Author: Service2Client

Understanding Carbon Accounting

Understanding Carbon Accounting, what is Carbon AccountingAlso known as greenhouse gas (GHG) accounting, carbon accounting is a way for managers and analysts to measure a company’s total carbon emissions. 

It’s a comprehensive approach to analyze how a company uses energy for its buildings, offices, conveyances and production processes. Carbon accounting examines firsthand, secondhand and tertiary energy uses.

Environmental, Social & Governance

Looking at ESG standards (Environmental, Social & Governance), it’s not only becoming encouraged, it’s becoming required for businesses, especially for publicly traded businesses. Whether it’s the U.S. Securities and Exchange Commission (SEC) or other governmental agencies in the global economy, these administrative organizations are mandating emission declarations for businesses to account for their carbon emissions. It’s also necessary for third parties (lenders, potential and current investors) to review and analyze a company’s current and past performance, along with industry comparisons.

It’s important to distinguish the differences between carbon and GHG accounting. Carbon accounting only looks at carbon dioxide emissions, while GHG looks at the broader category and illustrates why doing so is important. Businesses look at nitrous oxide and hydrofluorocarbons (HFCs), for example, when accounting for GHGs. However, such measurement is based on the so-called carbon dioxide equivalent or C02e. This helps standardize GHGs into the C02e standard for carbon accounting, giving government and interested parties the ability to measure across a universal standard. Two common uses for this standard are for carbon offsets and credits.  

Calculating Emissions

1. Scope 1 factors in emissions from the company’s directly controlled or owned assets. Examples include factories, production, conveyances, etc.  

2. Scope 2 looks at what the business uses in regard to climate-controlled services for their factories, offices, etc. It also looks at the company’s contracts with power suppliers.

3. Scope 3 factors in indirect emissions the business may incur. This includes commercial commuting activities, investing, how assets are disposed of, etc.    

According to the SEC, Scope 3 emissions must include those “upstream and downstream activities in a company’s value chain” if they’re necessary for investor consideration or if the business has pledged to meet certain metrics for Scope 3 levels.

From there, a business’ activity metrics are calculated according to governmental and industry standards, such as the U.S. Environmental Protection Agency, ISO Standard 14064, or The Climate Registry’s General Reporting Protocol, etc. Businesses’ results are presented against past results, where they discuss how they will improve their efficiency internally and work with their supply chain partners.

Compliance

While compliance is one important reason, third-party audiences, such as family offices, institutional money managers, lenders, etc., are equally as important. Asset managers and family offices, for example, look for ESG or environmentally friendly investments to attract retail or “smart-money” investors. Similarly, activist investors, especially those looking to make companies more environmentally friendly, can look at companies to see how their carbon emissions stack up against their industry and overall commercial peers.

Another consideration is that by meeting regulatory or industry requirements and meeting ESG standards, businesses could qualify for preferential or market rates for funding from the debt markets.

Conclusion

The more companies are well-versed in this type of accounting, the better they will meet government and investor expectations.

Cybersecurity Best Practices for the Holiday Season

Cybersecurity The holiday season is when most people go on shopping sprees and travel. This season also witnesses a surge in online activities in today’s digital world. Unfortunately, cybercriminals take advantage of this period to launch attacks. Therefore, cybersecurity should be the top priority for a business gearing up for peak sales or a shopper looking for the best deal.

Understanding Holiday Cyber Threats

Businesses and consumers face unique challenges during the holiday season. For businesses, the increase in traffic and online transactions can overwhelm systems. This may make them vulnerable to attacks. Cybercriminals may use tactics such as ransomware, phishing scams and fraudulent transactions during the busy season. Consumers, on the other hand, get lured by malicious ads, fake websites and phishing emails that may appear as irresistible holiday deals.

Recognizing these risks is important to staying safe for both businesses and consumers. Understanding them also means taking proactive measures to reduce exposure to cyber threats.

Why Cybersecurity Matters

The lack of effective cybersecurity can lead to financial loss, reputational damage and disruption to a businesses’ operations. On the other hand, consumers face identity theft, unauthorized purchases and compromised financial accounts.

According to the Retail and Hospitality Information Sharing and Analysis Center (RH-ISAC), threats such as ransomware, phishing, and account takeover (ATO) attacks intensify as consumer activity surges. In their 2024 Holiday Season Cyber Threat Trends Report, RH-ISAC emphasizes proactive defense measures, especially during high-traffic periods like the holiday season.

