about 20 years to pay off. On an individual level, paying off high debt can delay hopes of saving to buy a house, start a family, launch a business or invest for retirement.

On a broader level, the national burden of student debt could impact America’s economic future. When young adults are unable to afford home ownership, that reduces spending on all types of consumer products that accompany home buying. It also reduces property taxes used to support local resources and reduces the insurance pool of property owners used to help repair and rebuild homes after extreme weather crises.

Whether you’re a graduate or the relative of a graduate in this situation, it’s worth considering various strategies to help pay off this debt. After all, it may be better – for both your offspring and the country’s GDP – to financially help them out now rather than later via a larger inheritance.

High Interest and Consolidation Considerations

The strategic way to approach student debt is to focus on paying off high-interest loans first. This generally includes private loans and any others with variable interest rates that may increase over time. Be aware that with federal student loans, there are different types and the borrower is permitted to switch to a different payment plan that better suits his needs over time. Another option is to consolidate student loans. However, if sometime in the future federal student loans are forgiven, your student could miss out on that by transferring or consolidating to a privately held loan.

Employer Assistance Programs

In recognition of student loan debt as both a personnel and national concern, many employers are starting to offer repayment assistance programs – even to parents paying off parent student loans. It’s important to inquire whether or not an employer offers this benefit, as they are not always promoted – especially to current workers. However, these programs have become more appealing to companies since passage of the CARES Act, which extended pre-tax employer-provided educational assistance for up to $5,250 per employee, per year through 2025

Another program that some companies have introduced is the ability for employees to convert the cash value of unused paid-time-off (PTO) toward their student loan payments. In other words, if a worker is not able to use all of his accrued paid vacation days in a given year, he can request the employer contribute that income toward his student loan debt.

College Savings Plans

Each state sponsors a Section 529 college savings and investment plan, which feature tax-deferred growth and tax-free withdrawals when used to pay for qualified education expenses.

In 2019, as part of the Setting Every Community Up for Retirement Enhancement (SECURE) Act, Congress included a provision that permits up to $10,000 (a lifetime cap, per each beneficiary) from 529 College Savings Plans to be used to repay student loans. For example, if a family has three college students, the parents may withdraw up to $30,000 to help pay off that debt from their 529 account(s). Note that a 529 account owner can change the 529 plan beneficiary at any time without tax consequences.

Be aware, however, if 529 college funds are used to make principal and interest payments on a qualified student loan, that student loan interest cannot be claimed as a deduction on their tax return.

7 Ways to Save for a Home Down Payment

Save Home Down PaymentSo you want to save for a down payment for your dream house, but you aren’t sure how to get there. It might even feel overwhelming. But take heart, here are some tried and true methods that you can start today that will help you save sooner than you think.

Save a Fixed Amount Monthly

This is super easy, but first you need to figure out how much of a down payment you want to make. Remember, the higher your down payment, the lower your loan and monthly mortgage payment will be. With that said, put this amount on auto draft and deposit it into your savings account. Once you get used to this, you won’t miss it. Never use this savings for any other purpose except your down payment. Keep your eyes on the prize and stay the course.

Lower Your Expenses

If you don’t have a budget, make one. Review how much you’re spending on necessary items like rent, utilities and food. Also look at how much you’re spending on discretionary things, like going out to eat, subscriptions to magazines, driving instead of walking, etc. You might also evaluate how much those short-term indulgences mean to you. Only you can decide, but if you stick to a budget and start saving, the dream of a down payment can become a reality.

Skip Vacations For a Year

This one might be hard to swallow. However, if you save the money you’d otherwise spend on your vacation, you can make a significant contribution toward your down payment. If skipping a vacation is out of the question, try a staycation; or at least drive or take a bus or train to someplace near you that won’t cost an arm and a leg, like a natural park, an area lake or even, if you’re lucky enough to live near one, a beach. With every decision you make to delay gratification and focus on your long-term goal of home ownership, you’ll be more likely to stay on track.

Reduce Your High Interest Rate Debt

Credit card interest rates can really eat into the amount of money you are trying to save. If you can pay them off, do so – and start with the one that’s the highest. When you’ve paid it off, close the account and move on to the next one. You can also apply for a card with a temporary 0% interest rate (for maybe 15 months) and transfer your other balances to this one card. Good options include Bank of America’s Unlimited Cash Rewards credit card, Discover it Balance Transfer and Citi Double Cash Card.

