Monthly Archives: December 2016

Should You Know About How Can Private Healthcare Exchanges

When it comes to benefits packages, both employees and employers know that one size does not fit all. What is right for a younger, entry-level worker might not make sense for an empty nester with seniority. A flexible benefits package based on employees’ unique situations and income levels is essential to retaining top talent.

As open enrollment approaches, employees will be hitting the exchanges once more to select their health care packages and other benefits for the coming year. Here’s a look at how some employers are using private exchanges to give employees more options, as well as to better manage benefits-related expenses.

What is a private benefits exchange?

Private exchanges are essentially marketplaces where employees can shop online for health insurance and other benefits, including dental, vision and life insurance. Employers first access the private exchange and choose from a variety of carriers the benefits they want to offer, as well as set their specified contribution levels for each offered product. Employees then access the exchange to peruse the products offered by their employer and select the ones that suit their lifestyles and financial needs.

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“Think of these exchanges as a store, and each of the types of benefits are aisles,” Steven A. Nyce, director of the Willis Towers Watson Research and Innovation Center, told Business News Daily. “As an employer, you ‘own’ the store and have the ability to decide what products you want to include. So, say, one aisle is medical, [an employee] would have a number of products to choose from in that aisle.”

Depending on what products the employer has selected to offer, employees have their pick of the entire “store.” Those employees who need pet insurance can select it, while those who desire supplemental medical coverage, such as hospital indemnity, are able to as well. The aim is to give customizable control to the individual who is selecting the plan while also stabilizing costs to the employer.

“By facilitating a shift to a defined contribution … private exchanges offer the potential for cost stability to employers, while giving greater choice to employees, albeit with greater financial risk as well,” a 2014 report issued by The Kaiser Foundation reads. “Because the employer defines up front the amount paid to the employee, employers have greater control over how much they spend on health benefits.”

Health benefit costs are a huge consideration for employers. According to a 2015 report by the Centers for Medicare and Medicaid Services, health care spending grew by $102 billion between 2012 and 2013. The rapidly increasing costs of health care in the U.S., coupled with employer obligations under the Affordable Care Act (ACA), means keeping health benefits expenses stable is a growing challenge.

How are employees using private benefits exchanges?
To better understand the emerging private exchange marketplace, the Private Exchange Research Council (PERC) partnered with private exchange Liazon to see how consumers were operating within that exchange, and found that employers are offering more products over time and employees are purchasing more as well.

The PERC report found that, on average, employers offer 14 products on their customized exchanges. Medical, dental and vision plans are the most commonly offered by employers: The average company’s benefits package on Liazon includes six medical plans, three dental products and four vision packages from which to choose. Many companies also offer life insurance, legal plans, identity protection, disability benefits and pet insurance.

From 2013 through 2015, employees on average increased the number of products they purchased for their individualized plan from 3.6 to 4.4. A number of factors could be responsible, Nyce said, from the growth of the exchanges to more comfortability among those who have participated in the exchanges for several years.

“We’re seeing an expansion of benefits and a blurring of the lines traditionally seen between retirement and health care, life insurance and disability,” Nyce said. “Those were traditionally in their own silos, but we’re seeing them come together now in a more holistic approach. It provides employees with a unique experience, and they can use [these benefits options] as a platform to grow to a broader set of benefits in the future.”

Information About Accounting

Accounting is vital to a strong company, keeping track of the business’s finances and its continued profitability. Without accounting, a business owner would not know what money was coming in or going out, or how to plan for the future. The actions taken by accounting professionals — from bookkeepers to certified public accountants (CPAs) — make it possible to monitor the company’s financial status and provide reports and projections that affect the organization’s decisions.

What do accountants do?
The American Accounting Association defines accounting as “the process of identifying, measuring and communicating economic information to permit informed judgments and decisions by users of the information.” This is often done by logging a business’s accounts payable, accounts receivable and other financial transactions, typically using accounting software.

While bookkeepers tend to focus on the details, recording transactions in an efficient and organized manner, they may or may not see the overall picture like accountants do, said CPA Stan Snyder.
“Accountants use the work done by bookkeepers to produce and analyze financial reports,” Snyder said. “Although accounting follows the same principles and rules as bookkeeping, an accountant can design a system that will capture all of the details necessary to satisfy the needs of the business — managerial, financial reporting, projection, analysis and tax reporting.”

