Changing the Landscape of Business Combinations

effective date of transition.

Scope

FAS 141(R) applies to all transactions or other events in which an entity obtains control of one or more businesses. Prior to revision, FAS 141 only applied only to business combinations in which control was obtained by transferring consideration. The revised statement covers all mergers with the exception of the following:

-Joint Ventures

-Acquisition of a group of assets that does not constitute a business

-Combination of entities or businesses under common control

-Combination between not-for-profits (NFP) or the acquisition of a for-profit company by a NFP

The method of accounting for acquisitions prescribed in FAS 141(R) is known as the acquisition method. Under the original statement this method was known as the purchase method. The fundamental requirements of the two are the same. FASB defines the "acquirer" in a merger transaction as the entity that "obtains control of one one or more businesses in the business combination." The acquisition date is defined as the date that the acquirer achieves control.

Requirements

1) Fair Value Measurement - FAS 141(R) requires the acquirers in all business combinations to record the assets and liabilities of the acquired business at fair values, with very few exceptions. This requirement replaces the original statement's cost-allocation process, which allocated the cost of an acquisition to the individual assets and acquired and liabilities assumed based on their estimated fair values. The result of this practice was not recognizing some assets and liabilities at the acquisition date and measuring some assets and liabilities at other than their fair values at the acquisition date. Fair market value will now be based on market participant assumptions, rather than company specific assumptions.

2) Acquisition Costs Expensed as Incurred - This is one of the most notable differences, as acquisition costs were previously included in the purchase price and allocated to the assets and liabilities. The new expensing provision will result in lower earnings, primarily in periods leading up to combination periods.

3) Contingent Consideration - Under the original statement, recognition of preacquisition contingencies were able to be deferred until the full recognition criteria of FAS 5 were met. Going forward, contractual contingencies resulting in assets and liabilities are to be measured and recorded at their fair value, only if it is more likely than not that they meet the definition of an asset or liability in FASB Concepts Statement No. 6. The measurement techniques used to measure these assets and liabilities are likely to be complex and highly subjective. Further, contingent liabilities will result in fair value remeasurements and adjustments that will directly impact earnings, rather than additional purchase price.

4) Restructuring Costs - Previously, restructuring costs that the acquirer expected but was not obligated to incur were recognized as if they were a liability assumed at the acquisition date. Going forward, these costs are to be expensed in periods after the acquisition date. The result of this will be increased charges to earnings over several reporting periods, as the new business is integrated.

5) In Process Research and Development (IPR&D) - Under FASB Interpretation No.4, IPR&D assets acquired in a business combination that had no alternative future use were measured at their acquisition date fair values and then immediately charged to expense. Under the new statement, IPR&D will now be recorded at fair value as an indefinite-lived intangible asset and impaired or amortized in future periods, rather than being expensed immediately.

6) Measurement Date - The fair value of the purchase price when issuing equity securities will be determined at the acquisition date. Prior guidance stipulated the use of the announcement date as the date that equity securities were to be valued. The result of this switch will likely be volatility and uncertainty in estimating the final purchase price due to market price changes between the announcement date and the acquisition date.

Effective Date

The new statement will be effective for annual periods beginning after December 15, 2008, with early adoption prohibited. The statement will be applied prospectively.

The Iasb Framework

The IASB Framework sets out the concepts and principles underlying the preparation of financial statements for presentation to a wide range of users. This framework acts as a guideline, a regulation and sets out the scope of International Accounting Standards. It represents the very foundation of international financial reporting and represents the basis from which all IASs emanate.

The framework consists of the following chapters:

· Objectives of financial statements;

· Qualitative characteristics that determine the decision usefulness of information contained in the financial statements; and

· Definition, recognition and measurement of elements from which financial statements are constructed.

Objectives of financial statements

The objective of financial statements is to provide information on:

· Financial position;

· Changes in financial position; and

· Financial performance of an organisation

Financial Position

Information on the financial position of an organisation include information about economic resources controlled by the entity, the financial structure, the liquidity and solvency position of the entity and also the ability of that entity to adapt to a changing and dynamic environment.

