Credit insurance, which has been around for many years, is a custom financial tool that protects a business from losses due to insolvency or past due/slow pay from their customers.
This problem of insolvency or past due/slow pay from customers isn’t expected to stop any time soon, either. U.S. corporate default rates are expected to rise this year, as marginal companies that already refinanced debt in the last few years stumble because they didn’t reduce debt and just pushed out payment schedules, according to a USA Today article.
“This insurance product can be a cost-effective device for transferring risk — premiums are tax deductible while reductions in bad debt reserves are not,” says Shelley C. White, assistant vice president with SeibertKeck.
Smart Business spoke with White about why the value of this insurance is consistently being demonstrated during economic financial crisis time and time again.
How does credit insurance coverage work most effectively?
If your company does business in which it extends a line of credit for merchandise orders or other accounts payable, then this insurance protects you against losses because when you extend credit to a business, your own financial solvency gets tied in with that account. Coverage can apply to a single debtor or a greater spread of risk by including all of your unquestioned buyers in excess of a certain dollar amount. Annual sales of at least $1 million can make the program more cost effective.
Why should employers look into buying this type of coverage?
Business owners must be more attentive regarding the management of their accounts receivable in the face of this global economic climate. There are more business failures both domestically and internationally. This was borne out by increased worldwide demand for credit insurance across all geographies in the first quarter of 2012, according to the Global Insurance Market Quarterly Briefing. The United States saw a modest increase in demand of less than 10 percent, with the largest demand increase in Asia.
Credit insurance provides catastrophic loss protection that can be used by businesses of all sizes and by all business sectors. There are many benefits as to why a business owner will purchase this coverage. Some include:
- Increasing credit to your existing customer base and extending credit to new customers.
- Improving cash flow.
- Enhancing bank financing by increasing borrowing capacity. Banks will lend more against insured receivables.
- Reducing bad debt reserves and freeing up cash.
- Utilizing it as a risk management tool to improve business planning by elimination of unknown risk.
How does credit insurance protect you better than just looking at a customer’s payment history?
Unfortunately, payment history is not a valid predictor of default. Close to 50 percent of all payment defaults rise from stable and long-term customers. One sudden loss could have a devastating impact on you and your business. Consider that your receivables are a concentration of all your cost and profit, and in many cases, you create them based on a customer’s promise to pay. Therefore, there is a tremendous amount of risk facing your business. Credit insurance is a great tool to remove this disastrous risk from a balance sheet.
What do business owners need to know about purchasing this insurance?
The level of indemnity ranges from 80 to 100 percent depending on your credit management experience, accounts receivable portfolio and premium target. Policies are designed to fit a business owner’s need for coverage. Risk retention comes in the form of co-insurance and deductibles and helps in lowering the premium. Co-insurance is a percentage of the loss you retain on each insured account.
There are only a small handful of carriers that specialize in this type of coverage. Each will have their own risk appetite, underwriting philosophy, and method to how they structure and administer their policies.
Underwriters will research, approve and monitor the accounts you want to insure. They also will approve coverage limits on the customers you want to insure. You will want to provide underwriters with a balanced spread of risk that will offer best pricing and terms. It’s important to clarify with the underwriter your maximum terms of sale, lead times for customer orders and note any special circumstances that might require additional coverage.
You can insure the entire accounts receivable portfolio or a select number of accounts. The premium will be based on your loss history, customer credit quality, spread of risk, and deductible and co-insurance levels in the policy. Usually the premium is less than half of one percent of insured sales.
Your customers’ payment history is not a valid evaluator of their failure to pay. Having a carrier watching over your covered accounts and helping evaluate credit limits is a great advantage to a business owner’s risk management plan. Nonpayment and slow pay by your customers will weaken a company. Credit insurance can help protect a company’s biggest asset — your own business credit.
Shelley C. White is an assistant vice president with SeibertKeck. Reach her at (330) 867-3140 or firstname.lastname@example.org.
Insights Business Insurance is brought to you by SeibertKeck Insurance Agency
When the iconic “Got milk?” campaign was translated into Spanish, Hispanics wanted to know why asking someone if they were lactating was so funny. Language and cultural misunderstandings in the business world could cost you a contract or block your entry into a new market unless you take the time and have the foresight to do your homework.
While a language barrier isn’t easy to fix overnight, even learning a culture or just knowing there are cultural differences can make an impact.
“A language is a lot of investment, not just for the employer but for the employee as well. However, people are more forgiving about a language barrier than if you’re perceived as rude,” says Victoria Berry, program manager of Business and Performance Development with Corporate College.
Smart Business spoke with Berry about some of the pitfalls business owners face when working with those from another culture.
What is the value of learning a new language or culture in the business world?
It has tremendous value in a global marketplace. Even as a U.S.-based company, you have employees who are dealing with overseas customers, clients and partners. There also are more than 3,000 foreign-owned companies in Ohio, 275 of which are in Northeast Ohio and employ more than 30,000 workers. Even within your own company, you can have people from different cultures working together on high-functioning and cross-functional teams. The U.S. is an anomaly when compared to the rest of the world in that having more than one language under your belt isn’t part of our culture.
On top of the more visible language barrier, cultural misunderstandings can be just as dangerous. For example, in the U.S., a high-quality brochure typically has high-gloss or thick-stock paper, but in China, that comes across as cheap; you should use a thinner paper with a no-gloss shine to it.