One part of accounting focuses on presenting the company’s financial information in the required ways to those outside of the company. In order to present this information in a format everyone can understand, accountants follow a set of guidelines. In the United States, most accountants abide by the Generally Accepted Accounting Principles. There are different sets of accounting standards for companies that operate overseas, as well as for local and state government entities.

CPA Harold Averkamp said accounts also provide a company’s internal management team with the information it needs to keep the business financially healthy. Some of the information will originate from the recorded transactions, while some will consist of estimates and projections based on various assumptions, he said.

To come up with a company’s status and projections, accountants rely on various formulas. Accounting ratios help uncover conditions and trends that are difficult to find by inspecting individual components that make up the ratio. Accounting ratios are divided into five main categories:

Liquidity ratios measure the liquid assets of the company versus its liabilities.
Profitability ratios measure the organization’s ability to turn a profit after paying expenses.
Leverage ratios measure total debt versus total assets, and gauge equity.
Turnover ratios measure efficiency by comparing the cost of goods sold over a period of time against the amount of inventory that was on hand during that same time.
Market-value ratios measure the company’s economic status compared with others in the industry.
Accounting careers
Many accountants within the industry choose to become CPAs, a title they achieve by passing an exam and getting work experience. According to the Pennsylvania Institute of Certified Public Accountants, CPAs audit financial statements of public and private companies; serve as consultants in many areas, including tax, accounting and financial planning; and are well-respected strategic business advisors and decision-makers. Their roles range from accountants to controllers and from chief financial officers of Fortune 500 companies to advisors for small neighborhood businesses.

According to the University of North Carolina at Wilmington’s Career Center, there are countless other jobs that require accounting proficiency, including auditor, financial investment analyst, claims adjustor, loan administrator, tax lawyer, underwriter and stockbroker.

Should You Know About Accounts Payable and Your Business

Accounts payable are the bills and other debts that the business needs to pay. As a matter of fact, the only thing that a business pays that is not considered accounts payable is payroll. Everything else falls under the category, making it a critical aspect of your business.

“The accuracy and completeness of a company’s financial statements are dependent on the accounts payable process,” said Harold Averkamp, founder and author of accounting advice website Accounting Coach. “The efficiency and effectiveness of the accounts payable process will also affect the company’s cash position, credit rating and relationship with its suppliers.”

Implementing a dependable accounts payable system will produce accurate financial information you need to plan for both the short and long term. Here’s what you need to know about keeping up with your business debts.
Tracking accounts payable
Accounts payable, sometimes abbreviated as A/P, are tracked monthly for many small businesses, but as the business grows, it is better to make it a weekly task to take advantage of early payment discounts and resolve any credits due to inventory returns. It is handy to keep a record of accounts payable in case there are any payment disputes, to remind the business of current or outstanding invoices, or as proof of spending at tax time. These records can be kept manually or with accounting software.

Working with accounts payable requires a great attention to detail. Each invoice needs to be verified for accuracy, billing date and payment date, and then entered correctly in the general ledger or accounting software. Based on our research, here are some general tips to set up your accounts payable and help the process run smoothly:

Work from the original invoice whenever possible. Some invoices are sent electronically — print once and then file the email away to minimize confusion.

Use the same entering system every time. Each vendor has their own system of invoicing but assigning the invoice number in your system should be consistent. Determine the method, such as using leading zeros, and stick to it.

Enter every invoice individually. This includes multiple monthly invoices from the same supplier. In the event of a dispute, you will want to be able to track it down in your system easily.

Get invoice approval from the appropriate person before entering it. The person approving the invoice should be different than the one entering it. If you are a sole proprietor and do your own bookwork, this may not be possible, but still have a clear process for approval and entry. Keep solid records to support each one.

Look for early payment discounts to save money. It can add up by the end of the year. Some vendors offer a small percentage off the invoice if you pay it within a specified time frame from the invoice date, such as within ten days. If you typically only work with accounts payable once a month, consider a system in which you identify early payment discount opportunities when the invoice is received and pay those separately from the monthly pile.

Cash flow is important to a small business. A solid system of monitoring and paying accounts payable gives you a clear picture of your expenditures against your revenue, enabling better business decisions.