Gift Card Concerns for Small Businesses

Gift cards have become very popular with customers and a successful retailer’s marketing tool.   Point of sales accounting systems, such as the QuickBooks Point of Sales software, make offering gift cards easy for small retailers.  (Gift certificates are included in the use of the term gift cards.)

After the gift card sale, small companies (as well as large companies) need to be concerned with correct accounting and that federal and state regulations are complied with.  Both of these concerns, accounting and compliance, can be easier dealt with successfully by using information found by searching the Internet.

Below are identified some websites that are good sources of information for addressing concerns that small company retailers might have with gift cards.

In 2009, the US Congress passed the Credit Card Accountability, Responsibility, and Disclosure Act (the CARD Act).  A section of this act deals with gift cards.  A Federal Reserve Board (FRB) site provides an overview of how this act applies to gift cards.  Click here go to this FRB site.  Gift card rules in this act do affect how retailers account for gift cards.  For example, a gift card must be good for at least five years from the date of purchase.

In addition to this federal act, states may have rules that are applicable to gift cards.   Rules are usually associated with the states’ unclaimed property procedures.  Gift cards that are not used (redeemed) can represent unclaimed property to the issuing retailer.  Mary Bernard has written a short overview of aspects of unclaimed property laws affecting gift cards.  Click here to read this overview.  Small companies should read their state’s web pages dealing with unclaimed property procedures and how gift cards might be affected.  Searching on the terms unclaimed property and adding your state’s name should bring up a link to your state’s webpage dealing with unclaimed property, from which information on gift cards (certificates) might be found.

Three review articles dealing with gift card issues, including compliance with unclaimed property rules, are excellent sources of information.  The accounting firm Grant Thornton has an article on opportunities and issues for retailers in their use of gift cards.  One section deals with accounting for gift cards.  Click here to read this article (PDF file).  Another article, written by John A. Biek at CCH, delves into tax issues and unclaimed property aspects of gift cards.  Click here to read this article ((PDF file).  The third article, by Michelle Andre at KPMG, focuses on the issues of gift cards with respect to unclaimed property compliance.  Click here to read this article (PDF file).

Data Mining in a Small Company

Company data are some of the company’s most valuable assets.  Such data as customer and vendor lists and financial transactions are collected routinely and are critical to a company’s operations.  The data is used to show how the company is performing financially and in other important ways.  Company changes are based on decisions driven by what the data shows.

A key to company success is making changes based on what the data shows.  A primary responsibility of the company accountant is to analyze financial data for conclusions about needed changes.  Others in the company depend on company data to complete their tasks and to make decisions.

For these and other reasons, the company’s data is one of its most valuable assets.  The company would be wise to improve the use of this asset by thinking about new ways of using the data it collects and of looking for what may be in the data that provide important decision-making insights, but which has gone and can easily go unnoticed.

Data mining is a method of looking for what may be in the company data that provide important decision-making insights but which has gone and can easily go unnoticed.  Two websites provide good overviews of data mining.   At a Federal Reserve Bank of Boston site, Miriam Wasserman has an article giving examples of data mining use.  The Center for Data Insight at Northern Arizona University has an article entitled “A Perspective on Data Mining” that delves deeper into what data mining is and its use.  Both of these articles are dated but still provide some basics of data mining that continue to be true.  Click here and here (PDF file) to go to these articles.

Although data mining can involve a lot of resources in large companies, Microsoft has developed add-in technology for use with Excel that should make data mining more simple and double for a smaller company.  You can read more about the Microsoft’s data mining product by clicking here.  From this site, you can watch videos on the use of Excel and the data mining add-in.  Whitepapers are also available from this site on Excel and data mining.  YouTube has several videos on using Excel for data mining.  Search on “Excel data mining” at YouTube.

Even with the data mining add-in and it use with Excel, technical challenges requiring sufficient background and perhaps a steep learning curve can still exist.  In such a case, the small company might consider seeking an independent contractor to assist developing Excel for mining of the company’s data and to show unexpected and useful patterns for decision-making.

Risk Management (Online Purchasing as an Example)

A company should be concern with the risks that threatens the company.   Some of these risks occur when a company uses the Internet for purchases.   Although often these risks are small for most purchases, important risks can exist.

The practice of risk management is evolving into a more recognized, systematic (methodical) task within a company.  In a smaller company, the accountant might be the best (only) person to take on this task.  This is a task where a proactive, innovative accountant might add additional value and be recognized for it.

A good approach, it seems to me, to the task of risk management, such that the management is successful, is to recognize where risks exist, to understand the nature of these risks, and then to implement the policies and actions based on this understanding, which minimize the risks.  This approach can benefit from an expert, thorough research of the Internet to find appropriate information to better understand the risks.  This research often leads to recommendations on policies and actions to minimize the risks.

