Category: Finance & Capital

I’ve recently had a lot of people ask me about the new credit card act and how it will affect their small business? We all know that the new law offers a variety of protections to consumers and might possibly change the credit card industry forever. The question is what’s in it for the owners?

Unfortunately, business and corporate cards have no new protections under the act. The provisions contained in the Credit CARD Act of 2009 are designed mainly to protect consumers from unfair credit card practices, not small business.

Most of the major provisions of the act went into effect February 22, 2010, with the rest starting later in December and August of this year. Under the new law,

* Double cycle billing charges, over-the-limit fees, retroactive interest rate increases, and excessive fees on subprime credit cards have all been eliminated.
* Consumers have been granted greater time to pay their monthly bill, and need to be over 60 days behind on a payment before an issuer can increase the interest rate on a balance.
* Credit card companies must give at least 45 days notice of any changes in a borrower’s terms, with the borrower possessing the right to opt out of those changes, if desired.
* Credit card issuers won’t be able to increase rates within the first year of a customer opening an account.
* Card issuers are restricted from giving credit cards to those under 21 unless they have a co-signer or can otherwise prove that they have a means to pay.

One has to wonder why Congress would enact such a sweeping credit card reform and not include provisions for small business? Or, moreover, why couldn’t the new protections be extended to cover commercial card users as well?

Business and commercial credit cardholders have been fighting tooth and nail with card companies over abusive and unscrupulous practices for quite some time. Ever-increasing interest rates, continuous introduction of new fees, and frequent increase of existing fees have made it more and more costly for small businesses to use and accept credit cards. Even offer merchant services providers (companies that enable businesses to process credit cards) from large banks like Bank of America and Wells Fargo, to ISO’s like North American Bancard, have all felt the pinch of card companies soaring rates.

For those of you that are thinking of setting aside a personal card for business so that you can take advantage of the act- that probably wouldn’t be the best idea. Using a personal credit card for business lessens the amount of interest and/or various fees that you are able to deduct on your taxes and all activity and debt made on behalf of your business shows up on your personal credit score. Also, keep in mind that the blending of personal and professional finances can lead to serious money management problems.

It’s been hinted that much-needed relief is on the way for commercial and business credit card owners. The Fed has recently been tasked to examine small business credit card usage and make protection recommendations to Congress within the next year. Let’s hope so because it’s long, long, long overdue.

About the Author

Robert Sommers is a freelance mortgage and small business writer based out Baltimore. He has worked for over 25 years as a licensed real estate agent in all areas of commercial and residential real estate.

