Steve Trusty

Monday, 26 March 2007 20:00

Powerful plastic

We may have started out paying for needs with rocks or pebbles, but plastic has become the method of choice for most Americans. It has been reported that 75 percent of us now use credit or debit cards to pay for purchases. The most dramatic shift has been from checks and cash to plastic. Now, especially with those under 34 and earning more than $30,000 per year, the shift is moving to debit cards. Debit purchases have grown from $421 billion in 2001 to $1 trillion in 2006.

“Plastic can be a terrific tool for companies and consumers when used properly and to their full advantage,” says Roy Binger, executive vice president and retail LOB manager at SunTrust Banks, Inc. in Tampa. “There is a wide variety of choices that include consumer credit or debit cards, business cards, purchasing or procurement cards, fleet cards, and payroll debit cards.”

Smart Business talked with Binger for more insight on using plastic for more efficiency.

Why are we seeing such an increase in plastic for purchases?

For consumers and companies alike, plastic is easier to use. Carrying large amounts of cash is cumbersome and can be dangerous.

For companies, purchasing with plastic can provide instant, online information on purchases without the processes of preparing purchase orders, processing a plethora of individual invoices and creating checks for each of the numerous suppliers, and finding the authorized person to sign a check for routine or emergency purchases. Employees are not always in a position to pay for travel or other expenses and wait to be reimbursed by the company. Record-keeping is streamlined with the use of plastic. Reporting methods can be customized by your provider to give you the right combinations of reports to provide the details needed to analyze your spending. Another benefit is the credit and debit card industry is unique in that the card-holders are paid to use them. That payment includes reward points, mileage, rebates and extra services.

What should you consider when choosing cards?

As a consumer, you should do your homework in understanding the features and benefits of your cards. Analyze your lifestyle to determine what card fits best. Which saves you time or money? Would you benefit from travel insurance, concierge service, extended warranties, preferred seating, rebates or any of the other offerings? Read the fine print to ensure you can use what is offered and live with the conditions of the card.

For corporate cards, along with the above, make sure that you can receive the reports that you need to manage your business. Ensure that you and the issuer have agreed upon and set up the controls on how the cards can be used and who can use them. Determine if reward points can be combined for credit and debit cards. Decide who gets the points. Develop a plan to clearly inform each employee on the uses, restrictions and reporting requirements of card use.

Work closely with your business banker to determine what card or cards best suit your purposes and provide the cash management features and benefits to optimize your overall profitability.

What are the advantages of fleet cards?

They are especially useful to corporations with many drivers. Some cards provide discounts when employees use the cards, plus they help the company more easily track spending and employees don’t have to use their own funds when traveling.

What are payroll debit cards?

These are the next evolution beyond direct deposit for payroll. While many companies have streamlined their payroll system to direct deposit, that only works for employees with bank accounts. For a variety of reasons, not all employees have or want a bank account. In those cases, the employer’s workload is increased because it has to determine which employees receive checks and which receive direct deposit. Checks also increase the workload for employees receiving them as they must stand in line to cash them and often will pay a premium cost for that privilege. With payroll debit cards, each employee has his or her own card, can use it like any other debit card and can be rewarded for card use instead of paying to have their check cashed.

What are the caveats on plastic use that the reader should be aware of?

Every card, debit or credit, has disclaimers or footnotes. Make sure that you read all the fine print and follow the rules.

ROY BINGER is executive vice president and retail LOB manager at SunTrust Banks, Inc., Tampa. Reach him at (813) 224-2147 or SunTrust Bank Member FDIC

Monday, 26 March 2007 20:00

Above board

So you are giving some thought to involving one or more investors in your business. How might those thoughts translate into exposure to SEC regulations? We have all seen and heard about companies that have run afoul of the SEC, and we all want to make sure that whatever we do, if it might involve the SEC, we will follow the rules precisely. When do they apply?


“Whenever a company or institution is going to accept money from investors, public or private, it exposes the company to scrutiny from investors and/or regulators,” says Scott Meyers, chair of the Litigation Practice Group at Levenfeld Pearlstein LLC. “You need to structure things to satisfy both. Even if you have no interest in going public, you still need to be cognizant of the federal securities laws.”

Smart Business talked with Meyers to gain more insight into what one should be aware of and how to keep up to date.

How do I know if my quest for one or more investors is going to subject me to the SEC?