Cybersecurity Best Practices for Businesses

Security measures for businesses include:

  • Set up a holiday strategy – over the long holidays, businesses tend to have a change in work schedules and fewer staff members. Having a holiday cybersecurity strategy can safeguard against potential cyber threats. This can include an emergency response plan and designating responsible individuals for cybersecurity.
  • Endpoint security – this involves protecting devices like computers and smartphones used in the business. It is important to update all software, install antivirus programs and enable firewalls to shield the business network from intrusions.
  • Employee training – human error is one of the leading causes of data breaches. Therefore, it is important to educate staff to recognize phishing attempts. They should also know the importance of strong passwords and reporting suspicious activity.
  • Monitoring systems for unusual activity – This requires a business to invest in tools that help detect suspicious behavior in its networks. This should include fraud detection systems that will help identify unusual transaction patterns. It also helps detect potential compromises from third-party vendors.
  • Backup and recovery plan – business continuity in case of an attack is crucial. Therefore, a business should ensure that data is regularly backed up and stored securely. It also helps to test the recovery process regularly.

Cybersecurity Best Practices for Shoppers

Consumers are not immune to holiday cyber-attacks. A consumer must keep the following in mind:

  • Shop from secure websites – shoppers should be cautious by checking website security. They should check that a website includes “https://” and a padlock icon in the URL. Also, confirm the correct name of the website. It is also important to avoid clicking on links from unsolicited emails or social media ads. This is a common phishing tactic.
  • Use secure payment methods – a credit card provides better fraud protection than a debit card. Consider digital wallets that have an extra layer of encryption. It is also crucial to avoid saving payment details on websites.
  • Avoid public wi-fi – shopping on the go may see some shoppers use public networks. These networks expose data to hackers.
  • Be wary of emails and messages with deals that sound too good to be true. Always verify sender authentication and, where necessary, contact the company directly.
  • Be cautious about unexpected package notifications. Unexpected package notifications can be a phishing tactic to steal personal information or install malware. Always verify the sender and avoid clicking on links in unsolicited messages.
  • Be cautious of holiday scams like fake charities, gift card scams and fake gift exchanges that prey on the season’s generosity and excitement. Scammers may trick customers into buying gift cards or sharing personal details through fraudulent schemes. Staying skeptical of unsolicited offers and never sharing sensitive information with unverified sources will help ward off cybercriminal attacks.
  • Activate multi-factor authentication (MFA) – adding MFA creates an extra layer of security for highly sensitive accounts such as email, bank, and work-related logins.

 Closing Thoughts

The holiday season is meant to be a time of celebration and connection, not worry and stress. By implementing robust cybersecurity practices, businesses can protect their operations and customers while shoppers enjoy safe, hassle-free transactions.

2025 Federal Income Tax Brackets

2025 Projected Tax BracketsAccording to estimates, inflation adjustments to the Internal Revenue Code are expected to yield increases of 2.8 percent compared to 2024 amounts. This means wider tax brackets and increased exemptions, among other things. With the U.S. Bureau of Labor Statistics consumer price index (CPI) moderating, this increase is about 50 percent less than 2024’s inflation adjustment. Below, we’ll look at what the projected 2025 inflation adjustment means in terms of dollars and cents for you and your taxes.

Individual Income Tax Brackets

The tables below illustrate the individual income tax rates and brackets for 2025.

Individual Income Tax Brackets & Rates: Tax Year 2025

Single Taxpayers
10% 0 – $11,925
12% $11,926 – $48,475
22% $48,476 – $103,350
24% $103,351 – $197,300
32% $197,301 – $250,525
35% $250,526 – $626,350
37% $626,351 and Over

 

Married Filing Jointly
10% 0 – $23,850
12% $23,851 – $96,950
22% $96,951 – $206,700
24% $206,701 – $394,600
32% $394,601 – $501,050
35% $501,051 – $751,600
37% $751,601 and Over

 

Married Filing Separately
10% 0 – $11,925
12% $11,926 – $48,475
22% $48,476 – $103,350
24% $103,351 – $197,300
32% $197,301 – $250,525
35% $250,526 – $375,800
37% $375,801 and Over

 

Heads of Household
10% 0 – $17,000
12% $17,001- $64,850
22% $64,851 – $103,350
24% $103,351 – $197,300
32% $197,301 – $250,500
35% $250,501 – $626,350
37% $626,351 and Over

 

Trusts & Estates Tax Brackets

The table below illustrates what the income rates and brackets are expected to look like for Trusts and Estates in 2025.