Article Contributed by Kendall SummerHawk
While a rosier global economic forecast may still be a few months away, smart entrepreneurs are taking control of their cash flow now, and wisely implementing simple strategies to increase how much they make and how much they keep.
Good news is, it’s surprisingly simple to take control of your cash flow right now. And, what’s really cool is that once you put these strategies into place, your business will thrive even during times like these, which positions your income to soar once the rest of the economy emerges from this cycle.
The trick is to take an active role in how you create the income you want, as opposed to sitting back and passively waiting for “your luck” or “things” to change. Creating more money flowing into your business has nothing to do with luck, and everything to do with knowing the right actions to take.
Which is why I’m sharing five simple tips to help you get a handle on your cash flow now, so you’re sitting pretty in the “money driver’s seat.” (These tips are excerpted from my Certified Money, Marketing and Soul™ Coach training program.
1. Where’s The Money Coming From?
Now is the time to take a look at how many income streams you have and discover where you have untapped opportunities to offer a wider selection of services. For example, if you offer 1-on-1 services and maybe the occasional teleclass, then now is the time to plan the launch of a new teleseminar series, a 6-month high-end program or begin to offer 1-day intensives. This will dramatically increase your cash flow with very little additional effort on your part.
2. Raise The Value — And Your Pricing — Of What You Already Offer
If you haven’t changed your services in a while then chances are you’re not only significantly undercharging, but you’re probably also giving away too much for too little. The first thing I do with my clients is help them redesign their current service offers so they’re offering greater value to their clients, at a much higher price. Everyone wins because your clients get a better package and you’re leveraging your time so you make more money in less time.
3. Start Tracking Your Income…Daily!
Every day I write down the total amount of money I’ve brought in. At first you may think you don’t have enough coming in to bother with this type of tracking. Trust me, by paying attention to money in this way, more of it will flow towards you, faster and faster. Every client I’ve coached to take this action has reported making more, faster!
4. Know What Your Money Bug-a-Boos Are
Money is a highly emotionally charged topic so you may have unfounded beliefs, old values or unsupportive behavior regarding money that no longer serve you. This is normal so don’t sweat it; just do something about it. For example, if you assume people won’t pay more for your services or you frequently offer discounts, this tells me your money bug-a-boo is being too quick to judge what your clients value.
I recommend checking out one of my programs or home study courses. These resources will help you make dramatic mindset, and behavior shifts, regarding money so you’re no longer held prisoner by the past.
5. Consider This Popular Way To Even-Out Your Monthly Cash Flow
My monthly income used to spike and dip like a roller coaster, until I added membership (continuity) programs to my business model. Once I did, I had steady, reliable money flowing in. Since then, I’ve redesigned my entire business to be 75% membership based. Every business has the opportunity to create a membership program of some sort.
There’s even a company that offers horse vitamins on a monthly, auto-ship basis (to the tune of several hundred million dollars per year!). So get creative or get coaching on how you too, can add continuity to your business.
Solving Cash Flow Issues Simply Means Being Creative
Keep your approach to solving your cash flow issues simple. Most of all, be willing to look at what is working, and what is not working so you can let go of old habits that are costing you too much in terms of your time and potential revenue. This may mean refocusing how you spend your time but the results will be well worth it!
About the Author
Kendall SummerHawk, the Million Dollar Marketing Coach, is an expert at helping women entrepreneurs at all levels design a business they love and charge what they’re worth and get it. Kendall delivers simple ways entrepreneurs can design and price their services to quickly move away from ‘dollars-for-hours work’ and create more money, time, and freedom in their business. For free articles, free resources and to sign up for a free subscription to Kendall’s Money, Marketing and Soul weekly articles visit www.kendallsummerhawk.com.

“Business (B2B) credit is currently 1.5 times larger than commercial bank loans: and the spread between the two has grown by nearly $100 billion since the end of 2008.” from the Credit Research Foundation’s Sept. 2009 report, “Economic Impact on Business Credit & AR”.