The main purpose of the SEC is to protect investors. If you are letting any segment of the general public know that you are interested in seeking one or more investors, you are subject to compliance with federal securities laws and SEC regulations.

On the other hand, if you personally talk to a group of sophisticated investors individually, that could be considered as part of a private offering. While private offerings are not subject to all SEC regulations, you will still want to make sure that you are providing full disclosure to potential investors in order for them to make an informed investment decision.

What are the main areas of the law that I should be aware of?

Everything in the securities laws boils down to telling potential investors as much information as they need to know to make an informed investment decision.

In order to tell them all of the necessary information or ‘material’ information, you, the company, need to understand that information first. If you have sloppy bookkeeping, how are you going to know the overall condition of the company in order to disclose it to them? If you are not aware of the most up-to-date information on compensation law, how are you going to adequately disclose your compensation policies, especially in areas where they relate to the current owners or investors?

What is the best way for me to keep up on the various laws?

Your in-house counsel should be specifically tasked with the responsibility, working closely with outside counsel and other professionals that specialize in the applicable area. Tax rules, employment laws, employee benefits and accounting standards are also involved. It takes a team with expertise in all these areas, because all of these things will need to be disclosed to potential investors.

Some of the current litigation is developing because companies don’t recognize the interconnectivity. The regulations do not just apply to companies trading on the New York Stock Exchange. If you are seeking investors, whether through public or private offerings, and don’t disclose something that to a reasonable person would be considered ‘material’ within the total mix of the information disclosed, you are going to have a problem.

What state laws should I also be aware of?

Most definitely, especially state securities (or ‘Blue Sky’) laws as well as consumer protection statutes.

Most states have a variety of laws to protect the residents of their state. If you take on an investor from Illinois and do not observe that state’s securities regulations or consumer protection statutes, you are going to have a problem — with the investor, the state and the SEC.

The bottom line is that you need to know who you are selling to, where the people live, and what the applicable rules and regulations for that state are. Then you need to make sure that you know and disclose to them all material information so that they can make an informed investment decision.

SCOTT MEYERS is chair of the Litigation Practice Group at Levenfeld Pearlstein LLC in Chicago. Reach him at or (312) 476-7576.

Wednesday, 28 February 2007 19:00

Difficult navigation

The property insurance market was pretty easy to navigate in the Houston area until 2006. It didn’t require any special treatment from the insurance industry. Hurricanes Rita and Katrina have changed that. Now the area is considered on par with the coastal areas and has most of the concerns that go along with that distinction.

“The two main changes have been that premiums have increased by two or three times and deductibles now generally range from 2 percent to 5 percent of value,” says Rich Clark, managing director of Gallagher Hospitality Niche, Arthur J. Gallagher & Co. “Our crisis mode does not rival Florida’s. While premiums and deductibles have jumped, at least we haven’t seen the instances of coverage not being available.”

Smart Business talked with Clark for more information on the property insurance outlook in the Houston area.

What do you see on the property insurance horizon in the Houston area?

In general, property owners should budget for about the same property insurance costs as they paid in 2006 because the market is leveling off.

The exception to that would be for those whose premiums come due in the first quarter of the year. If they paid their premium in the first quarter of 2006, they probably got by without much of an increase. They will have to deal with a hefty increase this year.

Besides the premiums, property owners need to be aware of the potential exposure due to higher deductibles.

What can property owners do to alleviate some of the costs?

First of all, it is important to have a market-knowledgeable agent or broker. He or she needs to have experience in placing coverage on the type of asset you own to provide the best advice.

Secondly, ask your agent or broker to have a Probable Maximum Loss (PML) study done. Most lenders require that full replacement coverage be maintained.

Insurance companies want their premium based on full replacement cost. The PML study will show what the potential loss would be under various scenarios. It gives you a tool to negotiate with. Let’s say you have $100 million worth of property and the study shows that your maximum total loss would be $20 million from wind or flood damage. Then, if your lender agrees, you might only have to purchase insurance at the higher rate for wind or flood damage on $20 million and lower rates for $80 million coverage for fire, theft or other damages.

Is an appraisal necessary to determine coverage requirements?

As long as you can show the carriers that replacement costs are in line with industry standards, an appraisal should not be necessary.

With newer buildings, it is fairly easy to review various standards to come up with fair replacement values. With older buildings — especially those with historical significance or those built before many of the current laws and codes were in effect — higher replacement costs need to be considered.