People tend to overlook the fact that other cultures have different expectations, especially regarding business etiquette or meetings. For instance, in China, it’s considered discourteous to take someone’s business card and not look at it, or at least pretend to read the title. As another example, you wouldn’t want to call a Mexican company between noon and 3 p.m. when businesses are closed, or discuss business during lunchtime. Following these kinds of protocols will impress people from another culture and show you at least did some background work.
What is crucial to know when dealing with foreign businesses?
It’s crucial to know the greeting and how to approach a business situation. In the U.S., we tend to be demanding and quick, assuming people are in a hurry, and therefore, we sidestep some of the formalities. In most other cultures, the friendly bonds that business executives build with others weigh heavily on whether or not they decide to do business you. This is true especially in China and many Latin American countries, where personality and whether or not they feel like they can trust you are essential factors.
Another consideration to remember is that in American culture, we’ll work through breakfast, lunch and dinner. We often have the expectation that you’re going to work until this project gets done. In many other cultures, they work from 9 a.m. to 5 p.m. and then the lights go off. Family and personal time is coveted. In the U.S., we might say, ‘Family comes first,’ but how many of us miss a Little League game to be at work?
How do you know when learning new languages and cultures is worth the resources?
Any time you can foresee that you may be doing business either out of the country or in the country where you know there’s a large population of a specific culture, you probably want to get the employees you know will be in contact with these individuals acclimated.
Which employees might benefit the most from learning a new language or culture?
Depending on the situation and business, it could be your customer service, sales personnel, human resources and/or marketing professionals. Managers and executives who are making the decisions might not need to speak the language but definitely will need to know the culture.
What should employers be looking for to help employees understand other languages, cultures, customs and etiquette?
Some have a tendency to go for the free programs that you find online, but those programs are not always worth your time. A free program, for example, might leave you without the natural fluency and dialect you need. You get what you pay for; this program might cost $200 less but you’re just getting a PDF that someone copied.
Instead, focus on programs with quality instructors and a good reputation in the education/training field. The instructors should be fluent in the language and have teaching experience. Research the organization to find a program that has a history of providing good service.
Remember, even a little knowledge will keep you from inadvertently offending someone from another culture, which brings stress and tension among team members — whether it’s a long-term team or if you’re just trying to get the contract signed so you can do business together.
Victoria Berry is program manager of Business and Performance Development with Corporate College. Reach her at (216) 987-2906 or email@example.com.
Insights Executive Education is brought to you by Corporate College
The constitutionality of the Affordable Care Act was upheld recently by the U.S. Supreme Court, defining and solidifying many legal obligations employers have when it comes to health care coverage for employees.
“The crux of the Affordable Care Act is to make ‘minimal essential coverage’ more available,” says Christopher J. Carney, chair of the Labor and Employment Practice Group at Brouse McDowell. To achieve this, the Act contains provisions referred to as the ‘employer mandate’ or ‘play or pay.’
However, he says the Act does not require employers to provide minimal essential coverage.
“It is more accurate to state that the Act requires employers that meet a certain minimum employee threshold to make available minimal essential coverage or pay a penalty for failing to do so,” says Carney.
Smart Business spoke with Carney about some of the law’s caveats and what employers need to know in order to become compliant.
How does the law impact employers of various sizes?
The employer mandate provides that ‘large’ employers, or those with 50 or more full-time employees, are required to offer full-time employees health coverage effective Jan. 1, 2014. Businesses with fewer than 100 employees will also be eligible to shop for plans in health benefit exchanges that each state is required to establish as part of the Act.
What are the consequences of noncompliance?
Starting in 2014, large employers will be assessed an annual fee of $2,000 per full-time employee — in excess of 30 employees — if any full-time employee is not offered coverage and enrolls in and receives an income-based tax credit to participate in an insurance exchange. For example, assuming at least one employee satisfies the tax credit requirement, a business with 51 full-time employees that does not offer coverage must pay a monthly penalty of 21 (51 total employees minus 30) times the per-employee penalty amount, i.e., one-twelfth of the annual $2,000 per full-time employee. For purposes of the Act, a full-time employee is one employed at least 30 hours per week on average.
Furthermore, if an employee opts out of an employer’s health plan — either because the employee’s share of the premium would exceed 9.5 percent of his or her income, or because the employer’s or insurer’s share of the total cost of benefits is less than 60 percent and the employee obtains a tax credit for coverage in a health insurance exchange — the employer is also subject to a penalty.
Under these circumstances, the employer must pay a monthly penalty of one-twelfth of $3,000 multiplied by the total number of full time employees who obtain the income-based tax credit for that month. This penalty is capped at one-twelfth of $2,000, multiplied by the total number of full-time employees.
How do the state exchanges come into play?
The Act provides for government-run health benefit exchanges from which individuals and employers with fewer than 100 employees can purchase insurance. Plans in the exchanges will be required to offer four levels of coverage that vary based upon factors such as premiums and out-of-pocket costs. Premium and cost-sharing subsidies will be available for low-income families.
Each state is required to have its own health benefit exchange. If a state chooses not to create its own health benefit exchange, then one will be set up by the federal government. Ohio Gov. John Kasich says the state will not create its own and will rely upon the federal government’s health benefit exchange.
