Category: Business

As you all know, Pension Schemes are a unique type of saving plan that helps you save money which will be usually be used later in life often in retirement. It is also known that Pension Schemes have advantageous tax treatment when you compare it to other forms of savings. We can divide Pension Schemes into to main schemes and they are:

• Defined Benefits Pension Scheme
• Defined Contribution Scheme

Defined Benefits Pension Scheme

Defined benefits pensions pay out so-called secure income for life which will increase each year. The scheme is contributed by your employer and is he is responsible that there is enough money when you decide to retire.

A lot of these schemes have a normal retirement age of 65. At that time your employer often stops to contribute to scheme and your pension will start to be paid.

When you die, it might continue to be paid to your spouse, civil partner or dependents. This is usually a fixed percentage (for example 50%) of your pension income at the date of your death.

Defined Contribution Scheme

Defined contribution scheme is based on building up a pot, also called pension pot. This scheme is composed of employers contribution plus return on investments and tax reliefs.  Defined contribution scheme usually consists of two steps.

First step

In this step, it is often that funds are invested in stocks and shares thus allowing it to grow over the years. You can also choose from a range of stocks and shares, but also remember that you can value of the investment can drop.

Second step

You can access and use your pension pot in any way you wish but only if you are 55 years old. You can:

• Take your whole pot in one go. One-quarter of funds will be tax-free and the rest will be taxed the usual way.
• Take funds as and when you need them, but remember that one-quarter of each withdrawal will be tax-free while the rest will be taxed.

The size of contribution benefits pension pot and the amount of income you get when you retire will depend on:

• How long you save for
• How much you pay into your pot
• The choices you make when you retire
• How much you take as a cash lump sum
• How well your investments have performed
• How much your employer pays in (if a workplace pension
• Annuity rates at the time you retire – if you choose the annuity route
• What charges have been taken out of your pot by your pension provider

When you retire, your pension contributor an employer will usually offer you a retirement income based on your pot size, but you don no have to take this.

Defined Benefits Pension Schemes Winding Up

Defined benefit schemes have been all over media in recent months. The great majority of this scheme are low funded which means that they do not have enough money to cover all its members.

Because of this many of defined benefit schemes are being closed, also known as winding up. Low or poor funding can be caused if the company operates bad, but the majority of employers are closing these schemes because of rising costs that are associated with paying defined benefits schemes and they are not guaranteed to employees.

Previously, it was believed that defined benefit pensions were guaranteed, but they are not because they can only be paid if there is enough money in the scheme to meet liabilities of all its members.

Following reasons are the most cause why the great majority of employers or trustees deciding to close or wind up benefit pension scheme, of course, there can be some other reasoning, but these are most common:

• Agreement with between employer and employee. The contributing employer is not willing any longer to support or to contribute to defined benefit scheme but is willing to support a defined contribution pension scheme. This is usually happening when costs of defined benefits scheme are too greater that of a defined contribution scheme, so employer and employee agree to close defined benefit scheme.
• If the employer operates poor and because of that employer may be in financial difficulties unable to fulfill all obligations that come with a pension scheme.
• If defined benefit pension scheme is reducing in size it can become too small to operate. This is usually happening if the scheme is closed for new members and existing members are dying or retiring. In this case most common is that employer and existing members decide that it is in the best interest to wind up the scheme.

As a result of above mentioned many are transferring from defined benefit pension scheme to defined contribution scheme. But this is not without risks.

Risks of transferring to a defined contribution scheme

Any potential advantages of transferring from a defined benefit pension scheme to a defined contribution pension scheme can be outweighed by the costs, risks, and loss of benefits involved. Your future pension income can not be predicted precisely no matter are your employer is contributing or it is a personal or stakeholder pension. With a personal or stakeholder pension, you will give up any benefits you had in the former employer’s scheme.

Risks of staying in your defined benefit scheme

Staying in a defined benefit pension scheme can also be very risky. If your employer is operating well he still needs to secure that defined benefit scheme has enough funds to fulfill all obligation to scheme members. Some of these employers sponsoring these schemes have gone out of business, not leaving enough money to pay promised pension.

If an employer is going out of business without enough funds in its pension scheme, the Pension Protection Fund might be able to provide compensation, but this will not be the full amount of the pension you have accumulated.