You may have much higher costs to replace a building using today’s building codes. In these cases, be sure to talk to your agent about law and ordinance coverage.

What about flood insurance?

Houston has been remapped, so flood zones have changed. Flood insurance can be purchased through the National Flood Insurance Pool (NFIP). You can purchase this insurance whether you are in a flood plain or not. It is quite inexpensive, so it is usually recommended that property owners buy what NFIP insurance they can and then purchase supplemental commercial insurance to cover what isn’t covered by NFIP.

What is the most important aspect of a property owner’s insurance program?

People tend to look at the price of their coverage, but it is most important to review your coverage with your agent or broker. Make sure you understand what coverage you have and don’t have. This is another reason to deal with an agent or broker who specializes in your industry and understands your coverage needs. Only such a specialist is able to point out things that you do or don’t need to have covered and how best to obtain the coverage at a fair price.

Any other advice?

Be prepared. Every property owner should have a relationship with a first responder in the event of a major claim or catastrophe.

Also, identify a forensic accountant. Have your team in place before a catastrophe is imminent. When something happens, everyone should know who is going to do what, and when.

RICH CLARK is managing director of Gallagher Hospitality Niche, Arthur J. Gallagher & Co. Reach him at (713) 358-5930 or

Wednesday, 31 January 2007 19:00

Dealing with disruptions

Is your business prepared to continue operations during any type of work force disruption? This could be a transit strike, an earthquake, a terrorist attack or any other natural or human-induced disaster. Are you prepared to experience maximum growth for your company? According to the Society for Information Management, 70 percent of enterprises report being prepared for a data center

outage. Only 13 percent of enterprises are prepared for a work force disruption. How will your company operate if employees can’t get to work or can’t communicate with each other, customers or suppliers? “We advise companies to set up their systems so employees can conduct business from home or any other off-site location should an emergency situation occur so the company can continue conducting business as usual,” says Omar Yakar, CEO of Agile360.

Smart Business asked Yakar for information on the importance of work force continuity and how a system might be set up.

What is the importance of having a work force continuity plan?

You never know when something might happen that could make it impossible for employees to conduct business from their main office. Strikes, road damage, natural disasters, pandemics and terrorist attacks can happen anytime and anywhere. How do you communicate with employees if they can’t get to work? How do you know which employees are affected by any of these occurrences? How do they know what is expected?

According to the National Archives and Records Administration in Washington, 93 percent of businesses that suffer more than 10 days of system downtime will file for bankruptcy within a year.

It is not just the big disasters that we should prepare for. Who wanted to go to work in the D.C. area during the sniper attacks a few years ago? How do employees get to work when roads are closed by wildfires or earthquakes? What about snowstorms or hurricanes in other parts of the country? Forrester says a 5,000 employee organization will suffer a $1.4 million productivity loss as a result of a three-day work force disruption.

Gartner recommends that employees be able to work at home for an extended period of time and be able to communicate with each other and especially with customers and suppliers.

What should a work force continuity plan include?

Your plan should include who is responsible for making decisions, where notifications should be sent, the mechanism for communicating to your employees, an employee roll call, a designated disaster response team and a hierarchy plan. As soon as your employees take care of their own personal safety and that of their families, they need to know what to do next. They also need to be able to communicate their needs so employees can supply assistance or pass the word to others who could help.

Is it expensive to put together such a system?

If you think about access to your corporate applications and systems as part of an overall access strategy, then work force continuity capability can be built in and set up on a pay-as-you-use basis. If employees can access your data from any location and communicate with everyone they need to, your employees can cover their personal and family needs — and your business needs — so your company continues to operate. You just need the system that provides your employees a work force continuity kit (as small as a box of mints) containing a USB key and a retractable headset.

Please tell us more about the work force continuity kit.

With a properly planned system, employees with the kit can plug their USB key and headset into any computer with an Internet connection. This will automatically check in the employee and provide him or her with a desktop, access to corporate applications and a software telephone to communicate within the system. If someone needs water, supplies or anything else, they can let others know. You use a third-party service to maintain the data recovery and access points and pay by consumption. The costs only apply when the service is used. Another benefit is that with a properly executed access strategy, employees can work from anywhere. This means that as you expand your business you can mitigate real estate and IT management costs by having the flexibility to locate employees where it is optimal. An access strategy is all about reducing the cost of running the business so you can focus on growing it.