Considering the efforts to derail the Act, what would you advise an employer to do?
Employers should continue with their efforts to comply with the Act’s requirements and some provisions need immediate attention. For example, employers and insurers must provide a Summary of Benefits and Coverage for the open enrollment period beginning on or after Sept. 23, 2012. The SBC is similar to, but does not supplant, the Employee Retirement Income Security Act’s Summary Plan Description. If an employer’s SBC fails to satisfy the requirements of the Act, then the employer is subject to a penalty of $1,000 per failure, per participant. Another example is that the aggregate cost of employer-sponsored health coverage must be reported on Form W-2 for 2012 and going forward.
I would not expect a repeal of this law any time soon. Therefore, employers should determine the extent to which the new rules apply. Because the Act does not apply uniformly, an employer should review the law to identify which requirements apply and the compliance deadlines corresponding to each requirement.
When must employers come into compliance with the law?
The Act was passed on March 30, 2010, and not all changes set forth were imposed immediately. Generally, the provisions that were not controversial went into effect first. The provision prohibiting health plans from denying coverage or limiting benefits for children under the age of 19 because the child has a pre-existing condition went into effect immediately. But the ‘play or pay’ provisions for employers go into effect after Dec. 31, 2013.
What can legal counsel offer as employers look to come into compliance with the law?
Particularly when an employer is close to the 50-employee threshold limit, legal counsel can be helpful in identifying and analyzing employer options and obligations. The ‘play or pay’ regulations have not even been promulgated yet, but expect them to be complicated. Issues that will likely require the assistance of counsel include how to account for independent contractors to whom employee functions have been outsourced and whether common ownership of business would require the aggregation of employees.
Christopher J. Carney is Chair of the Labor and Employment Practice Group at Brouse McDowell. Reach him at (216) 830-6825 or firstname.lastname@example.org.
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On June 28, 2012, the Supreme Court announced its decision to uphold the majority of President Barack Obama’s 2010 healthcare law. Known as the 2010 Patient Protection and Affordable Care Act (PPACA), the law includes hundreds of provisions.
The Supreme Court upheld the mandate that all nonexempt individuals maintain a minimum level of health insurance coverage or pay a tax penalty. It also upheld new reporting requirements and mandates for employers that offer coverage to their employees, as well as coverage and benefit requirements for health insurers.
While the Supreme Court’s decision confirmed that Americans will see significant changes to the health care industry in the coming years, it also left many individuals wondering about the personal impact this decision will have on them, their families and their businesses.
“While the Supreme Court’s ruling does not affect current coverage for most health insurance policy holders, it is understandable that many are wondering how the ruling affects them personally in the future,” says Marty Hauser, president of SummaCare, Inc. “And although we don’t have all the answers, we do know some things to help employers and individuals work their way through the mandates and provisions of PPACA that may affect them.”
Smart Business spoke with Hauser about what the Supreme Court’s decision will mean to individuals and employers in the coming years, as well as what employers should be doing now to prepare for the upcoming mandates.
What does the Supreme Court’s ruling mean for the average American?
The ruling of the Supreme Court and the provisions under PPACA affect everyone, from the individual with pre-existing conditions to someone who can’t afford health insurance, to the employer that provides coverage to employees and the health insurance company that administers the plan and benefits. Overall, the goal of PPACA is to make health care coverage available to more individuals than ever before.
The ruling not only affects the availability and affordability of health care, but it offers peace of mind for individuals by requiring insurers to provide 100 percent coverage of some benefits, including preventive care and wellness visits, immunizations and some types of counseling and testing.
What are the next mandates and/or provisions that will affect employers and individuals?
Effective Aug. 1, health insurers are required to cover women’s preventive services at 100 percent. This includes well-woman visits; gestational diabetes screening for women 24 to 28 weeks pregnant and those at high risk of developing gestational diabetes; human papillomavirus DNA testing every three years; sexually transmitted infection counseling and HIV screening and counseling; contraception and contraceptive counseling; breastfeeding support, supplies and counseling; and domestic violence screening.
In addition to newly covered preventive services for women, another provision of PPACA that will affect employers and individuals is the Summary of Benefits and Coverage provision. The SBC provision applies to both fully-insured and self-funded group health plans and is meant to help employers and individuals compare benefits between different insurers and/or plans.
The SBC document is designed to describe health plan benefits, including what the plan will cover, limitations and coverage examples. The SBC document must be provided to participants of a health plan enrolling or re-enrolling on or after Sept. 23, 2012. Check with your insurer to determine their process for providing the SBC.
What mandates go into effect in 2013 that will impact employers and/or plan sponsors?
Upcoming mandates slated to go into effect in 2013 for employers and/or plan sponsors include Form W-2 reporting for the 2012 tax year; a $2,500 limit on employee contributions to health Flexible Spending Accounts for plan years beginning in 2013; a requirement for employers to notify employees of the availability of health insurance exchanges; a 0.9 percent tax on earned income of high-income individuals under the Federal Income Contributions Act; and a 3.8 percent Unearned Income Medicare Contribution tax for high income individuals/families.
What mandates go into effect in 2014 that will impact employers and/or plan sponsors?
