Why Are Defined Benefits Pension Schemes Winding Up

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.

Top 5 Credit Management Software Packages

Credit management software is used to prioritize and optimize credit management workflows. It also performs the function of storing key information and preparing many of the daily tasks that the credit management team are responsible for.

The primary purpose of using this type of software is to improve the efficiency of the credit management process and give employees more time to focus on high priority tasks that require their attention. Many companies start using a credit management software package for the purpose of enhancing the customer experience. As a matter of fact, credit management software packages have been quite effective in improving customer relationships and increasing customer retention.

There are a number of different credit management software packages that are currently available in the market. Some of them can be integrated into the entire accounting system of a company. In other words, the credit management software can become a part of other software systems. If you are looking for top tier credit management software packages, then the list below presents a few high performing products that are worth looking into.

1) CreditManager

The creators of this software have labeled it as the “optimum solution for the automation of accounts receivable”. As the label clearly suggests, this web-based software specializes in automating any activity that relates to the management of accounts receivables. The creators boldly claim that this is the best credit management software package on offer for any business out there. Given how well the product has performed in the market, it is fair to say that their claim is not unreasonable.

CreditManager boasts a Microsoft Certified Gold Partnership which guarantees users that the software will always run on and be compatible with the latest Microsoft technology. One of the reasons why this product has attained commendable popularity is because it can be seamlessly integrated into any business environment, regardless of the size of the company. The users have the option of letting the CreditManager team host the software for them or go for local installation.

The software has been tested on high volumes of invoices and debtors, and according to the creators, it has passed the test with flying colors. Other praiseworthy features of the software include conditional workflow and flawless data integration based on web services.

2) CreditForce

CreditForce has earned the reputation of being called a world class credit management software. It is a great option for mid to enterprise level businesses as it provides unparalleled features to enhance every aspect of the process known as credit management.

For more than 20 years, people have put their trust in CreditForce, which is now a global company as it is being used in 29 different countries. The most notable feature of CreditForce is that it has delivered in every sector and has produced impressive results under the most challenging environments.

The software provides end to end solutions that primarily focus on cash generation, rapid query resolution and intelligent workflows. In addition to that, it improves collector productivity by automating task lists and giving users functions that are extremely easy to use. Furthermore, the software is programmed to reduce the risk of bad debts through proactive account management and will monitor and enforce compliance with the selected credit policy.

3) Alloc8 Collect by Rimilia

This credit management software package is designed to help your collection team focus on creating value and pursuing customers that require extra attention. With the help of this software, they will no longer have to engage in gathering data from spreadsheets and sales ledgers. Most importantly, it will save them the hassle of calling customers that do not need to be called.

Rimilia has marketed Alloc8 Collect as a credit management software that is capable of evolving with time. In other words, the system learns as it goes. It has been programmed to accurately forecast customer behavior by using multiple parameters. This allows your credit management team to have all the information they need in real time.

The software uses intelligent segmentation and customer categorization to help you focus your attention on customers that need to be contacted. The simple, cloud based setup, the self-learning engine, innovative user interface and dynamic reporting are some of the features that makes it a top notch credit management software.

4) OnGuard

OnGuard is an integrated credit management software that maximizes efficiency, improves your company’s insight and increases your chances of satisfying customers.

With OnGuard installed, you can receive accurate information about the payment status of each customer every single time without fail. In addition to that, the software helps you prioritize the most fundamental accounting tasks every day so that your credit management team can allocate their valuable time to other more important work. It provides visible results in real time so that you can keep track of your progress on a regular basis. Most importantly, it provides all the tools necessary to keep your accountants stress free and relaxed.

Interested users can request a demo to test the performance of OnGuard and figure out whether the software is compatible with their business environment.

5) Credica

This software company is a specialist in creating collections, query and credit management software. What is different about their credit management system is that it is highly configurable which makes it easier for users to adjust it with their business environment.

With Credica installed, users can enjoy complete visibility and control over their credit management endeavors. The software is a product of 15 years of development work based on the input of 1000 credit professionals from across Europe.

Like other top notch credit management software packages in the list, Credica is designed to reduce debt, improve the visibility of risk, automate credit management processes and provide a rapid ROI.

How to Check Your Clients Credit Rating

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 

Why Plumbers Need to Control Credit

You would think that reducing credit comes down to getting paid. Contrary to popular belief/opinion, controlling the amount of credit you give to your customers is not about money. It’s about something else.  Sometimes the reason plumbers leave too many invoices out and open for their customers is due to feeling sorry for them. It’s true. Sometimes plumber employ sympathy, when they should be employing empathy.

This is one of the mistake many plumbers make with credit. Here is an illustration of the difference.

Sympathy – You can understand to a certain extent; but, you have never been there personally.
Empathy – You have been there yourself, so you know what it feels like.

If plumbers had more of an understanding of these two things, there would be less credit. Now, let’s take a look at a few other things.

Saying No to the Customer

This is a tough one for plumbers. Some plumbers happen to be very weak. Customers can sense this. They can also use this to their advantage. Plumbers need to learn the “art of saying no.”

What is the main reason for not saying no? It’s becomes more personal than anything. It’s usually not about the money, as I stated above. It’s usually a personal emotion that gets in the way.

People Don’t Like No

This is so true. Some customers will even turn on the water works. They do this only to take advantage of the circumstances. Most of the time the customer can pay, why else would you have been called out. These customers do not want their plumbers to know this.

You will get this with even your most reliable customers. Some feel that if they know their plumbers, he/she will extend their credit. This is not always the best option to use. Best friends even take advantage of one another at times. The same logic applies here.