Additionally, a byproduct of implementing common sense infrastructure and operational improvements is the achievement of objectives such as regulatory compliance and disaster recovery.

OMAR YAKAR is CEO of Agile360 in Irvine. Reach him at (949) 253-4106 or

Sunday, 31 December 2006 19:00

Pushing for information

Research has shown that companies with better information technology have more productive employees. Other research has shown that company growth can be positively influenced with outstanding information technology. Managers who have the most useful up-to-date information are in a position to make the best possible decisions in the shortest amount of time.

“Today’s businesses need to have a competitive edge,” says John Bugado, who had years of experience as an IT executive with NCR before becoming a department chair at National University in La Jolla. “They can get it with the infrastructure provided by new information technology that enables management to make quick decisions. The companies ‘fluent’ in these new technologies have harnessed the potential to be the most successful.”

Smart Business talked with Bugado about why fluency is important and how to become fluent.

What do you mean by being fluent in new technologies?
I am talking about the ability of the business side of the company being able to communicate to the IT people what they need in the way of information, and the IT people being able to communicate to the business side what they can and cannot do for them.

This fluent communication is a two-way street. Both sides need to understand the other’s needs and terminology, horizontally and vertically. If the IT side doesn’t understand what the business side needs and how it applies, how can they be expected to come up with solutions? If the business side doesn’t understand the value of information technology and its terminology, how can they realize its benefits and values?

While the IT side of a company is extremely important in today’s economy, it is neither more nor less important than the business side. What is most important is that both sides of the business are fluent in the new technologies and what they can do for the company.

What’s the difference between horizontal and vertical fluency?
Horizontal fluency is being aware of the breadth of information technology and understanding how the technology best fits the business and related business processes. Once the overall IT architecture and the strategic roadmap is established, you then can drill down vertically into the details on how the technology works and how it is going to be applied.

How does a person become fluent in the new technologies?
One way is to read the various professional magazines, such as Computer World, Info World and Information Week. These professional publications study the issues in depth and then report on what is most important. They specialize in information such as Internet technologies, security technologies, wireless technologies and search technologies.

You could take courses that would help you become more fluent. Courses are available in technology management for business people and business courses for tech people. These will help bridge the communication gaps between business and technology analysts. Conferences can help you gain added insight. The networking and visiting between sessions at on-site conferences or classes can prove beneficial in increasing fluency. Some conferences are done as Web casts so you don’t even have to travel.

Other sources are search engines on the Internet. There are various tools that a good business person can use to keep up. The Internet is especially useful when you use ‘push’ technology to get what you need.

What do you mean by push technology?
Push technology is the opposite of pull technology, which is pulling information from the Internet or the local library. Push technology is developing a personal profile to indicate your specific technology interests and preferences. Based on the profile, search engines can filter through all the information in the Internet and push to you just what you need.

With so much information available on the Internet, it is increasingly important, and a time saver, to use push technologies.

Are there any other considerations?
There is a gap between keeping old and acquiring new technologies. The idea is to narrow the gap. You first need to be aware of how the old or current technology was being used by the business and then how to integrate the new into what you have. For example, new wireless technology uses the same basic business processes to connect and relate to customers and vendors. The difference is the flexibility and the availability of being more mobile.

Customers and vendors are demanding higher accessibility and availability. Constant evaluation and acquisition of new information technology within the business infrastructure will address these demands and narrow the gap between new and old technologies.

JOHN BUGADO is department chair at National University in La Jolla. Reach him at or (858) 642-8407.

Sunday, 31 December 2006 19:00

How to assure VoIP security

Are Voice-over-Internet phones ‘safer’ than land lines?As the quality of Voice over Internet Protocol (VoIP) telephone systems improve to more closely match the sound of the land-line-based telephone system, more attention is being given to security questions.

VoIP systems are vulnerable to many of the same impersonation-based attacks “phreakers” or hackers attempt against traditional telephone and cellular services. Their goals may range from harmless curiosity to identity theft, information theft and toll fraud. Those exploiting the system for illegal and unethical gain are picking up new ways to gain access to the emerging technology.