Economic resources controlled by an entity

Information about economic resources under the entity's control will help assess the amount of future economic benefits that will probably be generated. Disclosing such information will assist the user in taking economic decisions. For instance, an investor will be in a better position to take more informed investing decisions; an employee may be more aware about any scope for salary increases and bonuses.

Financial structure

This refers to the mix of debt and equity of an entity. The more debt a company takes on, the greater the financial risk and hence the risk of bankruptcy. The financial structure enables users to assess:

· The extent to which the company can obtain additional external sources of funds in the form of debts;

· How profit is being distributed in the form of dividend and interest; and

· The company's ability to settle its existing debts

Liquidity and solvency

Information about liquidity helps to determine whether the company settle its short term debts as and when they fall due. Solvency is all about the entity's ability to settle its long term debts as and when they fall due.

Changes in financial position

This provides information about the way cash is used or generated from operating, investing and financing activities. It allows the user to assess the cash adaptability of the organisation and the way in which cash is distributed.

Financial Performance

The net assets of an organisation indicate profit levels. Increases/decreases in net assets result in increases/decreases in profits. Information about financial performance of an organisation is essential since it helps the user:

· To assess economic benefits generated from its existing resource base; and

· To determine the efficiency with which the entity might employ additional resources

Qualitative Characteristics

The information contained in the financial statements should be relevant, reliable, understandable and comparable.

Relevance

Information is relevant so far it has the impact of influencing the decisions of users of financial statements. Information can be relevant by nature and by amount. Furthermore the timely nature of information is fundamental in determining its relevance. Materiality is a particular characteristic often associated to relevance. Materiality may be assessed by the impact information can have on the decisions of users. Past and current information may be of predictive value to the user while future information will be of confirmative value and hence all essential/relevant for the user.

Examples of relevance:

A key personnel staff is a close family member to the managing director of the company. Despite the fact that there might not be any transactions between the company and the staff, the nature of the related party relationship should be disclosed as this is purely relevant information by nature.

The resignation of Jose Mourino as manager of Chelsea has definitely been a relevant and important information in Premiership football. However, had the information been concealed and disclosed much later after his resignation, this information would not have had the same impact.

Disclosing information about the risks associated with financial instruments is also relevant. IFRS 7 Financial Instruments: Disclosure, highlights the importance of disclosing the risk level of financial instruments and also requires organisation to explain their policies towards managing such risks.

Disclosing and computing separate EPS for discontinued operations and for the whole operations (that is both continued and discontinued) is much relevant (IAS 33)

Reliability

Reliability is enhanced when information is free from errors/bias and any other form of misstatements. The elements contained in the financial statements faithfully represent the transactions that have occurred.

Users express greater confidence in the contents of financial statements when:

· The financial statements are free from mistakes, errors, omissions and other misstatements;

· Transactions are faithfully represented and are correctly recorded as assets, liabilities, incomes or expenses in the financial statements;

· Information is free from bias;

· Financial statements are prepared under conditions of uncertainty;

· Information is complete and prudence is applied; and

· Financial statements are prepared within the bounds of materiality.

Scenario 1- Faithful representation

Forest Ltd is a major producer and supplier of plywood. The company enters into a sale and repurchase agreement with Timber Ltd. Forest sells wood to Timber for $8m and purchases it for $10m in 4 years. Describe the nature of such a transaction.

Understandability

The IASB Framework emphasises on the need for information in financial statements to be clearly explicit since these are General Purpose Financial Statements (IAS 1, Presentation of Financial Statements). It is however expected that users have relatively sound business knowledge. Understandability is the quality of information that enables users to comprehend its meaning. It is essential that any relevant information; whatever be its complexity; be included in the financial statements. Understandability is enhanced through aggregation, categorisation, classification and presentation of financial information.