How will it look if you say no? How will your customers feel about you if you say no? These are probably the thoughts that run through every plumber’s mind.

What the Manual Says and What Really Happens

Almost every manual out there would have you believe that customers will be “understanding” of this. This is complete nonsense. What actually happens is something completely different. There have been customers who have thrown tantrum for not having their credit extended. Their have been complaints filed against plumbers for this happening.

Not all customers are nice and understanding. Sometimes you have to use your best judgement for the situation. Does this question/statement sound familiar?

Do you mind if I pay you after the delivery is made?

Delivery is made. Payment is made too. Ever notice how it’s only a small amount? This happens a great deal. Then the customer will say to put in “on their tab.” Have you ever noticed something. The tab is growing and their payment is not coming down.

Customers do Not Like to be Chased

Credit chasing is one method plumbers use to get their money back on open and extended invoices. Well, customers do not like this either. They take this method personally. If you haven’t already picked up on it, the relationship is very one-sided.

These are the normal responses plumbers will hear?

1)The person who takes care of it is away.
2)I’ve just been so busy over the last few weeks. I promise, the money will come tomorrow.
3)Can you give me just a little bit more time

If you haven’t noticed already, these are also excuses. Plumbers hear these on a regular basis. These excuses are another reason why a plumber should never be so considerate with the credit.

Customers Aren’t Organised

This is another excuse plumbers will hear. The worst part is, many pf them buy into it. The customer will make it out to be the plumber’s fault and personalize it.

Bottom Line

This one is for the all the plumbers doing business out there. If a client can not pay in-full when he/she is supposed to, do not extend the credit. It’s going to hurt your business. All of the above are reasons how some plumbers have gotten cheated in the past by clients. Do not let this happen to you.

No matter what the manual says, credit is not a good thing. Invoices will be out-of-control. Too many sloppy mistakes. Only employ the credit extension if there is an emergency. If there is an emergency, get proof from the client beforehand.

My hope is that this article helped some of you out today. Please do not be afraid to tell a customer no. You might lose a client or two because of this; but, your bottom line will be more secure.  James run Doran Plumbing and Heating in Dublin.

Why Businesses Need to Shred Documents

recycleRegardless of the kind of company, you have whether small, medium, or large; one of the most crucial duties is making sure that your operational cost is manageable. To develop your firm and make it a long-term achievement, you must attain this balance between reinvesting your income and achieving your development goals. You need to have the ability to accomplish this balance while upholding a well cash reserve. The challenge is to minimize expenses by ensuring that operational costs do not encumber the objectives of achieving a healthy return on investments. One of the businesses operating cost where it is beneficial to the investors in the third-party resource to produce high returns on investment is to employ the shred documents services.

When it comes to matters of adhering to conformity legislation that give authorization, companies must follow precise documentation and discarding of classified information practices. Document shredding becomes a vital investment in assisting the company in complying with the law. Internal Document shredding, where workers are in charge of shredding documents at a shredding place, is not a cost-efficient and effectual method to uphold compliance. For example, the possibility of inappropriate disposal are highly maximized, and they are no way you can ensure that every worker adheres to appropriate discarding standards. Besides, each worker will need to be skilled on what classified information is and documents handling methods. Training each worker on this process takes considerable resources and time, and you need to allocate someone to ensure that compliance is maintained.

Confidentiality is a vital aspect of each business, and however, it is not at all times guaranteed or secured. Individuals who own business should take every indispensable preventive measure to make sure that complete damage of classified documents to ensuring that wrong hands do not obtain these documents and cause a violation of security. The perfect method to ensure that appropriate obliteration has taken place is to rent a qualified shredding service. While the significance of these services is widely known, several company owners seem to pay no attention to document shredding.

paperOn the other hand, firms that lack safe, tested, verified, and simple to use a document-shredding system in place are at a high possibility of putting their business in jeopardy. This is for the reason that, if classified information happens to reach your competitor’s possession or somebody with evil intentions, your company will suffer greatly. Besides, you are not the only individual place at dangers but also your customers. For example, you can envisage what can occur if a person gets hold of previous business bank statements.It is very simple for your bank account to tamper with and soon or later you might have bouncing checks this can result in embarrassment to your business corporate.

If something of this magnitude takes place, clients will as well not have trust in you, and apparently this could lead to an ill repute that will make your customers shift to your competitor. Aside from losing customers, consumers can sue you since they suffered financially due to your carelessness. Mostly, if your customers find out that individuals can obtain classified information from your business with no appropriate approval, they lose trust in your company and take it as carelessness. With shredding services, on the other hand, it is likely to make sure that this possibility does not take place.

The perfect method that you can be sure of that there will be no slight chance of any of this taking place is finding a document shredding with a good reputation. There are many shredding services for companies to select from, and while this is the case, it is advisable when you choose you do it wisely. There are some aspects you need to look at, such as the duration in which the service provider has been in the business and if they have the ability to offer referral from happy clients. In addition, you should check if they are using modern tools able to ensure that all your records become completely unreadable. Do not choose the regular shredders that are identified in cutting the papers into strips that can be joined. Rather, go for crosscutting data shredding equipment that are totally secure for you.

It does not matter if your business is small or large; these services are vital in ensuring that the protection of your interests is upheld. They as well guarantee that classified data will not fall into hands of wrong individuals. For the big organizations, there is a lot to lose if you think about the number of customers you will have to lose and the money. Alternatively, small organizations cannot manage to lose the customers have already. It is for all these motives it is vital for you to carry out a detailed investigation and get a service provider with a good reputation that can cater your business requirements.