“In some ways, VoIP is more secure than traditional phone service,” says John Curry, owner of Curry IP Solutions. “It is relatively easy for the thief to gain access to the hard-wires of the traditional phone service by tapping into the junction box outside the building or the network of wires in the basement. The important thing is to be aware of the vulnerabilities and develop ways to prevent intrusions into the system.”

Smart Business asked Curry for his thoughts on ways to secure your VoIP system.

What are the first steps in protecting your VoIP system?

You first need to look at VoIP traffic as you look at data traffic. You put data behind a firewall and you should do the same with VoIP. The next step is using encryption. Many companies already send their e-mails and file attachments encrypted. They can use the same technology to send voice traffic.

Secure logins and passwords to send or retrieve messages are the next step. Make sure your service provider has and uses the ability to provide for unique logins and passwords that secure the carrier’s network with the equipment.

Is a separate firewall required?

No; the same firewall can be used as long as it is properly designed to handle VoIP traffic. VoIP uses the IETF Session Initiation Protocol (SIP) and the Real-time Transport Protocol (RTP) for call signaling and voice-message delivery. Firewalls that are SIP-aware, that can detect and counterattack against SIP signaling messages, and that can process RTP media streams without adding significant latency, should be used.

What encryption advice do you have?

Since most companies are already using encryption for e-mails and attachments, they already have policies that can be applied to their phone system.

Companies planning to develop their VoIP network need to make a long-term decision on the hardware they plan to use. Since there is no industry standard for encryption equipment, manufacturers develop preparatory encryption that works on their hardware only. So if you are planning your network for multi-site locations and want to ensure security within your network, you should be consistent with your selections.

Each phone should also have a unique alphanumeric signature or login and password. This will make it more difficult for the phone to be used fraudulently by an unauthorized user. A password of eight to 12 characters requiring a combination of alpha and numeric characters is the toughest to break.

How often should a person change his or her login and password?

If you notice anything suspicious, you should change both your login and password immediately.

With VoIP, the login and password provides secured registration with the VoIP Service provider and the IP phone. If your organization has an administrator, you should contact him. If your service is directly connected to a VoIP service provider, you will need to contact the service provider. The login and password is typically controlled by the service provider. In most cases, the service provider makes these changes without contacting the customer.

Anything else that you’d like said about security?

There is another type of security to be considered. That is in the case of a natural or other disaster. In today’s environment, there is access to cell, land and VoIP. If any disaster should occur in an area, one of those three should be available if any suffer gridlock.

More and more cities, including Pittsburgh, are establishing wireless broadband networks that can play a key role if emergency communications were needed. Cities could take control of their own WiFi network and have their staff use WiFi in case of such occurrence. In that case, VoIP could be the most usable and effective communication, since the city could block casual users. I know myself last year when the Pittsburgh Steelers won the Super Bowl, there was gridlock on the Public Switched Telephone Network and cell phones, with fast busies and recordings. VoIP, however, was available.

JOHN CURRY is owner of Curry IP Solutions ( which caters to business clients. Reach him at (412) 307-3600, ext. 9007 or

Friday, 24 November 2006 19:00

’Tis the season

Since this issue comes out in the throes of the holiday buying season, we thought you would be interested in some of the latest “toys” you might want to consider purchasing for your Voice over Internet Protocol (VoIP) telephone system.

“VoIP is advancing rapidly, and since new equipment is constantly coming out, I get to play with many of these new items to determine how they perform and how they might be used,” says Brian Curry, technical coordinator at Curry IP Solutions.

Smart Business asked Curry about some of the latest products and how they might make good business sense.

What is your favorite new toy for use in the office?

For a person who needs to move around the office or warehouse, I like the new 480i CT Cordless Handset from Aastra. It provides warehouse coverage up to 300,000 square feet. It has a vibration alerter and is headset-compatible. Features include four call-appearance lines, plus up to five additional lines using softkeys, personal directory, call forward, call transfer, call waiting, caller and calling line information, caller’s log, conference calling, hold and a redial list — all in a relatively compact, lightweight, handheld unit. This can be very useful if you need to be on the move and still be accessible by telephone.

What is your favorite new toy for use outside the office?

My overall favorite product is the first second-generation WiFi VoIP phone from UTStarcom. It is the model F3000. With the first-generation phones, you would need to manually set up the phone if you moved from one WiFi or Hot Spot to another. This phone allows you to move freely between the various WiFi networks in your area, and the switching is automatic and usually seamless. This is going to become even more important as the technology continues to improve with the development of more Hot Spots.