Projected Trusts and Estates Tax Brackets & Rates: Tax Year 2025
10% 0 – $3,150
24% $3,151- $11,450
35% $11,451 – $15,650
37% $15,651 and Over

 

Standard Deduction Amounts

The table below illustrates what the projected standard deduction amounts will be for 2025, with a comparison to 2024.

Projected Standard Deduction Amounts
  2024 2025
Single $14,600 $15,750
Married Filing Jointly $29,200 $31,500
Married Filing Separately $14,600 $15,750
Head of Household $21,900 $23,625

 

Alternative Minimum Tax (AMT)

The table below illustrates the anticipated AMT exemptions for 2025.

AMT Exemption Amounts
Tax Year 2025
Single $88,100
Married Filing Jointly $137,000
Married Filing Separately $68,500
Trust & Estates $30,700

 

Capital Gains

The rates applied to long-term capital gains are not expected to change for 2025; however, the brackets that apply to different rates will expand. Note that, in considering the table below, a 20 percent tax rate applies to capital gains that are over the 37 percent ordinary tax rate threshold. Furthermore, capital gains on art and collectibles are subject to other exceptions.

Maximum Capital Gains Rates for 2025
  Zero Rate 15% Rate
Single $48,350 $533,400
Married Filing Jointly $96,700 $600,050
Married Filing Separately $48,350 $300,000
Head of Household $64,750 $566,700
Trusts & Estates $3,250 $15,900

 

Conclusion

First, it’s important to remember that all the figures above are only projections. The IRS will not publish the official numbers until later this year. Moreover, as these rates and brackets have increased, they have done so significantly less than in 2024 and 2023, largely driven by lower inflation.

Breaking Down Bill-and-Hold Arrangements

What are Bill-and-Hold ArrangementsLooking at accounting and journal entry considerations, if accounts receivables are debited and revenue is credited, it can be interpreted as the business recognizing revenue without the customer paying. As such, the U.S. Securities and Exchange Commission (SEC) sees the potential for intentional manipulation of earnings. It is important to review this type of transaction to see how the U.S. government and accounting standards treat deviations from these activities.

Defining Bill-and-Hold Arrangements

This type of agreement permits sellers to recognize revenue before delivery is made. Instead of shipping the product first, the seller bills the customer first, and delivery is arranged for a future date.

Based upon Accounting Standards Codification (ASC 606-10-55-83) and the U.S. Securities and Exchange Commission (SEC), for a customer to have obtained control of a product in a bill-and-hold arrangement, they must meet all of the following in order to move ownership of the product to the customer, with the seller still in custody of it.

  • Customers have explicitly asked for such an arrangement. Purchasers have to demonstrate a material reason for buying the goods through this route.
  • The goods must be sequestered explicitly for and attributed exclusively to the customer.
  • Customers must be able to physically receive the goods.
  • The separated goods are expressly prohibited from being used for any other purposes, including those of other customers.
  • Purchasers assume all risk.
  • There’s a written, fixed commitment to buy the goods.
  • The ultimate delivery of goods must be done according to a set timeline that follows realistic commercial uses.
  • The finished goods shall be 100 percent finished and be transit prepared.

Illustrating a Bill-and-Hold Arrangement

Companies in commodity-intensive establishments (miners, farmers, etc.) often use heavy equipment to recover and produce outputs. Since a mining or energy company is unsure of the profitability when recovering resources that are price-dependent on dynamic economic conditions, they often enter into a bill-and-hold arrangement with their supplier. Since the steel producer and the drilling company have an existing arrangement with standard terms, there’s an established history of bill-and-hold transactions. If machinery or drilling equipment is fully built for one of these companies, the equipment manufacturer will sequester the equipment and prohibit it from being shipped to any other buyer. Similarly, the invoice for the equipment must be satisfied by the customer in full within 30 days of the equipment being placed and waiting for the resource company buyers. The last step is for the buyer to arrange delivery in a reasonable manner.   