Mandates effective in 2014 include the ‘pay-or-play’ mandate; employer certification to Health and Human Services regarding whether the group health plan offered to employees provides minimum essential coverage; an increase in permitted wellness incentives from 20 percent to 30 percent; automatic enrollment of new employees in a group health plan for large employers with 200 or more employees; a 90-day waiting period limit for coverage; coverage of certain approved clinical trials for non-grandfathered plans; guaranteed availability and renewability of insured group health plans; prohibition on pre-existing condition exclusions; and complete prohibition on annual dollar limits, which will primarily impact those in the individual market.
What should employers/plans sponsors be doing now to prepare for upcoming mandates?
The most important thing employers or plans sponsors should do now is to start talking to their insurer about insurance options available to them and consider their long-term goals and strategies. It’s also important to figure out when the mandate and provisions will affect the coverage and benefits offered to employees, as some mandates and provisions go into effect upon renewal and are not automatically required, and not every provision applies to each plan type.
Because parts of the mandates and rules aren’t fully written, guidance is still needed. Employers and plan sponsors should pay attention to information regarding upcoming items as information is released.
Marty Hauser is the president of SummaCare, Inc. Reach him at email@example.com.
Insights Employee Benefits is brought to you by SummaCare, Inc.
On June 28, the U.S. Supreme Court upheld the majority of the Patient Protection and Affordable Care Act with a 5-4 ruling. As both sides of the political spectrum use the decision on the controversial law to win support for their own policies, employers may be wondering where this leaves them.
“The decision provides some necessary clarity that can lead to more decisive health benefits planning,” says Bruce Davis, principal and leader of Health and Group Benefits Consulting at Findley Davies.
At the same time, Davis warns this ruling isn’t the end of the matter. Some health care issues are unlikely to be resolved until after the November election and the health care exchanges smaller Ohio employers were counting on will be operated by the Department of Health and Human Services.
Smart Business spoke with Davis about what the Supreme Court’s decision means for employers now and in the future.
How does the Supreme Court’s decision impact employers?
Employers now know what they need to do this fall as they head into open enrollment. They need to:
- Comply with the new Summary Benefit Coverage requirements by modifying open enrollment materials to include new coverage examples with help from health insurance carriers or third-party administrators and professional advisers.
- Work with payroll vendors, IT staff and human resources to ensure they can report the aggregate cost of their employer-sponsored health coverage on employees’ W-2s to be issued in January if they have more than 250 employees.
- For plan years beginning on or after Aug. 1, provide expanded coverage for eight categories of women’s preventive care without cost sharing if they are nongrandfathered under the PPACA.
What might this mean in terms of cost?
For 2013, businesses can examine their demographics to understand what expanded women’s preventive care requirements mean in terms of increased claims costs, but generally, Findley Davies believes it will be approximately 1 percent. Other costs, such as coverage for children up to age 26 and general adult/child preventive care requirements had already gone into effect.
Cost increases may elicit new work force strategies. For example, employers with more than 50 employees will be penalized for not offering essential health benefits or offering benefits deemed unaffordable. However, those requirements apply to full-time employees — those working an average of 30 or more hours weekly. Employers in some industries may begin using part-time employees or independent contractors to a much higher degree.
What parts of the Affordable Care Act remain undecided?
In July 2012, Ohio and several other states decided not to participate in expanded Medicaid, which was permitted in the Supreme Court decision, and will not establish a state-based health insurance exchange. HHS will operate the exchange in Ohio in 2014 to serve individuals and employers with fewer than 100 employees. Smaller employers were investigating the idea of moving toward a defined benefit contribution model and letting employees use the exchange to choose their own coverage based on their risk tolerance.
If you have fewer than 100 employees, you’ll need to follow the developments in each of the states in which you do business to determine whether they will move ahead with a health insurance exchange for 2014. It won’t be clear for another year which carriers will participate in each exchange, which plans will be offered and their costs.
Further, the first comparative effectiveness research fees are due July 2013. Employers will remit the $1 per member fees using IRS Form 720, but the IRS has not yet revised that form to take these fees into account. There also are several requirements where the federal government should be issuing guidance in 2012, such as how to file a quality of health care report and how non-discrimination rules apply to insured plans that favor highly compensated employees.
How does politics play into what happens next?
This will be a huge issue for the November election. For example, if the Democratic majority in the Senate changes, then some smaller measures might pass, such as restoring the ability to pay for over-the-counter medicines under flexible spending or health savings accounts.
However, employers cannot wait for the election results. Even if Republican candidate Mitt Romney is elected, the inauguration won’t happen until Jan. 20, well after businesses must comply with some of the act’s provisions.
What should employers tell their employees?
The decision relieved some anxiety and provided clarity, but employers need to begin communicating to their employees. Take advantage of this opportunity and reinforce your commitment to providing a competitive, affordable health plan as you work to comply with the new PPACA requirements.
Employers also need to be ready for questions from their female employees. Health care flexible spending accounts will become limited to $2,500 in January, which needs to be explained in upcoming open enrollment materials. In addition, there’s the misconception that reporting the value of health care coverage on a W-2 means it is taxable. Employers need to be proactive in explaining that this is information gathered for the federal government so it can administer the premium subsidies under the health insurance exchange programs.
Health benefits remain a very important part of employees’ total compensation. Employers will want to drive that message, as well as demonstrate how these benefits fit into the overall value proposition of what it means to work for their organization.