Whatever you decide always consult with specialized financial advisors to avoid any unwanted risks.

Businesses depend a lot on cash flow. No matter how much money is given to clients and how many days they are given to pay, a late payment could be very adverse. It could impact the business immensely in terms of cash flow. This could impact on how you conduct your dealings and can slow down business growth.

Why You Should Check a Clients Credit?

It’s because of this that receiving payments on time from your customers is definitely important. The question would be how do you know who is suitable to be lent money? Or who is good at repaying the money? This is where the credit rating comes in. The credit rating simply shows how good your client is at making sure that they repay their debts and if they fulfil their debt as previous agreed upon. Now you might wonder how do I check my client’s credit rating? Here are some of the methods you could use:

How to Check a Clients Credit Rating

– Credit Checks

A credit check would help you assess the reliability of the customer. They will allow you to know how long it took your customers to repay their funds as well as whether they fulfilled their entire payment. It usually doesn’t take long to do a credit check but then again it depends on the client you are dealing with. Either way, it’s beneficial for the business and can help ensure that the cash flow doesn’t get disrupted. Credit reports for most individuals are available and can normally be purchased from the main credit reporting agencies such as Equifax or TransUnion.

– Accounts

This might be a bit more complicated than the other methods because some knowledge of accounting is required. This also depends on the clients because not every client will have published their accounts, but for those who would have, you can take a look at them. This is where some knowledge is required because you’ll need to know how to apply formulas such as the gearing ratio, current ratio and the acid-test ratio to the data. The advantage though is through the accounts you’ll get to know the cash flow of the business and whether they are able to repay you or not.

– Bank References

This is not always an advised method to use, but it can work for you. Banks always have information about their clients who have accounts with them or who have conducted business with them. You could ask your potential client to provide you with a bank reference so that you could get an opinion based on the bank’s review of the customer. It has to be noted that this method is not a definite way of ascertaining the reliability of your client because it may be their first time doing business hence might not have a bank reference.

– Pro Forma Invoicing

This is a great way to build trust among you and your clients. The pro forma approach involves you to ask the client to make payments after an invoice is produced in the first few transactions. If they fulfil these payments, it provides you evidence that the client could be trusted with a loan/credit. This is best used for those who encounter start-ups looking for some credit because they have no other way to prove that they can be trusted.

– References from Suppliers

Although not as trustworthy, this is one of the easiest ways to assess the credit rating of your potential client. This works because the suppliers deal with the client directly in their dealings on almost a day to day basis, so who better than them to tell you whether the client can be trusted or not and whether they pay their debts on time or not? Like any other method, this also has its downsides in that the client might only use one supplier as a reference or might have a good relationship with only one supplier out of their other many suppliers. To curb this problem, always remember to ask for multiple references from different suppliers.

– Using an Agency

Not just any agency a credit checking agency. These agencies are made up of professionals whose sole job is to assess the credit rating of businesses. They can also provide you with a risk assessment on the client if you were to ever offer credit to the person/business. It has to be pointed out that this method is probably the most expensive on the list. These agencies don’t come cheap, so it’s best to use it on the larger clients with whom you stand to lose a lot of money if you were to give them a loan.  This post is from Eimear at Fluke Ireland 

When we get into a cycle, it is hard to break it, even if the cycle is as vicious as that of late payments. It affects both our personal and business lives negatively and will only hurt us more and more in the long run. How do these cycles happen and how do we break them?

 

High Interest Rates Are Brutal For Late Payments

The reason that this happens is that those with less financial means tend to think in the more short term range. Getting ten dollars now is much more valuable to them than getting twenty dollars next week, which causes them to use money-lending sites like Wonga to get quick loans. In fact, Wonga advertises that borrowers can get up to four hundred dollars within minutes of their loan being approved. Wonga is a very popular money-lending company. However, their interest rates are staggering. Their standard APR is 5,853%. And yet they can get away with it because of the poor man’s psychology.

Poor Man’s Psychology

The poor man’s psychology is simply discounting future costs for the present’s decisions. To someone who is desperate to pay the bills before the bank forecloses, it is worth getting a loan with five thousand percent annual percent interest rate. At least at the time. When the bill comes due with all of the interest and late payment fees, then they begin to regret their decision. But they needed to save their house. How did they get so poorly off that their home was in danger of foreclosure?