Based on this real-world example, revenue should be recognized once it’s set aside exclusively for a particular mining or natural resource extraction company.

Considerations Beyond the Goods Themselves

Goods producers also must determine if there’s a custodial component during a bill-and-hold arrangement. If a custodial arrangement exists, either part of the original cost of goods sold to the customer needs to be determined or a separate charge, and therefore, exclusive recognition of revenue for the custodial services provided should be addressed outside of the bill-and-hold arrangement.

When it comes to revenue recognition under certain circumstances, goods producers may be able to recognize revenue despite the traditional requirement that goods have left a business, and the seller has materially satisfied their traditional requirement for accounting standards.

5 Tips to Keep End-of-Year Spending Under Control

5 Tips to Keep End-of-Year Spending Under ControlIt’s that time of year again. Halloween has just come and gone – and now we’re hurtling headlong into Thanksgiving and Christmas. For holiday shopping, it’s tempting to turn a blind eye and put everything on your credit cards. However, if you don’t want to have a financial hangover in January, February (and so on), you might want to take a look at these tips.

Create a Budget and Stick To It

The earlier you sit down and do this, the better. Decide on a financial cap per gift per person, then shop. Then, get creative. For instance, what if you bought a pre-loved item for someone? Made something for someone? You might also decide on a gift, then shop around and compare. So, when Black Friday and Prime Days raise their heads, you’ll already have made your selections. More on that below.

Put a Lid on Impulse Buying

This is a tough one. As mentioned above, Prime Day and Black Friday are hard to avoid. They scream at you on your TV and phone scroll, so it’s easy to get off track. If you want to avoid runaway spending, here are two ways to approach these retail spectacles. First, you can keep an eye on which item you want – then plan and research. Buy it when the price is crazy low, and walk away from all the frenzy, all the while tracking your spending. Second, you can dive right in, browse all you want, then put some things in your cart. But don’t buy it then. Come back a day later and decide if the purchase is really necessary. At this moment, you might also imagine the pain you could feel in 2025 with a bunch of debt hanging over your head. Employing this mindset could make all the difference.

Use Your Credit Cards Wisely

According to Jennifer Ellis, senior consumer manager at BOK Financial, credit card debt is on the rise. And with high interest rates, if you do have a balance, you’re going to pay more for your items. Before you set out to buy gifts, try to pay your credit card balances in full to avoid big fees. This way, you won’t carry the burden of a lot of debt into the new year.

Try Envelope Stuffing

This is an old trick, but a good one. Get envelopes, put the name of your giftee on the front, then put the amount of money you’re going to spend in it. Once you’ve used up the cash in the envelope for said person, you’re done. Also, using cash is more startling – you see the money go bye-bye! It’s so easy to gloss over the actual cash amount when you’re using plastic, as it almost doesn’t seem real. Working with real moolah is a tried-and-true technique, a wake-up call that you’ll appreciate.

Plan Early for Travel

Buy your tickets early for Thanksgiving and the December holidays. Monitor airline, bus, and train websites. Set alerts to notify you when the prices go up or down. All it takes is a little time and elbow grease. In the end, it’s worth it.

Most importantly, having a financial plan during this time of year is key. Yes, life is busy, but if you want to step into the new year without carrying the shackles of debt, using some of these ideas might be your saving grace.

Sources

https://thestatement.bokf.com/articles/2024/10/the-spookiest-trend-spending-too-much-on-the-holidays 

 

Cash Conversion Cycle (CCC) Defined

Cash Conversion Cycle (CCC) DefinedThis metric, which is also referred to as the cash cycle or the net operating cycle, looks at the time a business takes to recover its investment in inventory to eventually sell. The process starts from selling its goods, collecting on outstanding receivables or invoices, and satisfying its operating costs with the sale proceeds. It’s normally measured in days to determine the company’s financial health.

The less time necessary to complete the CCC, the healthier a company is financially because it means the business’ money spends less time tied up in inventory or collecting on outstanding inventory. It’s important to be mindful that different industries have different CCC time frames. Generally speaking, most calculations are done on either a quarterly (90 day) or an annual basis (365 days).