Bruce Davis is principal and leader of Health and Group Benefits Consulting at Findley Davies. Reach him at (419) 327-4133 or firstname.lastname@example.org.
Insights Human Capital is brought to you by Findley Davies, Inc.
As the economy has encouraged more than a few business owners to tighten budgets and search for inefficiencies, workflow automation is enabling companies to do the same amount of work with fewer people.
“We’re looking out for your bottom line because we take these inefficiencies and wrap them in automation to not only reduce overhead and cost, but also let you spend more time worrying about generating new revenue rather than the loss of revenue,” says Curtis Verhoff, systems integrations and applications manager with Blue Technologies.
Smart Business spoke with Verhoff about how business workflow automation could make sense for your organization.
How does business workflow automation work?
Employers can introduce efficiencies by looking at business processes and putting in various solutions — often a combination of hardware and software — that allow them to automate workflows for areas such as shipping and receiving, accounts payable, accounts receivable and human resources.
Business workflow automation is more than just taking physical documents and data and digitizing them so employees can view them quickly. It involves installing software with rules, actions and notifications that help employees more easily and quickly process documents and information within the organization. For example, the hiring process is growing more complex with numerous steps to be completed such testing or certifications. Automated workflows can help employees keep track of all steps and automatically initiate the next one; the workflow solution informs people when tasks have been completed, what is outstanding and what requires immediate attention.
What advantages does workflow automation bring and how are those magnified in a tough economy?
Workflow automation allows all the players in your department or business to be more productive. Along with doing more with fewer people, workflow automation is a time saver as tasks can be completed quicker. With accounts payable, for instance, the workflow automation enables the invoice to automatically enter the system by calling on various employees to look at it, approve it or move it on without a lot of handholding. The system can be set up for different levels of approval based on the monetary amount, and a series of checks and balances would require validation before payment is made.
This type of automation has become especially important as companies in the last four or five years — particularly in Ohio — have taken a hit as far as jobs. Businesses have had to find ways to keep up with the workload with fewer people. Employers are battling with keeping their level of production, satisfaction and customer service at the same level or higher with fewer resources.
Employers also are drawn to the technology because they are skeptical about the current economy and where it’s going. It’s often easier to look at software automation to help the existing staff keep up with the work level, as well as grow it, rather than hire additional people who might not be needed next year.
What departments and industries are using workflow automation the most?
Some of the biggest uses are for accounts payable and accounts receivable, as well as in the industries of law and education. However, automation works across a wide range of industries, as just about every company is working with information and documents to some degree. The automation solution can be tailored to fit from a small volume of information and documents to a large amount.
It’s important to keep an open mind because, in some cases, automation has a role that isn’t immediately obvious. In addition, the systems are flexible enough that many times they can be adapted to other inefficiencies you may find later.
How does an employer decide if it needs to consider workflow processes?
If not enough time or attention seems to be available; if you’re not able to service your current customer base; or if you see customer service levels decrease, those are some serious red flags. If inefficiencies are coming out of the woodwork, unlike in the past, the first solution might not be to hire another employee.
With the help of technology experts, you can uncover your internal challenges and current deficiencies by processing business documents or data. Those experts can spend time with you to discover what your business does and how it does it to determine what level of impact the automation would have for your organization. In a few cases, the cost might not justify itself because the inefficiencies or deficiencies don’t equate to much.
Once you’ve installed the workflow automation, what is the best way to overcome the challenge of training and employee buy-in?
There are a couple of tactics, but the most successful is to choose an employee to be extensively trained in the software and put him or her in charge of that initiative. It gives a company control and flexibility because it has someone internally who knows the solution very well and can train or re-train employees at his or her own discretion and timetable.
In addition, if the trainer is within the organization, employees take greater strides in learning the system and using it on a daily basis. You have a faster response with problems when the trainer can help another employee immediately. You’re putting skin in the game to have the employee making sure everybody is properly trained and utilizing the system to the nth degree.
Curtis Verhoff is a systems integrations and applications manager with Blue Technologies. Reach him at (216) 271-4800, ext. 2251, or cverhoff@BTOhio.com.
Insights Technology is brought to you by Blue Technologies
Event planning is no longer just “party planning.” Event planning has become a powerful tool for business success by helping to increase sales through live events and saving time and money when planning or organizing company events. Planning an event takes a great deal of time, energy, skill and creativity to effectively execute.
“Mid-sized businesses often do not realize the value of having someone actually trained in event planning; they often allocate the job to an administrative professional who has a full-time job and little time to pay attention to the vast details it takes to successfully implement an event,” says Michele Clark, program manager, The Shlensky Institute for Event Meeting and Planning, for Corporate College.
Even if a business thinks it cannot afford an event planner, it could afford training someone in its office. And, any administrative professional that is given the task of planning and executing events should be compensated for the increase in time and effort it takes.
Smart Business spoke with Clark about the importance of training employees in the fundamentals of event planning and understanding best practices in this essential role.
Why does a business need to ensure its marketing coordinator or a similar employee is properly trained in event planning?
Marketing and event planning really go hand in hand. Events have become an advantage for any business’s marketing strategy, and when combined with an advertising campaign, it vastly increases the awareness and visibility for a product or service. It gives your audience a live environment for your brand. The more people see, touch, taste and experience your product or service, the more you sell.