 Provided below are 3 websites that provide excellent information on the risks associated with online purchasing and steps to take to minimize the risks.

A site maintained by the non-profit Privacy Rights Clearinghouse has a list of precautions when purchasing online.  Click here to go to this site and these precautions.

The Bureau of Consumer Protection at the US Federal Trade Commission has a website with information to protect purchasers.  Click here to go to this website and then click “Computers & the Internet” for protections related to online shopping.

The Department of Homeland Security has a site that provides guidance and risks about Internet purchasing from other countries.  Click here to go to this site.

Understanding the information at these three websites is a good approach to implementing policies and actions in your company that will reduce risks related to online purchases.  Identifying these websites demonstrates the value of competent Internet researching in risk management.

Human Resource Management Information Sources

The small company accountant often ends up keeping the “official personnel folders” for the company employees.  And, along with this, comes many tasks that would be done by a human resource department, if one existed in the company.  But, since the company has no human resource department, the accountant is given the role.

Many of the tasks needed, such as payroll, records management, and regulatory compliance, can be well-handled by a skilled and willing accountant.   The accountant can be greatly assisted in this role by a willingness to seek out and use the many websites that have excellent information on the human resource functions and managing the functions.

The following identify some of these excellent sites and provides links to them.

A Wolters Kluwer site provides well-organized and easy to read information covering many functions that are needed in managing personnel.  Click here to go to this site.

The US Department of Labor (DOL) provides extensive information of probable use in personnel management issues and decisions.  Employment law and regulations can be found by clicking here.  DOL provides hundreds of job descriptions and 2010 median pay based on federal government surveys.  Click here to access this information.

Two sites useful for employee benefit-related information are the Employee Benefit Research Institute (EBRI) site and the BenefitsLink.com site.  At the BenefitsLink site, click on “Authorities” in order to find several links to government and other sites providing guidance on employee benefits.  Click here and here to go to the EBRI and BenefitsLink sites, respectively.

These are just a few of the many websites where you can find in-depth information on human resource/personnel management.

Although many human resource tasks can be carried out by the accountant, the accountant and other company leaders need to recognize those situations where the company should seek the advice of more skillful and knowledgeable persons, such as an employment attorney.

Information on Federal and State Tax Credits

If your company has certain expenses, you can qualify for tax credits from your sate and from the federal government.  These tax credits reduce the tax amounts that you would otherwise pay to your state and the federal government.

You may already be incurring the expenses.  If yes, you certainly should be applying for credits to reduce your tax payments.  Another consideration is to implement a company project (make expenditures) because the project satisfies a company need and also because a tax credit exists which helps to make the economics of the decision more attractive.

Below are six expenditure categories that could qualify for federal and state tax credits. For each category, links are provided to websites that companies can go to for more information on available tax credits from states and the federal government.

1.  New employees.  The federal government offers tax credits when companies hire employees that qualify for the credits.  Click here to learn about the federal government’s Work Opportunity Tax Credit.

Most states offer tax credits for hiring employees under certain conditions.  Click here for a US Library of Congress site that provides links to all states’ home websites.  From these home websites, information on the tax credits offered by the states, not only for hiring new employees but for other tax credits offered, can searched for and found.

2.  Health insurance.   The National Conference of State Legislatures provides an overview and links to information that describe federal and state programs that provide tax credits to employers that provide health insurance to their employees.   Click here to go to this site.

3.  Investments.  Some states offer tax credits to investors who make qualifying investments in companies located in their states.   The Community Development Venture Capital Alliance has published a report that surveys state tax credit incentives for investments.  Click here to assess this report (PDF file).  The state’s websites should also be used to verify whether the state has tax credits for investments in companies.

4.  Energy.   Click here to go to a US Small Business Administration site with information on federal tax credits for energy efficiency.

At this Energy.gov site (click here), tax credits and rebates offered by states, cities, and counties can be found.

5.  Environmental improvements.  The US Environmental Protection Agency has a site which leads to descriptions of each state’s recycling tax incentives.  Click here to go to this site.

6.  New product and process development.   An article published in The CPA Journal identifies the states that offer tax incentives designed to stimulate the research and development of new products and processes.  Also provided is a brief analysis of each state’s incentives.  Click here to read this article.

The federal government also offers a research and development tax credit (for product and process development).  A GrantThornton site provides an overview of the tax credits and the activities that qualify.  Click here to read this overview (PDF file).