How to Calculate CCC

The formula is as follows:

(CCC) = Days Inventory Outstanding (DIO) + Days Sales Outstanding (DSO) − Days Payable Outstanding (DPO)

It can be broken down into three different stages:

Stage 1

Days Inventory Outstanding (DIO) looks at how many days the inventory takes to sell to customers. It’s calculated as follows:

DIO = (Average Inventory (AI) / COGS) x Time-Frame (In Days)

AI = 1/2 x (BI + FI)

BI = Beginning Inventory

FI = Final Inventory

It’s important to define COGS, taken from the Income Statement, which is Cost of Goods Sold or the costs personally connected to creation of goods or services (raw materials, labor or electricity). The lower the number, the faster a business is selling its goods.

Stage 2

Days Sales Outstanding (DSO) measures the time it takes the business to collect payment from all outstanding sales completed.

DSO = Average Accounts Receivable (AAR) / Daily Revenue

AAR = 1/2 x (SAR + FAR)

SAR = Starting AR

FAR = Final AR

Accounts Receivable are what companies record on their balance sheet to keep track of what customers owe for the goods delivered or services rendered. The lower the results, the better the company’s cash position is because they’re able to satisfy outstanding invoices.

Stage 3

Days Payable Outstanding (DPO) is the third and final stage that calculates how much businesses owe to their suppliers the business has sourced input materials from, within the time frame the suppliers’ invoices are due.  

DPO = Average Accounts Payable (AAP) / Daily COGS

Where:

AAP = 0.5 x (SAP + FAP)

SAP = Starting AP

FAP = Final AP

COGS = Cost of Goods Sold

There are different ways to interpret the DPO result. A low DPO means the business is taking care of its bills from suppliers. However, potential investors, internal managers, and supervisors can see if the business can either negotiate lengthier payment terms while still maintaining good terms or if the company negotiates early payment terms or invests the money on a short-term basis to earn more for the company before paying suppliers’ bills. A high DPO, after an investigation of a company’s financials, might show the company is taking longer than its peers to pay creditors.

While calculating the CCC is relatively straightforward, the more complex process is interpreting it correctly and using judgment for a business based on industry averages and how the numbers relate to current economic conditions.

Protections for Election Candidates and the Electoral Process; Improving Programs for Veterans and American Indians

hr9106, hr6513, s1549, s656, s70Enhanced Presidential Security Act of 2024 (HR 9106) – During an election year, the Department of Homeland Security identifies major presidential and vice-presidential candidates in consultation with a committee of congressional leaders. This bipartisan bill instructs the U.S. Secret Service to use the same criteria for establishing the level of protection for major candidates as provided for presidents and vice presidents. The bill was introduced by Rep. Michael Lawler (R-NY) on July 23. It passed in the House on Sept. 20, in the Senate on Sept. 24, and was signed into law by the president on Oct. 1.

COCOA Act of 2024 (HR 6513) – This bipartisan Act, titled the Confirmation of Congressional Observer Access Act, was introduced on Nov. 30, 2023, by Rep. Mike Carey (R-OH). It was passed in the House on Sept. 9, in the Senate with changes on Sept. 24, and cleared the House with changes on Sept. 25. The president signed it into law on Oct. 4. The bill requires states to designate congressional election witnesses to observe the administration procedures of federal elections, including casting, processing, scanning, tabulating, canvassing, recounting, auditing and certifying ballots during the pre-and post-election period. However, the bill prohibits the observers from handling any ballots or equipment, advocating for a particular candidate, issue, or party, or interfering with the election process in any way. Election officials are further authorized to remove any designated observer who does not follow the guidelines detailed in this bill.

Congressional Budget Office Data Access Act (S 1549) – The Privacy Act of 1974 generally requires written consent before a federal agency is allowed to disclose certain personal records. However, some agencies are exempt from this requirement, including the Government Accountability Office and the National Archives and Records Administration. This bill designates the Congressional Budget Office (CBO) to be exempt as well in an effort to expedite sharing between the CBO and federal agencies. The bill passed in the Senate on June 22, 2023, in the House on Sept. 23, 2024. It was signed into law on Oct. 2, after having been introduced by Sen. Gary Peters (D-MI) on May 10, 2023.