Marketing personnel also become involved in the acquisition of sponsors for events. To sell an event, it’s important to understand how to look at the event through the eyes of a planner so you are able to provide real marketing solutions to a sponsor’s goals.
What is involved in planning a business event?
A business event is no different than any event in that it all comes down to the details. Whether you are planning a large conference or a gala affair, knowing how to manage every detail is key to its success. If you don’t know the fundamentals of planning an event, you could be wasting a great deal of time. For example, a large conference can take up to year to plan. An event planner handles all of the tasks related to an event, such as research, food, decor, entertainment, transportation, invitations, accommodations, speakers, activities, staffing, supervision, evaluations, and the list goes on and on.
How does event planning affect a business’s profitability and reputation?
Having someone trained in event planning actually saves time and money. If you have someone who understands time management and the organization of an event, it is much more efficient than having someone just plan the event on the side trying to find their way through hundreds of logistics.
As for reputation, there is a remarkable difference between someone with experience and training who executes an event versus someone who just ‘wings it.’ If something can go wrong, it will, and a well-trained event planner understands the challenges and knows how to avoid or solve them. Your well-managed events will speak for themselves and be less likely to become a failure, which could, in turn, give you a bad reputation.
What kind of training should be provided to employees who deal with events and hospitality?
A comprehensive course designed specifically for event planning is excellent training for someone given the task of planning events and will provide that person with an appreciation of what it takes to plan an event. An employee needs to understand the fundamentals, such planning a budget, dealing with sponsors and clients, and utilizing organizational tools.
However, experience is the No. 1 attribute when it comes to executing events. So look for a course that also offers your employees experience through volunteer opportunities, internships and working with an event planner for the best combination of learning.
Also, if your company holds conferences on a regular basis, employees can receive further training specifically in Meeting and Conference planning. There is also other targeted training such as trade show and exhibition management or event planning trends and technology.
Trends and technology include information on registration software or how to take advantage of iPhones during a conference. Technology is now a large part of the hospitality industry, such as using something as simple as the ‘Bump’ app, where attendees can download their information then just tap other smart phones to receive their information. It’s a terrific networking tool and saves paper. There is an influx of meeting technology that changes rapidly and accommodates various attendee ‘smart’ tools.
As the hospitality industry grows in Northeast Ohio, how will this affect corporate business events?
It is a really exciting time for event planning in Northeast Ohio. The event and meeting planning industry is increasing in Northeast Ohio faster than the national average, at 14 to 19 percent over the next few years, according to O*net OnLine.
The new casino alone just begs for an activity, anything from corporate team building to a birthday party. Then you bring in the Medical Mart and Conference Center and you are surrounded by opportunities for event marketing projects, product launches, entertainment parties, major conferences and trade shows. The list of what can take place here is ongoing and event planning and management is alive and well.
Michele Clark is the program manager, The Shlensky Institute for Event Meeting and Planning, for Corporate College. Reach her at (216) 987-2909 or email@example.com.
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Before entering into an international commercial agreement, it is vital to ensure your company will be protected in the event of a dispute.
Litigation can drag on for years and can be extremely disruptive and expensive. Litigating against a foreign company can be particularly complex with issues that include service of the complaint in a foreign country and jurisdictional objections that can be raised by a foreign defendant. That is why international arbitration may be the answer, says Michael B. Dubin, a member with Semanoff Ormsby Greenberg & Torchia, LLC.
“International arbitration is an easy way to litigate against a foreign company that allows you to avoid a lot of the headaches,” says Dubin. “With any international commercial agreement, consult with an attorney early to assist with both the structure of the business terms as well as contingencies in the event of a dispute.”
Smart Business spoke with Dubin about the advantages and intricacies of international arbitration.
What is international arbitration?
International arbitration is a confidential, private arbitration proceeding to resolve disputes between parties to an international commercial agreement. The agreement provides that all disputes arising out of or relating to the agreement will be resolved by binding arbitration by one or more arbitrators (usually three) selected by or on behalf of the parties and sets forth under what rules the arbitration will be conducted.
The arbitration is similar to a trial but heard before experienced attorneys and/or businesspeople sitting as the arbitrator(s), rather than a judge or jury. After the arbitration, the arbitrator(s) will issue a binding award that cannot be appealed except under limited circumstances, such as for fraud or undue influence on the arbitrator(s).
How can international arbitration help resolve a dispute for my company?
International arbitration provides a quicker, more efficient resolution of a dispute than litigation and allows the parties to avoid the uncertainties of litigating in a foreign court. A typical international arbitration can be completed in approximately one year from the date of filing.
Arbitration generally, including international arbitration, substantially limits the exchange of discovery between the parties, thereby expediting the entire process. The arbitrator(s) routinely allow the parties to request information and documents from the opposing party and possibly take a limited number of depositions, if warranted. However, depositions are discouraged.
One disadvantage to arbitration is the actual out-of-pocket costs to the parties. For example, a party initiating an arbitration seeking damages of $500,000 to $1 million can expect to pay a filing fee of approximately $8,500. In addition to the filing fee, the parties are required to pay the hourly or daily rates of the arbitrator(s), which can be expensive in a case with three experienced arbitrators.
How can companies best protect themselves before international arbitration, especially mid-sized companies that might not be familiar with the process?