Survey Results on Fulfilling Customer Sales Orders

No more important company goal should exist than to satisfy the customer with the product and/or service offered by the company. Many company processes are used between receiving a customer sales order and delivering the order’s requested product and/or service to the customer.   Below are links to four surveys that identify several such needed processes.  The surveys present data that are measurements that can be used to show how well the processes are carried out.

In addition to the links to the PDF reports on the surveys, information is provided below on some of the key content provided in the survey reports.  The data in the reports should be useful to the small company trying to improve its sales order fulfillment processes.

The Aberdeen Group published a report entitled “The Warehouse Productivity Benchmark Report – A Guide to Improved Warehouse and Distribution Center Performance” in 2006.  The report indicates that most companies surveyed have not been successful in reducing customer order cycle times. Suggestions are made on why this is the case.   The suggestions lead to recommendations.  Useful data in the report includes: actions taken or planned to improve warehouse operations; identification of technologies being used or planned for improved performance; barriers to better warehouse performance; and best-in-class performances compared to average performances.  Click here to access this report (PDF file).

Karl Manrodt and Kate Vitasek, of Metrics Surveys, analyze a 2006 survey by Georgia Southern University on how well distribution centers do in delivering products to customers.  What may be the most useful data for the small company, presented by Manrodt and Vitasek, are median and best-in-class performance measurements for metrics related to distribution.  Metrics include: order cycle time; on-time shipments; dock-to-stock cycle time; % lost sales; % back orders; cases shipped per person per hour; distribution costs as a % of sales; inventory shrinkage as a % of total inventory; and inventory days of supply on hand.  Click here to gain access to these useful benchmarking metrics (PDF file).

Karl Manrodt and Kate Vitasek use the results of another survey, conducted by Vendor Compliance Federation, to prepare a 2008 report focusing on how average and best-in-class do with respect to the four metrics often considered the most important in fulfilling sales orders successfully.  These four metrics are: on time delivery; complete orders; damage free; and accurate documentation.   The report’s data include that in 2007 on average only 51.1% of surveyed companies had on time delivery; 59.5% complete delivery; 100% damage free; and 88.8% accurate documentation.  Best-in-class vendors had these results: on time delivery – 76.7%; complete – 87.5%; damage free – 100%; and accurate documentation – 99.4%.  Click here to gain access to this report (PDF file).

Rob Martinez reported the results of a 2010 Shipware Systems Corporation survey on distribution center metrics.  The survey compares what data best-in-class companies track to what average campiness track.   Results show that increased tracking of distribution-related metrics often correlates with companies found as best-in-class.  The survey also shows that companies that benchmark to other company performances do better in several distribution-related metrics.  The report on the survey can be accessed by clicking here (PDF file).

The data from surveyed companies in the four reports identified and linked to above should be useful to small companies to set goals for one of the most important tasks a company has – keeping the customer happy.

Mobile Banking Offers an Important Tool to the Business Owner

With the smartphone, the small business owner can now have easy and mobile access, at all times, to the company’s and owner’s personal bank accounts.  This mobile access then becomes an important tool that the owner (company decision-maker) has in order to make and implement, more efficiently and effectively, company financial decisions.

Using the smartphone, some of the financial tasks the owner now can timely do are: transfer funds between accounts, to manage cash flows; approve and initiate payroll; approve payments needed to be made to company personnel; snap pictures of checks received to make bank deposits, without visiting the bank; approve vendor bills that need to be paid; and act on account alerts received from the bank.

Now with a smartphone (mobile device), the owner does not need to be at his desk and desk top computer to have access to one of the most important company information sources – the data in the bank account.  And, because of this, performing financial tasks, such as the ones identified above, at optimal times, will add value to the company.  The better the company’s money supply is managed, the better off the company will be.

And, the utility of the mobile device to manage cash through the bank account is likely only to get better as banks develop additional applications.   These applications likely will allow for better cash flow and cash management analysis leading to better financial decisions.

Here are links to two websites with useful information about mobile banking and security.  The first link is to a Federal Reserve Bank of Boston primer on what mobile financial services are.  This document seems to be an excellent overview of mobile banking as of 2010.  Click here to access this overview (PDF file).  The second link is a McAfee report on security concerns with mobile devices.  Click here to access this report (PDF file) and to read about security concerns with mobile devices.

Using mobile devices in a company’s banking processes requires efforts at understanding mobile banking options offered and how to use the options.   The better these options are understood and used, the more valuable the mobile device and its management of the bank account will be for the company.

Also, the use of mobile device banking has consequences for the company’s accounting processes.   Accountants need to be on top of what mobile device banking options are, how the company can best use them to be more successful at cash management and at accounting, and how to integrate the mobile banking options with the accounting system so that correct accounting continues.