Veteran Improvement Commercial Driver License Act of 2023 (S 656) – This Act was introduced on March 6, 2023, by Sen. Deb Fischer (R-NE). It provides guidelines to approve assistance by the Department of Veterans Affairs (VA) for commercial driver education programs. The requirements include appropriate licensing and usage of the same commercial driver education curriculum as other approved institutions. The bill passed in the Senate on Nov. 2, 2023, the House on Sept. 25, 2024, and was enacted into law on Oct. 1.

Tribal Trust Land Homeownership Act of 2023 (S 70) – This bill was introduced by Sen. John Thune (R-SD) on Jan. 25, 2023. It requires the Bureau of Indian Affairs (BIA) to process and complete all residential and business mortgage packages within 20 or 30 days, depending on the type of application. It also establishes the position of Realty Ombudsman within the BIA’s Division of Real Estate Services. This is a bipartisan bill that passed in the Senate on July 18, 2023, and currently sits in the House, where it has a high probability of passing before the end of the current Congressional session.

Pre-Retirement Planning Guide – Legacy Planning

Pre-Retirement Planning Guide - Legacy PlanningStep 6: Looking to Legacy Planning to Address Future Needs of Family

How do you want to be remembered? People often view their legacy as a way of disseminating assets to charitable venues to be remembered as passionate and generous supporters. That is one aspect of a legacy.

But perhaps the most important legacy plan is how you want to be remembered by your family, friends and loved ones. If you do not develop an estate plan and communicate it with your loved ones, if you leave your financial accounts and investments in a state of disarray by not keeping files organized and beneficiaries updated, then you leave a huge burden behind when you pass away.

This may very well mar the fine memory your loved ones have for you. After all, having to manage a complex or messy estate over a long period of time could overwrite the previously fond memories they had for you. No one wants their legacy blemished by administrative chaos, so now is the time to get your financial house and estate plan in order. Don’t let the last memories of you be ones of aggravation and bitterness.

Repair and Strengthen Relationships

If you are estranged or have an uncomfortable relationship with someone close to you, do yourself and them a favor by rectifying the situation. This may take time, so begin the process during your pre-retirement planning phase. Remember, no one wants to die having said harsh last words or having not seen a loved one for a long time.

Make part of your plan a commitment to shore up relationships. You can start by making a list of people with whom you should contact, jotting down a few thoughts about what you want to communicate, and devising a plan for how to accomplish this. It might be a special weekend with each of your children, or inviting a long-lost sibling to take a vacation with you, or taking your spouse out to dinner and reiterating your love for one another. Remember, your legacy is about how you want to be remembered, so make some new memories to crowd out any poor ones.

First, Loved Ones; Then Philanthropy

Once your relationships are in good shape (which takes ongoing maintenance – it’s not a one-shot deal), turn your attention to your philanthropic legacy. This includes how you want to distribute your assets to both your family and the causes you care about.

The following are some key components of a legacy plan:

Wealth Transfer

Be sure that your estate plan efficiently communicates and transfers your assets to the appropriate heirs. It also should incorporate prudent tax planning so that your beneficiaries do not pay more in taxes than required. Remember, part of your legacy will be determined by how well you protect your assets, not just from taxes but also from creditors, divorce settlements, and other potential risks.

Education

Leaving a large sum to heirs can be overwhelming. It’s a good idea to help them learn about financial responsibility, wealth management and philanthropy. By helping them understand tactics about which assets to leave intact, which to transfer to other accounts and which they can liquidate for their own use – in a tax-proficient manner – is key to ensuring they’re ready to manage the legacy you pass on.

Charitable Giving

There is a range of sophisticated vehicles that allow you to maximize the long-term value of gifted assets to charitable and passion causes. For example, a donor-advised fund (DAF) enables you to donate cash or securities to a charity-sponsored fund and help direct where charitable grants are distributed. Another option is to set up a private foundation. This is a public 501(c)(3) organization that invests, manages, and distributes your donations to charities; however, this option is really only viable and cost-efficient if you have substantial assets (multi-millions) in your estate.