Most mid-sized companies are unfamiliar with international arbitration. If your company is contemplating entering into an international commercial agreement, consult with an attorney during the initial stages of negotiation instead of waiting until after the agreement is signed and a dispute has arisen.
There are several critical items that companies should consider and provisions that should be included in international agreements if arbitration is the desired dispute resolution method. These provisions include:
- A clause providing that all disputes arising out of or relating to the agreement will be resolved by binding arbitration.
- Under what rules the arbitration will be conducted.
- That interim (injunctive) relief shall be permitted.
- The number of arbitrators and how they will be selected. For instance, agreements commonly provide for three arbitrators, one to be selected by each party and the third arbitrator, who will act as the chairperson, to be selected by the two party-selected arbitrators.
- The language in which the arbitration will be conducted.
- The state and/or country’s substantive laws that will govern the arbitration.
- The city and country where the arbitration will be conducted.
- Whether the prevailing party will be awarded its attorneys’ fees and costs.
- The award can be enforced in any court of competent jurisdiction, meaning the prevailing party can enter the award as a judgment in court to enforce and collect on the award.
What steps should a company take once it becomes aware of a dispute?
Once you become aware that your company is involved in a dispute that could lead to arbitration or litigation, it is important to preserve all relevant documents and to inform your employees (and IT team) not to delete or destroy any documents, including electronic documents, that may be relevant to the dispute. Also contact your company’s in-house counsel and/or outside counsel early on to best protect your company.
International disputes can be complicated and expensive, but a well-drafted international commercial agreement can simplify the process, help control costs and put your company in the best position for a successful resolution.
Michael B. Dubin is a member at Semanoff Ormsby Greenberg & Torchia, LLC. Reach him at (215) 887-2658 or firstname.lastname@example.org.
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The Patient Protection and Affordable Care Act (PPACA) was signed into law on March 23, 2010, and since then, the health care delivery system has experienced rapid change. Health care reform will be the biggest change to the U.S. health care system since Medicare was established in 1965. According to KPMG and Milliman reports prepared for the Ohio Department of Insurance, nearly 1 million more Ohioans will shift to Medicaid in 2014 at a cost of $250 million to taxpayers. It is estimated that this will increase to $600 million in 2019, while another 524,000 individuals could shift into the proposed government subsidized exchange. It’s also estimated that 660,000 fewer Ohioans will get their health insurance coverage from their employers. Not only does health care reform impact the way health care services are covered and administered, it also changes the delivery of health care and the ways consumers will obtain insurance. In addition, employer groups that offer benefits to their employees will experience change due to health care reform laws. Therefore, many employers have questions regarding how they can continue to offer comprehensive benefits to their employees while maintaining the costs of such benefits. “The small- to medium-sized employer will definitely be affected by the new legislation,” says Marty Hauser, president of SummaCare, Inc. “Many employers plan to continue offering benefits to their employees, but the way these benefits will be offered and the contributions made by the employer will likely change.” Smart Business spoke with Hauser about changes and mandates under the health care reform law, as well as post-reform strategies employers may use when offering benefits. What changes under PPACA have already gone into effect? In 2010, changes include coverage of children with pre-existing conditions; coverage of dependents up to age 26 under federal law and up to age 28 under Ohio law; elimination of lifetime limits of coverage; regulation of annual dollar limits of coverage; and a prohibition against rescission of coverage. In addition, certain preventive services became covered at 100 percent for most policies. What changes under PPACA are up next? While many of the changes under the PPACA law will go into effect in 2014, others will take effect in the coming months, and insurance companies are busy making appropriate preparations now. In August 2012, new women’s health preventive services, including contraception, will be covered at 100 percent if received in-network. These services fall into the categories of evidence-based screenings and counseling, routine immunizations and other preventive services for women. For policies issued or renewed after Sept. 23, 2012, insurance issuers will be required to distribute Summary Benefits of Coverage (SBC) documents to potential enrollees upon application and upon renewal. These documents will allow consumers to easily compare plans from different insurance companies. Under the law, two new resources scheduled to be available for consumers to purchase policies. Consumer Orientated and Operated Plans (CO-OPs) go into effect in 2014 and will offer consumers more choice when it comes to purchasing an insurance policy. CO-OPs are nonprofit groups designed to offer individuals and small businesses more affordable options, and their customers will direct them. Low-interest federal loans will be available to eligible private, nonprofit groups to help set up and maintain the CO-OPs, which can be operated locally, statewide or across several states. The second new resource for consumers in 2014 will be exchanges. Exchanges are state-based transparent, competitive insurance marketplaces, administered by a governmental agency or nonprofit organization, where individuals and small businesses with up to 100 employees can buy affordable and qualified health benefit plans. Standard benefit tiers will be offered on each exchange, and states will have broad latitude in design of the exchanges. All plans offered on the exchanges will be guaranteed issue with no medical underwriting, and some consumers may be eligible for subsidies based on their income. What strategies might employers use so they can continue to offer health insurance to their employees in the post-reform market? Strategies include providing employees with a stipend to pay for health insurance in the individual market or providing a defined contribution and moving to the purchase of policies on the exchanges. Another strategy is offering a policy that promotes a culture of wellness that features a smaller network, larger employee contribution or incentives for meeting wellness and/or preventive care goals. Employers may also continue offering benefits in the same manner as they have in the past. What changes are insurance carriers making? While the focus of most carriers has always been to provide cost-effective care in the most appropriate setting, insurance carriers now are participating with providers in creating Accountable Care Organizations (ACO) and Patient Centered Medical Homes (PCMH) that aim to further provide savings and promote coordinated, appropriate care. More information and education about these activities will be forthcoming in the near future. Where can employers get more information? Begin with your current insurance carrier or broker. Share questions or concerns. You can work together to determine the best option for your business. Also, www.healthcare.gov provides information that outlines the basics of the reform law and its provisions. Regardless of the final outcome of PPACA, health care delivery will be changing. With the spotlight on quality, effective outcomes and transparency, the move toward improving the delivery system is certainly well under way. MARTY HAUSER is the president of SummaCare, Inc. Reach him at email@example.com. Insights Health Care is brought to you by SummaCare, Inc.