With increased availability of WiFi, the convergence of your data and voice will be a natural and seamless transition.

Security with this new technology is a great consideration. This phone has increased security with a more secure public-key encryption system. This assures that only authorized network users can access your service. It’s not like traditional phone service where anyone can access the gray box placed openly on the rear of your building or a common basement.

Cosmetically, this phone has some other enhancements, including a large, color LCD screen and a clamshell similar to current mobile/cellular/GSM phones. This phone will allow you to take calls wherever WiFi is available. You can move freely about, take and make calls, and the person on the other end doesn’t know if you are in your office, car — or even at the beach.

This is a significant advantage if you do a lot of traveling, especially if you travel internationally. Just as you are able to send e-mails anywhere in the world where there is Internet access, the same is true now of VoIP. Your WiFi phone accesses the same Internet anywhere in the world. The cost of a call from Italy is treated the same as a call made within the U.S. and not as an international call.

What other toys do you like?

Most people who are into tech-type toys already have their Bluetooth headsets, cell phones and notebook computers. Keeping with the development of VoIP, I would suggest downloading a free Softphone, XLite from, onto your notebook.

A Softphone is a software program for making telephone calls over the Internet using a computer. It often is designed as an image of a phone that appears on your computer monitor and has the same characteristics of a traditional telephone.

Using your Bluetooth headset with your Bluetooth-enabled computer, you will have the tools to begin using a VoIP service with little to no investment. Of course, you will need to set up an account with a VoIP service provider if you want to place and receive calls over the Public Switched Telephone Network. And remember, the quality of the service is affected by the quality of the broadband connection.

As a general rule of thumb, a phone call with VoIP may require 64Kbs of bandwidth for a quality conversation. So if you download MP3s for your iPod, you probably should schedule the downloads for that long winter nap.

Merry Christmas!

BRIAN CURRY is technical coordinator for Curry IP Solutions. Reach him at (412) 307-3600, ext. 9001, or

Friday, 24 November 2006 19:00

Benefits of merchant capture

With the advent of Check 21, you might want to consider a new way of handling the checks you receive from your customers. Check 21 is short for the “Check Clearing for the 21st Century Act” which went into effect on Oct. 28, 2004. Instead of checks physically being taken from your facility to your bank, through a Federal Reserve bank, to your customer’s bank and then to the customer, they only leave after being electronically processed and eventually shredded.

“With the rollout of Check 21, there are significant savings and efficiency benefits to financial institutions and commercial customers, with the use of merchant capture,” says Tracy L. Marshall, vice president of treasury management at ViewPoint Bank in Plano. “By working closely with your business banker or treasury management professional, you can determine if merchant capture is right for your business.”

Smart Business talked with Marshall to gain more insight on this process.

What is merchant capture?

Merchant capture is a system between a merchant and his bank whereby the merchant captures or scans his customer’s checks and makes his deposit by transmitting the MICR information and the checks image to his bank electronically. The electronic transmission continues through to the customer’s bank for the settlement of funds. This process eliminates the need for the paper check to physically move from place to place. The check writer may receive a substitute check from his bank, or he may see a copy of a substitute check on his account statement.

What are the benefits of merchant capture?

It can be more cost-effective for you and your bank. The scanning process reduces the amount of time previously required for handling checks. Also, you don’t have to worry about getting the checks from your location to the bank before closing time or to the night deposit, which you may consider a safety issue.

Another benefit is quicker availability of deposited funds. In most cases, you can negotiate with your bank a next-day or same-day availability, whereas previously, the funds may not have been available for three to five days — or longer in some cases. If you are tightly managing your cash flow, merchant capture could play a huge role by providing access to funds quicker.

Another benefit is to companies with multiple locations, because they can process checks from all locations into one central bank account instead of maintaining local accounts.

Lastly, since the checks remain in your possession until they are destroyed, you have the ability to go back and look at physical checks for research or collection purposes.

What do I need to know as I consider merchant capture?

The first thing is to have a great relationship with your business banker or treasury management professional. He or she can provide a lot of help as you conduct your cost/benefit analysis. Remember to look at all costs involved in your current check-handling process. Include the time spent

and the processing and services fees currently being assessed by your bank. Determine with their help what, if any, savings will be gained by switching to merchant capture. Be sure to factor in the quicker availability of funds and reduced processing time. Usually, the more checks you handle, the more cost benefits will be realized. If you only handle a few checks per week, there will probably not be enough of a savings to make it beneficial. However, if you anticipate significant future growth, it may be beneficial for you to implement now versus later.