There are also trust vehicles designed to balance your philanthropic goals with leaving enough assets for your own living expenses and/or an inheritance for heirs. Fortunately, these also may enjoy tax benefits, such as an upfront tax deduction, removing assets from your taxable estate, or avoiding capital gains taxes on donated securities. Here are some examples:

  • Charitable Lead Trust (CLT) – The charity of your choice receives trust income (fixed payment or fixed percentage) for a specified term/or your lifespan, after which the remainder goes either back to you or another trust beneficiary.
  • Charitable Remainder Trust (CRT) – The trust distributes income to you or another beneficiary for a specified term or your lifespan, after which the remainder goes to a designated charity.
  • Charitable Remainder Unitrust (CRUT) – The trust distributes a fixed percentage of its balance to you or a beneficiary for a specified term or your lifespan, after which the remainder goes to a designated charity.
  • Charitable Remainder Annuity Trust (CRAT) – The trust distributes a fixed payment to you or a beneficiary for a specified term or your lifespan, after which the remainder goes to a designated charity.

Setting up a trust to meet a variety of goals is very complex. Be sure to work with an experienced and qualified estate planner to set this up or, again, your legacy could be tarnished if your estate is not disseminated as planned.

Social Media Marketing: A Game-Changer for Business Growth

How to Social Media MarketingSocial media has evolved from a simple networking platform to a powerful business tool. Businesses today use these platforms with billions of active users worldwide to connect with their target audience. Social media allows businesses of all sizes to reach audiences in a way that traditional advertising, such as print or television, cannot.

The Role of Social Media Marketing in Business Growth

Social media marketing uses social media platforms such as Facebook, LinkedIn, Instagram and TikTok to promote a business’ products or services. This is done through sharing content like posts, videos and ads to engage a targeted audience and eventually make sales.

With 5.22 billion social media users as of October 2024, businesses can reach customers around the world with ease. The platforms are also suitable for sharing information, enabling companies to communicate with customers about promotions, events or new products or services.

Each platform offers different strengths, and a business can choose which ones suit its target audience. For instance, LinkedIn is more professional and a good platform for B2B opportunities. On the other hand, TikTok and Instagram are suitable for visual storytelling, making them good places to showcase products.

Benefits of Social Media Marketing

Some of the key benefits of marketing on social media include the following:

  1.  Increased Brand Awareness
    Consistently and strategically posting on social media enhances brand visibility. A brand gains recognition as users engage with the content through likes, comments, and shares. Content that goes viral expands a business’ reach, introducing new audiences to the brand.
  2. Improved Customer Engagement
    Social media gives businesses a direct line to customers. Whether replying to comments or through direct messages, these interactions help build trust and create a sense of loyalty. This two-way communication gives businesses a better understanding of customers’ needs while also allowing them to respond quickly to inquiries and feedback.
  3. Cost-Effective Advertising
    Unlike traditional advertising, social media offers cost-effective marketing solutions. With social media, a business can run targeted ads based on demographics, interests or behaviors. This ensures they reach the right audience without wasting resources. This makes it possible for small businesses to leverage paid campaigns to increase their reach while staying within their budget.
  4. Measurable Results and Analytics
    Social media marketing offers the ability to measure results through built-in analytic tools. A business can monitor follower growth, engagement rates, link clicks, and conversions. Such data-driven insights help businesses identify what is working, fine-tune their strategies, and continuously improve their campaigns.
  5. Drive Website Traffic and Sales
    Sharing links to a business website on social media drives traffic to the site and increases conversions.

Social Media Strategies that Help in Business Growth

  1. Content Marketing
    Creating engaging content is crucial in social media marketing. This involves using text, videos, images and infographics to capture the audience’s attention. One powerful tool in content marketing is storytelling – using emotional and relatable stories to connect with audiences will enhance loyalty and trust.
  2. Influencer Marketing
    Influencers have huge followings, and their endorsements can significantly help a business. However, partnering with the right influencer is important to attract new customers and boost credibility.
  3. Paid Ads and Promotions
    With paid ads, a business targets specific audiences in terms of location, age and interests. Social media also enables retargeting campaigns, which remind users about products they have previously viewed.
  4. Community Building
    Social media allows a business to create a community for long-term relationships. This is done through creating groups or pages. These communities develop a sense of belonging, and customers are more likely to engage with the business over time and recommend it to others.