The crowdfunding component of The Jumpstart Our Business Startups Act (JOBS) is designed to help startup and emerging growth companies raise capital through new securities exemptions.
“It’s a promising platform for companies that are already doing small-dollar raises of capital,” says Jeff Roberts, a director at Kegler, Brown, Hill & Ritter. “With the high cost of capital from venture and angel funds and the general unavailability of bank funding, small businesses, startups and emerging growth companies are looking for different ways to raise funds, so they are very excited about the possibility of crowdfunding. It’s worth the hype because currently, raising capital is expensive and investors are hard to locate.”
Smart Business spoke with Roberts about how to benefit from crowdfunding.
What is crowdfunding?
Crowdfunding concepts have been in the market for quite some time with companies like Kickstarter providing a platform for businesses to raise money through donations. With the passage of the new JOBS Act, businesses will soon be permitted to issue equity to investors based upon a securities exemption that allows companies to raise up to $1 million annually from non-accredited, small-dollar investors such as friends and family, and those who want to place their money somewhere other than the stock market. Funds will be raised through regulated online crowdfunding intermediaries.
Investors will be limited in the amount of money they can invest. According to the JOBS Act, investors with an annual income or net worth of at least $100,000 can invest up to 10 percent of their annual income or net worth. Those with a net worth of less than $100,000 can invest the greater of $2,000 or up to 5 percent of their income or net worth. The dollar amounts at risk on the front side are small, which helps alleviate the fear of some skeptics who think some investors may spend their life’s savings on a fraudulent venture.
What kinds of companies should consider crowdfunding to raise capital?
Local restaurants (or other small businesses with dedicated customer followings) that need to make certain capital improvements can go out and raise the money for those projects through these online intermediaries. Any startup company that doesn’t generate a lot of income up front could also take advantage of the crowdfunding platform, though such companies may have more difficulty in generating a buzz.
The financial disclosure requirement for raising $100,000 or less is not as great as raising between $100,000 and $500,000. In the latter case, you have to provide reviewed financials, and in raising more than $500,000, companies have to provide audited financials. The cost of providing those financials has been a roadblock for some small startups. When their accounting bill can be $10,000 to $20,000 before they raise a dime, it can be prohibitive to their market access. Given the cost profile, companies with less than $100,000 in financial needs may be best served by this new platform.
What are the potential legal risks associated with crowdfunding?
Companies seeking to raise funds though this exemption need to be more concerned about compliance with state laws that govern corporations, limited liability companies and other entities because, given the relaxed federal regulation, greater emphasis will likely be placed on state law fiduciary duties.
If Ohio can come up with some sort of regulatory scheme that makes it efficient to raise capital this way, then it could become the Delaware of crowdfunding. A lot of the governmental bodies and politicians like that idea and are behind it, but it’s still early. And since federal regulations will trump state law, how this will be regulated between states is still up in the air.
What could change about crowdfunding regulations?
Crowdfunding won’t become a reality until the end of the year because the SEC has 270 days from the date of enactment to put its regulations in place. While some specifics are included in the JOBS Act, there are still some open questions and equity cannot be raised through the crowdfunding securities exception until the regulations are released. What worries me is that the SEC, in an attempt to hurry up and get something out there, might throw out proposed regulations that are not really well thought out, which may create additional road blocks that effectively eviscerate the purpose of the JOBS Act, which is to make it easier and cheaper to access money.
What can companies do now?
Put it on your radar as an opportunity. Some companies considering doing raises in the next six months are operating under the old SEC rules and might put off those investments until they can see what happens with crowdfunding. But otherwise, not much can be done until we know what that landscape looks like.
If a company is interested in crowdfunding, where should it start?
Seek out legal counsel because this is such an unknown area. Issuers of crowdfunding equity are going to have questions about which intermediary to use. Should they go through a licensed broker/dealer instead of a crowdfunding intermediary? How much money should they raise? What are they going to have to provide in the way of financial disclosures? Hopefully, as the market develops, the process will become more efficient and well defined and the cost of fundraising will decrease.
The ability to go to nonaccredited investors online and the ability to reduce transaction costs by not expending substantial amounts of money on securities compliance is a step in the right direction, but time will tell how successfully crowdfunding can be implemented and what type of demand it generate.
Jeff Roberts is a director with Kegler, Brown, Hill & Ritter Co., L.P.A. Reach him at (614) 462-5465 or firstname.lastname@example.org.
Insights Legal Affairs is brought to you by Kegler, Brown, Hill & Ritter Co., LPA