Comparability

A key characteristic of qualitative information is comparability. Financial statements should be prepared on grounds that will enable their comparison over time and across boundaries (firms within the same industry). The adoption of similar accounting policies and application of IASs/IFRSs facilitates comparison.

Definition, Recognition and Measurement of elements

The financial statement is made up of five key elements: Asset, Liability, Income, Expense and Equity.

Definition – Asset

An asset is a resource controlled by an entity as a result of a past event from which it is probable that future economic benefits will flow.

In order to qualify as an asset, the item should not result in any form of cash outflow. Besides, ownership is not a necessary criterion for access to future economic benefits.

An item is recognised as an asset when

· It can be reliably measured at cost;

· It is probable that future economic benefits will flow to the entity

Definition – Liability

A liability is a present obligation arising from a past event, the settlement of which results in an outflow of resources embodying future economic benefits.

At no point in time will a liability give rise to an inflow of resources. The occurrence of liability may be viewed as a transfer of resources at the time of settlement.

An item is recognised as a liability when:

· It can be reliably measured at cost;

· It is probable that the settlement of the transaction will result in an outflow of resources embodying future economic benefits

Income, Expenses and Equity

The framework defines income as increases in economic benefits arising from the enhancement of assets or reduction in liability that results in increases in equity other than those arising from contributions from equity participants.

Increases in net assets lead to income so far those increases do not arise from any form of capital contribution (issue of shares).

Expenses are decreases in economic benefits in the form of depletion of assets or increase in liabilities that result in decreases in equity other than those arising from distribution to equity participants.

A reduction in net assets give rise to an expense so far that reduction is not attributed to any form of distribution to equity participants (dividends).

Equity/ Net Assets is the residual interest in the net assets of an entity after having deducted all liabilities. Equity consists of ordinary share capital and reserves. (Movements on reserve accounts are reflected in the statement of changes in equity)

Home Activity 1: Outline the importance of the IASB Framework

Measurement Bases

The IASB Framework recognises the following measurement bases:

· Fair value measurement;

· Historical convention;

· Current value approach;

· Future value measurement; and

· Present value method

One fundamental aspect of the IASB framework is that it lays much emphasis on the adoption of a balance sheet approach. This approach implies that decisions should be taken on the basis of the equity position of the organisation; hence the net assets.

The Importance of Cost Accounting

The Importance of Cost Accounting

Managers rely on cost accounting to provide an idea of the actual cost of processes, departments, operations or product which is the foundation of their budget, allowing them to analyze fluctuation and the way funds are used socially for profit. Cost accounting is used in management accounting, where managers justify the ability to cut costs for a company in order to increase that company's profit. As a tool for internal use, versus a tool for external users like financial accounting, cost accounting does not need to follow the GAAP standards (Generally Accepted Accounting Principles) because its use is more pragmatic.

Cost accounting creates a financial value out of the production of a product, measuring currency that is nominal into units that are measured by convention. By taking recorded historic costs a bit further, cost accounting allocates a company's fixed costs over a specific time period to what items are actually produced during that period of time, creating a total cost of product production. Products that were not sold during that period of time produced a “full cost” of those products, recording them in a complex inventory system that uses accounting methods of its own that are in compliance with the GAAP standards. Managers are then able to focus on each period's results as it relates to the “standard cost” of any product.

Any distortions in cost that were caused by calculating what the overhead of a product is versus what a unit cost is for companies that specialize in only one specific product are very minor in industries that mass produce that product with a low fixed cost. Understanding why costs vary compared to what was actually planned helps a manager to save a company money by taking actions that are appropriate to correct that variation in the future. Variance analysis is a very important part of cost accounting because it breaks down each variances into many different components of standard cost and actual cost. Some of these components are material cost variation, volume variation and labor cost variation.

Cost accounting is a very important part of the management accounting process. In order for managers to determine the best methods to increase a company's profitability, as well as saving a company money in the future, cost accounting is a necessary system in the management of a company's budget, providing important data to analyze fluctuation in company production costs.