Challenges and How to Overcome Them

  • Staying Relevant in a Crowded Space
    Many businesses compete for customer attention, and standing out can be challenging. Therefore, businesses should keep up with social media trends, experiment with new formats and regularly update their strategies to align with changing consumer preferences.
  • Managing Negative Feedback Publicly
    Businesses may face criticism or negative feedback. Handling these situations professionally is crucial. It calls for prompt responses that show empathy and a willingness to resolve issues. This demonstrates accountability, which can turn a negative experience into an opportunity to build trust.
  • Creating Consistent Content
    Maintaining a steady flow of content can be overwhelming, especially for small businesses. Content calendars and automation tools can help plan posts in advance, ensuring consistent engagement without added stress. Repurposing existing content across platforms is another way to save time and effort.

Conclusion

Social media marketing has become a game-changer for businesses seeking growth in the digital age. It provides cost-effective ways to build brand awareness, engage with customers, and measure real-time success. However, success requires more than just presence – it demands strategic planning, creativity, and adaptability to overcome challenges and maintain relevance.

How to Measure the Quality of Accounts Receivable

How to Measure the Quality of Accounts ReceivableAnalyzing a company’s Accounts Receivables is an effective way to measure its current cash flows and the likelihood of maintaining healthy cash flows. According to the U.S. Chamber of Commerce’s Small Business Index (Third Quarter 2024), 68 percent of small business owners reported being content with their third quarter cash flow performance. This illustrates the importance for small business owners to do everything possible to maintain healthy cash flows, including evaluating the quality of accounts receivables (A/R).

Defining Accounts Receivables

This account or line item on the balance sheet gives the business’ managers/owners and investors a measure on how much money a business expects to receive from selling goods or services. It’s an important metric because it’s a measure of what’s owed, but not yet collected from rendered services/goods.

Consideration for Uncollectable Accounts Receivables

While businesses hope to collect 100 percent of their A/Rs, businesses take a realistic view that not everyone will pay up. For whatever reason, A/Rs aren’t always collected and must be accounted for as uncollectable. Therefore, a contra account is setup to account for accounts receivables that turn into bad debt. This contra account is linked to the accounts receivable, an asset reported on the balance sheet, offsetting the accounts receivable balance. However, there are many metrics for companies to manage their health internally, and some of these metrics are discussed below.

Accounts Receivable-to-Sales Ratio

This is determined by taking a “snapshot” of the ratio or division of the accounts receivables divided by sales over a period of time. The resulting calculation is the percentage of a business’ unpaid sales. The higher the accounts receivable-to-sales ratio, the riskier the company’s financial health. It indicates a business has accounts receivables with a low likelihood of being collected. It’s calculated as follows:

AR to Sales = AR / Sales

Since it measures the mix of how much a business relies on cash versus credit, it can prompt an analyst to determine whether a company is able to operate on minimal cash with low fixed costs and limited outstanding debt. It can also prompt an analyst to determine if a company is subject to cyclical sales and is dependent on the business cycle and whether it’s the right time to invest in a company or hold off until a better entry point is established.

Accounts Receivable Turnover Ratio

This calculation determines how fast a business can convert its accounts receivables into cash. It calculates this over a discrete period, be it a month, quarter, year, etc. It’s calculated as the sales over a period divided by the average accounts receivables balance over the same period. It’s calculated as follows:

ARTR = Net Credit Sales / Average Accounts Receivable

Net Credit Sales = Sales on Credit – Sales Returns – Sales Allowances

Average Accounts Receivable = (Starting + Ending A/R Over a Fixed Time) / 2

The higher the ratio, the less friction businesses have in converting their accounts receivables into cash. One important consideration to keep in mind is that if total sales are used for this calculation, which some business do, the results don’t reflect the original formula because it doesn’t remove the sales on credit or sales allowances.

Days Sales Outstanding (DSO)

This metric reveals how fast (in average number of days) a company is able to turn its receivables into cash. It’s the average accounts receivables divided by net credit sales multiplied by 365. It’s calculated as follows:

DSO = (A/R / net credit sales) x 365 days

The lower the DSO, the better quality and the more efficient a company is in converting its accounts receivables into cash. The higher the DSO, and especially when it goes beyond 90 days, can represent two different financial measures. The first is that the business’ accounts receivables might not be collectable. The second is that the company might be able to make sales but with deteriorating earnings.

While there are many ways to analyze a company’s health, along with many ways to analyze the quality of existing and future accounts receivables, these are a few ways to evaluate a company’s present financial health and prospects for the future.

Sources

https://www.uschamber.com/sbindex/key-findings