Since the checks will be staying with you, it is also imperative that you develop processes and procedures to secure the checks until they are destroyed. You also will need to determine how long you are going to keep the checks and the method to use for item destruction. Many businesses utilize a shredding service or purchase a high-quality, diamond-cut shredder.

Lastly, if you decide to use merchant capture, the law requires that you advise your customers that their checks will be processed electronically.

What equipment do I need for merchant capture?

You will need access to a merchant capture system and a scanner. Here again, a good relationship with your business banker or treasury management professional is key. They can work with you to establish access to their system and recommend a scanner based on the scanning capacity you need. Scanners currently run between $700 and $2,000, depending on the brand and/or scanning capacity. These costs are trending down as more merchants adopt this product and more scanning vendors enter the market.

TRACY L. MARSHALL is vice president of treasury management at ViewPoint Bank in Plano. Reach her at (972) 509-2020 ext. 3682 or

Tuesday, 25 November 2008 19:00

Make IT work for you

In today’s business climate, chief information officers struggle with tight budgets and limited resources while being asked to have a broader impact across their organizations. Doing more with less is a common theme.

“It is imperative to build a successful partner strategy,” says Keith Blachowiak, senior vice president, operations, and CIO at Pomeroy IT Solutions. “No one can do everything. You need to keep your precious internal resources focused on those items that drive your competitive differentiation and use partners to provide support for back office IT functions — all while lowering your costs and providing enhanced service levels.”

Smart Business gained further insight from Blachowiak into maximizing competitiveness with IT.

What are the focus areas for IT management?

I see three priorities of IT. First, protect the company’s assets. In addition to IT security, this includes the recovery of assets, backups, and business continuity. Second, ensure all deployed technology is running as efficiently today as it did yesterday. This includes keeping the business systems running, networks available, desktops supported, etc. The impact of an unproductive work force due to technology issues is often underestimated. Third, deliver new products and services. This can range from developing new reports to entirely new products.

In today’s highly competitive environment, there is tremendous pressure within an organization for the IT team to place the emphasis on the third priority, which is typically where the competitive differentiation is created. Thus IT management needs to find a solution that provides acceptable levels of protection and operations so they can focus their attention on driving incremental business value. The answer lies in partnerships. By employing partners to handle the back-office, commodity facets of IT, they are able to focus their precious internal resources on the initiatives most important to the company.

Can you give an example?

The IT help desk is a perfect example. Everyone within an organization, from the CEO to the person shipping your product, calls the IT help desk at one time or another. Industry statistics show that most people call the IT help desk one or two times each month. When people place calls to the help desk they are usually in a situation where they cannot do their job and thus are unproductive until the situation is resolved. To make matters worse, very often this also means a customer is not being serviced. The combined loss of productivity and impact to customers can be staggering yet in most companies the IT help desk is not a focus area of the IT management team or the IT budget. The help desk team is usually a lower paid set of individuals, with minimal training, typically working in the back corner of the IT department, answering phone calls but usually providing nothing more than log and escalation assistance. At best, they usually have a system that allows them to record the calls but generally lack the tools to solve the problems in a timely manner. Minimal focus is placed on the average seconds to answer or the first call resolution rate. The company’s IT staff is generally focusing on other more pressing issues and isn’t researching the latest tools for remote problem resolution and knowledge tools — things that would help maximize the productivity of their entire company. By partnering with a company that has already invested in the talent and tools to provide this service, the IT management team can dramatically improve the level of service within the company while maintaining or lowering costs and keeping their focus on other company priorities.

Why are partners necessary to accomplish your goals?

No company, regardless of its size and resources, has enough bandwidth to focus in all areas. Partners have focus. This focus allows them to hire the talent with the necessary expertise, procure the tools and technologies that help deliver world-class service and stay abreast of the latest advancements in their particular specialty. They are then able to spread these costs across multiple companies thereby allowing each individual company to receive world class benefits at typically the same or lower costs than when it was run internally.

Are there other areas in which partners can assist?

As mentioned above, the IT help desk is certainly a prime area. Other areas include desk side support, asset procurement, network and telecom support and management, security, database management, data center management and new technology deployments.