Accounting for Goodwill

What is goodwill? Depending on whom you ask you may find many different answers to this question. If you were to ask an accountant what goodwill is he or she would exclaim that goodwill is the amount an entity pays in acquiring a business that is in excess of the acquisition’s fair market value of its net assets (Goodwill = Purchase Price of an Entity - The Entity’s Fair Market Value of Net Assets of the business). What this basically means is that goodwill represents a value of an entity above what the current fair market value of the acquired firm’s net assets. Some examples of goodwill would be: future profitability of the acquired firm, client lists, brand name etc… Goodwill is considered an intangible asset and once the value of goodwill is established this amount is listed as an asset on the acquiring firm’s balance sheet.

In the past, firms had to account for goodwill by abiding by the Accounting Principles Board (APB) Opinion 17 issued in 1970. In this opinion, when a firm was purchasing another entity, the purchasing firm could account for any goodwill involved in the transaction as an asset on their balance sheet and amortize the asset over a maximum of 40 years. If the purchasing firm did not want to amortize the value of the goodwill involved in the purchase of another organization it could also use the Pooling-of-Interest accounting method. The Pooling-of-Interests accounting method combines the book value of each firm’s assets and liabilities to create the new entities’ combined balance sheet. In this transaction, it is hard, if not impossible, to figure out which entity is the purchasing entity and which entity is being purchased. The Pooling-of-Interests method basically negated the need to account for goodwill at all. However, the Pooling-of- Interests method was superseded and is no longer an option of merging firms as of the issuance of FAS 141 by the Financial Accounting Standard Board (FASB). The Accounting Principles Board (APB) opinion 17 was also superseded when the Financial Accounting Standards Board (FASB) issued SFAS 142, Goodwill and Other Intangible Assets, in June 2001. In this statement the FASB laid out the new rules when accounting for goodwill. In this statement, amortization of all goodwill stopped regardless of when it was originated. According to this statement goodwill amounts are still to be treated as intangible assets (and listed on the purchasing firms balance sheet), but instead of amortizing this asset over a maximum of 40 years, each firm that records goodwill on their balance sheet must annually test the value of goodwill for impairment. To test goodwill for impairment an organization has to take the book value of the goodwill on their balance sheet (the carrying value), and compare it against the current fair value of this goodwill (using the present value of future cash flows). If the fair value of the goodwill in question were to decrease to a value lower than the book value (carrying value), then the firm must impair (or write off) the difference in the value of the current goodwill asset. An example of this would be if XYZ firm purchased ABC firm, and the transaction involved $100,000 worth of goodwill, this goodwill would have to be tested at least annually to make sure it does not decrease in fair value. If it were to decrease in fair value the amount that the $100,000 was reduced by would need to be impaired (written off). For the purposes of our example let’s say the fair value of the goodwill in question were to decrease by $10,000 and the fair value of this goodwill would now be $90,000 the $10,000 would be impaired (written off). That is, the $10,000 would be reduced from XYZ assets (goodwill) on its balance sheet, and this $10,000 would show up as a loss (expense) on XYZ income statement. SFAS 142 also states that if in the following accounting periods test of goodwill for impairment, the $90,000 in goodwill now on XYZ balance sheet were to increase in value the firm is not allowed to increase the goodwill asset; XYZ is only able to impair the value of the goodwill asset if it were to decrease in value.