Borrow From Your Retirement Plan

If you want to expedite getting into a house and are comfortable doing this, the look for penalty-free withdrawals from your retirement plan. Many company-sponsored 401(k) or profit-sharing plans allow you to borrow against your nest egg to purchase a home. Just ask your HR or payroll department.

Sell Some of Your Investments

While this option might not be instantly appealing, think of this as a way to move some of your current investments into another – your house. Once you’ve moved in and are paying your mortgage, you’ll be building equity. As your house increases in value, so does your investment.

Look Into Down Payment Assistance

Yes, this is a thing! There are organizations that might be able to help you, like the Federal Housing Administration, the U.S. Department of Agriculture Rural Housing Service and the Veterans Administration. Another source is your local housing authority.

These are a few options to help you move toward a down payment. But no matter what you choose, don’t wait. Get started today. This way, you’ll be packing up and moving in no time.

Sources

https://www.bbt.com/education-center/articles/top-10-ways-to-save-down-payment.html

https://www.creditkarma.com/credit-cards/balance-transfer?gclid=Cj0KCQjwtMCKBhDAARIsAG-2Eu8NmKerM3dO4cPjC0KvMCj_S3HPjJ_r4ge6MV50wWiQf51VLK4HOwUaAncZEALw_wcB

Mistakes to Avoid When Implementing Business Accounting Technology

Business Accounting TechnologyChoosing to implement new technology for your accounting needs is a big step toward improving your business. Accounting technology helps streamline the accounting system, thereby offering various benefits. However, poor implementation can impact your business negatively. To make your implementation a success, there are several mistakes that you must avoid.

Importance of New Accounting Technology 

Before looking at the potential mistakes, it is important to understand why businesses implement new technologies. Technology advancement has played a great role in various life and business aspects. In businesses accounting, technology such as computerized systems help easily track and record financial transactions. 

Various types of technologies have impacted business accounting, such as cloud-based systems, mobile accounting, big data, artificial intelligence, data analytics, robotic process automation, etc.

Businesses that have successfully implemented some of these technologies have witnessed improved accuracy, faster processing, forecasting, analytics and better external reporting, among other benefits. 

As a result, more business owners wish to enjoy the same benefits as their counterparts. Unfortunately, rushing to implement a system will end up causing more harm to your business than what you are trying to change. Therefore, being prepared before the implementation will save you a lot of trouble. 

In a continuously changing technology landscape, businesses want to remain competitive and do not have much choice but to keep up with technology trends. 

Mistakes that Result in Poor Accounting Technology Implementation 

  • Failure to define your business’ specific requirements
    Rushing to implement a technology solution because a counterpart is benefiting from it is a bad idea. Remember each business is unique and, before implementing a new technology, you should first consider your kind of business. Identify functions to automate and research suitable systems that fit your needs. Failing to do this means you could end up settling for a generic solution that will not properly address your business needs.
  • Failing to plan the implementation process 
    Implementing new technology involves more than installations, configurations, setting up necessary devices and adding users to the new system. It requires – among other things – focus, resources, accountability and follow-up for its success. 
  • Failure to include users in the implementation process
    Users can determine how successful a new system will be. Involving users will help get the business process workflow right, and also plays a part in avoiding resistance to the new solution. If employees are opposed to the implementation, it will fail. 
  • Assuming it is a one-time cost 
    Failing to anticipate post-implementation costs may result in abandoning the new systems you implemented. Any new technology always comes with other hidden costs, such as maintenance fees, subscription fees, training, etc. Find out the involved costs to help you budget properly. 
  • Failure to properly train users 
    Many times, user training is overlooked to cut costs or with an assumption that they will learn on the go. Having the users properly trained will ensure only minimum support is necessary. All users should be well trained before the vendor or consultants finish with the implementation. Continuous training should be carried out to ensure that users leverage advanced features of a system that will help them be more productive.
  • Failure to consult
    Once you decide to implement new technology, most likely other businesses have done it, too. By consulting with other businesses, you will learn what has worked or not. You also may want to check vendor reviews, which can be readily found online. As more businesses choose to outsource accounting, it is best to consult on technologies to use for integration issues. This will help avoid the need to implement different solutions. 
  • Failure to consider security issues 
    In accounting, security is vital as you are dealing with personal and financial data. A data breach can result in financial loss or reputation damage. Consider your internal security, train your employees on security, and implement a security policy. Ensure that the vendors you choose to partner with prioritize security.

Take Away 

One vital point to remember when you want to implement an accounting technology is not to rush to keep up with trends without proper planning. A good implementation strategy will help you avoid the above-mentioned mistakes, ensuring your business enjoys productivity and workflow improvement.