In a pure barter system there must exist a coincidence of wants and or desires before a trade takes place. This severely restricts and limits the opportunities for commerce.
Money is a medium of exchange with an established value that is accepted in return for goods and services. The dominant form of money is currency which is issued, controlled and limited by governments. An alternative to money is B2B (commercial) credit and no government printing presses or controls are required.
Credit allows for the value of a product or service to be assessed and for profitable sales to happen based on payment at some later date. Credit is an intermediary used in trade to avoid the inconvenience and inefficiencies of a pure barter system.
Credit terms, i.e. IOUs, like money are a medium of exchange.
Safeguards so as to protect the value of credit extended must exist just as governments must safeguard the value of the money they print. For example at the time of this article one ZWD is worth .00000003 of 1 USD, that means that it takes about 37,410,000 ZWD to purchase the same as $1.00 US.
While the supply of money is limited by how much of it governments print, credit is unlimited; in fact the more of it that is created/extended the greater is the demand created for products and services . Credit, properly understood and managed allows for the expanded movement of products and services and for economic growth and prosperity . Credit is a lubricant of commerce and greases the wheels of business.
Fear of loss and focus on risk management due to a lack of knowledge on the full profit potential and on how to properly manage this unlimited medium of exchange creates bottlenecks, i.e inefficiencies that hinder the fruitful expansion of trade .
The Profit System of B2B Credit and A/R Management provides a proven, understandable and useable philosophy and methodology for integrating a seller’s specific knowledge regarding their “Product Value at Time of Sale”, their potential customers’ profile and past performance to allow for the expansion of profitable sales while remaining confident of payment.
The Profit Approach
Philosophy is the study of existence and truth and relies on a systematic approach and reasoned argument. So what is the truth or purpose for the use of B2B Credit in the selling of products or services?
To understand the purpose of B2B Credit we must first accept that behind the selling of products or services lies a profit motive, that is we need or desire to earn more than we expend in a business transaction. The actual process of extending credit must be driven, based on and support this desire to earn a profit.
Beyond the cost of the product or service being sold there are fixed business expenses and other transactional costs that must be taken into consideration to ensure that indeed a profit is earned on a sale made.
Fixed expenses are also known as fixed costs and as a rule do not vary with production. Some examples of fixed costs are rent, sometimes insurance, long term equipment costs. The ability or inability to take on more business without increasing fixed costs is a factor that must be considered in profitable credit sales.
Transactional costs are incurred in every economic exchange. These varying costs include the cost of products, of delivering a service, sales commissions , marketing costs, the effort of billing customers and of the taking of payments. It is important in B2B Credit sales to consider the transactional costs that might prove significant; so as to ensure that in fact the sale being made is a profitable sale.
In B2B Credit the costs start when a customer expresses a desire to buy based on payment at a later date. At this point of purchase efficiency dictates that the information required to help determine if and how credit will be extended to the customer must be gathered. Use of a traditional credit application that the potential customer fills out and which contains standard terms and conditions of sale contributes to delays and to a sales limiting mindset. A better tool for the gathering of customer information is a New Customer Information Form, which is completed by the selling agent and which contains an authorization to check a customer’s credit to be signed by the customer.
Additional costs that go with selling on credit terms are the costs of the investigation of the customer, the evaluation of the customer’s profile , i.e who the customer is and how the customer does business, and evaluating the seller’s Product Value at Time of Sale. Terms and conditions of sale are then determined following the investigation of the customer past payment history and the evaluation of the customer’s profile and the seller’s Product Value at Time of Sale.
There is also the cost of carrying A/R (accounts receivable), i.e. the time value of money and of bad debt write offs or losses should the customer fail to pay.
Why Incur The Costs?
We have already stated that the underlying motive or purpose for an economic transaction is the need or desire to earn a profit. Specific to B2B credit sales, credit terms are extended because:
1) Required by the customer. The customer require time after the delivery of the purchased product or service to ensure that in fact what was desired was received. They also require time to process the bill for payment.
2) Downline sales by the customer. The customer company requires time after the delivery of the purchased product or service to add value to the product or service and to make downline sales to its own customers before it can pay. If a customer company is extending credit terms to its own customers it may require even more time in which to receive payment before it can pay upline suppliers.
3) Customary in the industry. Credit terms are routinely extended in the customer’s industry by competitors and are expected.
The reason why the costs associated with the extension of credit are incurred is to capture profitable sales that would otherwise be lost.
Credit is primarily a function of sale and not of accounting.
If the management of a business believes that credit is an accounting function and all about risk management the end result will be the limiting of both short and long term sales and profitability.
DSO (days sales outstanding) and % bad debt, i.e. the % of approved credit dollars lost due to non-payment are and always have been measurement of risk. Use of risk performance measurements will result in the limiting of both short and long term sales and profitability. The old risk management approach to Credit Management limits profitability.
Two men look through prison bars, one sees the mud the other the stars.
The Profit System of B2B Credit Management
In the course of years of hands on work with companies across industry lines the copyrighted Profit System of B2B Credit Management has proven that Credit properly understood and applied can and will lead to more and larger new sales, to improved cash flow, controlled loses, greater repeat sales, elevated customer service levels and customer retention, and to the ability to identify areas of opportunity for improvement that can drive down costs of doing business for seller and customer alike.
The proven profit philosophy and set of methodologies that make up the Profit System of B2B Credit Management turns an area of business always thought of as a cost center, as a negative, a necessary evil and as the ugly step-child of accounting into a proactive profit center.
In Closing
Credit is essential in both short and long term sales and is also an investment in the lifespan of the customer relationship.
Credit allows for the value of a product or service to be assessed and for profitable sales to happen based on payment at some later date.
Properly understood and managed B2B Credit is an unlimited alternative to money and to the expanded movement of products and services and economic growth and prosperity.
Abe WalkingBear Sanchez is an International Speaker / Trainer / Consultant on the subject of cash flow / sales enhancement and business knowledge organization and use. Founder and President of www.armg-usa.com, WalkingBear has authored hundreds of business articles, has worked with numerous companies in a wide range of industries since 1982 and has spoken at many venues including the Shakespeare Globe Theater in London.