This also goes back to the poor man’s psychology of instant gratification before long term effects. Even with a well-paying job, it is easy to go broke unless the money is handled properly. Thinking in the short term range means more impulse buys, splurging, and unnecessary luxuries are made until a whole week’s pay is gone and there isn’t any money to buy groceries. So you take money out of your checking for groceries even though that money was supposed to go to your car payment. To make the car payment,you take money out of your account that was meant for your mortgage payment and so on.

How to Break the Cycle

The easiest way to stop yourself from being ruined is to keep yourself from getting into the cycle to begin with. Budget your money and stick to it. Try to live on only ninety percent of your income so you can use the other ten percent for emergencies, investments, and saving for the future.

If you’ve already found yourself getting behind on the bills and you’re not sure how to get out, then stay off the money-lending sites all together. They will only hurt you long term and if you make decisions with the long-term in mind then you will be happier even in the short term. If you’re short on a payment and need to get some money fast, then sell some of your unwanted possessions to raise the cash or do some odd jobs in your neighborhood. You can also find extra work online for some extra money as well.

Even if you are already caught up in the vicious cycle, start budgeting and living within your means. Remember, you can always put that extra ten percent towards the bills you owe to get caught up that much faster.

How It Affects Businesses

Late payment doesn’t just affect our personal lives. It can also affect our businesses as well. For small business owners, one of the biggest problems is getting their customers to pay on time, especially if it’s from big businesses. Big businesses are often late with their payments to smaller businesses, sometimes a full month later than the agreed date in the contract. This interrupts cash flow for the small businesses which makes them late on their own payments and eventually makes them collapse.

In the UK, government policies are being put in place to fight late payments made to small businesses. But there are some things small businesses can do to stop themselves from getting caught up in late payments. First, make sure that it isn’t you holding up the payments by accidentally withholding information. Second, make it easy for them to pay you. Provide all the information they need and if possible provide multiple payment options. Third, take action. Keep calling and emailing the company from the day the payment is due until they pay it. And when all else fails, you can file a lawsuit for breach of contract.

The advancement in technologies today has increased the demand of many professions. One particular profession is an electrical engineer, who is responsible for developing and testing products that are powered by electricity. Everything from refrigerators, computers, iPods, and televisions are all built based on the specifications of an electrical engineer.

Electrical engineers go through extensive training before they are considered for hiring in the production world. They require a certain skill set to be a qualified engineer, to include, having a natural knowledge of math, science, and computer skills. These skills are critical during your educational studies as becoming an engineer will require you to take advanced college courses in these fields. In addition, they must have excellent communication skills, as they are often required to talk with customers and other co-workers on specification of system design and operation.

Once they are trained and certified as an electrical engineer they will be able to start putting their skills into use. Some specific job duties that they perform are to design, implement, and improve on electrical devices. This means they are constantly testing and evaluating equipment to ensure they are operating at maximum efficiency, and if there are ways to improve the product implement those processes and make sure all PAT testing is up to date. In addition, engineers often find themselves talking with customers on current products and what they want to see for the future. This means the electrical engineer must discuss ways to improve the current product or facilitate ideas with the customer on how to create a better version of the current product. This is where the communication skill set come into play, poor communication with your co-workers or customers can result in projects not getting completed or not to customer satisfaction.

Another significant job duty for electrical engineers is the role of preparing and studying technical designs and specifications of various electrical systems on devices. To do this you must be able to understand how the device operates when powered by electricity and be able to follow wiring diagrams on a map. This is especially critical for engineers that work on the infrastructure of electrical power grids across the country, which include the power plants, power lines, and relay stations. Along with knowing how the power grids work, engineers will also be tasked to conduct field surveys, maps, and diagrams of the electrical grids and recommend ways to improve efficiency and reducing operating costs.

Senior electrical engineers who have gained experience through the years often find themselves developing budgets, and operating costs for electrical equipment. They are asked to find the cost of how much a device will cost to build, as this will determine how much to sell the product, which directly affects profits for the company. Also, some senior electrical engineers get involved in compiling reports on engineering studies and projects that government agencies or companies are interested in. So thorough background knowledge in all aspects of engineering is needed to be able to compile these types of reports.

Being an electrical engineer is an award career and will continue to be in demand for the foreseeable future. This is a positive trend for prospective engineers looking to make it a career for them.