KEITH BLACHOWIAK is senior vice president, operations, and CIO at Pomeroy IT Solutions. Reach him at (859) 586-0600 or by e-mail at

Thursday, 25 September 2008 20:00

Leasing costs

Is your lease up for renewal? Are you considering a move? Do you need to expand? In any case, you need to be aware of all the potential costs of a lease to assure that you are getting the best economic lease terms possible for your budget and business plan.

“Building owners’ goals are to maximize revenue to their building. They will utilize the services of a broker and an attorney in negotiations,” states Stephanie Marino, first vice president in the Corporate Service Group in the Atlanta office of CB Richard Ellis.

“In order to assure yourself that you are getting a fair deal from your landlord, you need to do your homework and build leverage by working with an experienced broker and a real estate attorney.”

Smart Business talked with Marino about getting the best deal when leasing.

How do you go about determining the real cost of leasing?

The first step is to do your homework in the market. Determine your key business drivers: where you want to relocate, the type of property you are interested in, space requirements, the potential need for growth and parking needs. Then shop around and obtain all the information you can about any properties that meet your needs. This information helps you create leverage. The more leverage you have, the better you can negotiate. Keep in mind that a Fortune 500 company is going to have more leverage than a start-up company. You also need to know what concessions potential landlords are willing to give. Typically, if landlord A offers one month free rent for each year of lease term, landlord B will meet the same offer.

Are there costs that don’t belong in the lease category?

Generally, capital improvements to the building should be covered by the landlord. Since the rent amount is based on the landlord’s costs, make sure that he or she is obtaining at least three competitive bids for capital improvements. Rent may be based on inflated costs because the work was done by a profitable captive company of the developer.

It behooves the tenant to make sure that all categories of expenses are spelled out in the lease as well as who is responsible for each. Also, typically excluded from operating expenses are tenant improvements, commissions and most capital expenditures, unless they are required by governmental authorities or serve to reduce expenses (such as a lighting retrofit). Those types of capital expenses can be amortized over the useful life or as dictated by accounting regulations. Additionally, marketing expenses, legal expenses, any services that were reimbursed (such as separately metered electricity billed to individual tenants) and any tenant-specific items, such as locks or signage, are excluded. Some leases allow for tenant relations to be passed through if all tenants benefit. Other leases specifically exclude tenant relations.

What are base rental rates, and how are they determined?

There are four pools of money to consider. First is the base building/financing pool. This includes the base building construction, rate and financing. Next is operating expenses. Included here are taxes, utilities, insurance, common area maintenance, janitorial and repairs. You need to know who is responsible for what and what the management fee is. Is it competitive? Tenant improvements are the next pool. Is the developer proposing a ‘turnkey’ transaction? Are bids competitive? What carry costs and profit fees are added? Who controls the timetable? The fourth pool is the rental rate and concessions. Here is where knowing how many properties can meet your requirements helps. The more options, the better your leverage.

What operating expenses should be included in leasing costs?

It depends on the type of lease:

  • Gross office lease — Includes taxes, insurance, marketing costs, property management fees, engineers on-site, landscaping, utilities, trash collection, snow removal, maintenance and legal fees, among other expenses. The tenant writes one check per month to cover everything.

  • Modified gross rental rate — This rate is most used for single-story office buildings and warehouses. The annual rental rate includes taxes, insurance and common area maintenance. The tenant is responsible for everything else.

  • Triple net lease — The tenant is responsible for everything except a basic rate paid to the landlord.

Are there other areas that should be considered when negotiating a lease?

Rent escalation is here to stay, but is somewhat negotiable. The norm in the Atlanta area is 2.5 to 3 percent per year. In some areas around the United States, it can be up to 4 or even 5 percent. It is important to properly budget for annual increases. Parking fees can run from free to a premium. They are usually a small part of the overall cost and are negotiable. Options to renew or expand are also negotiable. Cancellation options are typically used in longer leases. You may want the option to cancel in three or five years on a five- or seven-year lease, but it may require you to pay for all unamortized improvements, commissions and a penalty, which would be a set amount equal to a (pre-negotiated) number of monthly rents.

STEPHANIE MARINO is first vice president in the Corporate Service Group in the Atlanta office of CB Richard Ellis. Reach her at (404) 504-5950 or