Article Contributed by Kendall SummerHawk
Did you know that HOW you design your client payment plans can make the difference between your prospective client saying, “Yes!” versus muttering, “Let me think about it?”
This applies to services, programs and even products offered on your Web site. So it’s wise to understand what works — and what doesn’t! — so you can make it easy for your prospective clients to say “yes” to you.
Now, the problem is, most Soul-preneurs™ feel uncertain as to how to design their payment plans. Many rely on the simple “order now and save XYZ amount” strategy. And while that’s a good one, in this economy that alone is not compelling enough to motivate people to hire you or invest in your info product.
Which is why my Platinum clients and I carefully design what payment plan strategy is going to work best for each of their service or info product launches. It’s just too important to leave to chance or not get expert help creating!
The good news is that I’ve spent years figuring out what works in the area of pricing and money. Here are three SIMPLE strategies that will instantly help you design a compelling offer your prospective clients will love to say “Yes!” to.
Pricing Plan Strategy #1: Offer a Valuable Incentive For Paying in Full
You’ll be surprised at how many clients will choose a full pay option in order to save big or qualify for a special high-value incentive.
For example, in my new 2009 Platinum Program the full pay option is generously rewarded with a special “preferred client” coaching day with me on the topic of pricing and money. This is in addition to a significant savings. Together, these create powerful reasons for new Platinum members to not only apply for the program but to choose the full payment option.
Pricing Plan Strategy #2: Create a Reason WHY a Client Should Say “Yes” to Your Offer Now… Instead of Later
Most Soul-preneurs™ mistakenly give their prospective clients far too long to make their investment decision. This backfires because human nature is such that the longer someone has to decide the more likely they are to talk themselves out of making a “yes” decision.
That’s a shame because that means that’s someone you’re not able to help. So keep your cut-off dates more immediate, then use your marketing to create energy, excitement and a reason for people to say “yes” to you within this shorter time frame.
Pricing Plan Strategy #3: Aim to Make Your Bonuses Total MORE Than the Original Service or Product Being Purchased
Like you, I’m NOT a fan of offering a hodgepodge array of bonuses that look like someone just cleaned out the back of their closet. Instead, design bonus products or services that have real value to your clients and that if purchased separately, total up to even more than the original item offered. Even better, offer at least one bonus that can’t be purchased separately, emphasizing its appeal as an “exclusive” available only to your clients when they invest in your program or product.
Think Creatively When It Comes To Your Pricing Plan Options
While there are many more pricing plan strategies you can use, these three will get you started quickly and help you feel more confident in launching your new programs and products. Remember that the easier you make it for your prospective clients to say “Yes!” the more you’ll be able make a positive difference for them while making more money!
About the Author
Kendall SummerHawk, the Million Dollar Marketing Coach, is an expert at helping women entrepreneurs at all levels design a business they loveand charge what they’re worth and get it. Kendall delivers simple ways entrepreneurs can design and price their services to quickly move away from ‘dollars-for-hours work’ and create more money, time, and freedom in their business. For free articles, free resources and to sign up for a free subscription to Kendall’s Money, Marketing and Soul weekly articles visit www.kendallsummerhawk.com.