The effect of SFAS 142 does have a mixed impact on different organizations. Because goodwill was amortized and expensed on the income statement (prior to SFAS 142) this amortized amount would be part of the expenses deducted from the purchasing firm’s revenue to come up with the entity’s net income. By getting rid of this amortization the purchasing firm in theory may not have to report a loss against its revenue (on the entity’s income statement) if the fair value of the goodwill in question does not decrease in value. Thus SFAS 142 would be advantageous to a firm that does not have to impair any value of their current goodwill assets, and because the amortization expense of this goodwill is no longer netted against current revenues, net income would in essence be higher as a result. SFAS 142 could also lower the purchasing firm’s net income on an irregular basis. Now that the purchasing firm is no longer allowed to amortize goodwill over a maximum of 40 years and it has to test the goodwill asset for impairment; any reduction in net income that would occur from the loss of fair market value of the goodwill in question is going to be more volatile and varying in amounts. This volatility means that a loss could be booked for the goodwill one year and not be booked the next year, and each time the loss is booked it could be by a different amount.

Accounting for goodwill does spark some controversy in the accounting field. Because it is an intangible asset, goodwill is very hard to value, identify, and measure. Also when the acquiring entity does its yearly evaluation of the goodwill in question the fair market value is difficult to measure because it is an intangible asset. The accounting for goodwill is still a controversial topic that will more than likely have to be modified again in the future.

How to accounting: Assets and Liabilities

Knowledge in finance and investing is a must for everyone today. Back in the day, people used to leave the financial jargon to 'those who deal with that kind of thing'. Well, the tide has changed, and it's now absolutely necessary to know where your money is going, your sources of income, and how to balance the two in order to make informed decisions into your financial health. We'll take a look at assets and liabilities, and find out ways of balancing the two for the benefit of you and your family.

Assets

To begin with, we'll have a look at what an asset it. This can be defined as anything that has economic value or is expected to provide future benefit if invested in, such as money in the bank, personal property, real estate, and investments. Look around your house or business premises, I'm sure you're bound to see a few. For example, that computer that you use to write short stories for submission in exchange for pay is an asset. That pickup truck that you use to transport items for sale from the warehouse to your supermarket is an asset as well. Make a list of everything you own that is of value. Include your possessions such as vehicles, property, jewelry, furnishings, equipment, antiques and collectibles. Add any investments that you may have, and any cash in the bank. Place a value on each item. When you add up these values, you will have an idea of the worth of your assets. Remember, assets can be converted to cash for times when you'd find yourself in a rough spot.

If you want to acquire additional assets to secure your financial future, you could invest steady investment classes such as stocks, bonds and gold. These can be bought from investment brokers, who will advise you on the best stocks to buy in order to make a profit. It's wise to diversify your assets to bolster your finances from future rainy days that each of us is bound to come into. With a good mix of assets, you can weather the storm and brave economic slumps when they hit.

Liabilities

Next, we'll check out what liabilities are. These are amounts you owe to people or businesses in the form of bills or loans. These also include things that will cost you money in the future like that car loan you're servicing. It's important to make sure that your liabilities never exceed your assets. The funny thing, however, is that sometimes when you're acquiring assets, you incur liabilities. Unless you have cash in the bank to cover their cost, assets are often accompanied by debts. Please note that day-to-day living expenses are not liabilities, as these are costs that are to be expected and should be planned for in advance in your budget.

In order to have an idea of your net worth, add the total cost of your liabilities and subtract it from your assets. This kind of knowledge will give you the power and confidence to take control of your financial future and ensure that you live a worry-free and financially secure life.

Career: Plan to be Small Business Accountant

For those who have studied accountancy as the core subject and planning to have a bright future in this field, there are some points that should not be ignored in any case. These points are very important to shape up their career in effective manner. The first point is the clear the mind-set about career opportunities.

People generally have the myth developed in the back of their minds that associating with a big company is the only right path to have an excellent career in this field. But this is not the right though. This is the myth, as mentioned earlier. The reality is that a Small Business Accountant can shape up his/her career in perfect manner, without paying any loss.

Yes! The small business enterprises, which are huge in count, offer a top class range of salary and additional benefits to their employees. These companies have the capital investment small as compare to the big corporate players; they have small staff and small plans as compare to the huge players of the industry worldwide. But this nowhere indicates that the small scale firms do not have a bright or profitable future.

These companies ensure an excellent work environment to their employees as they understand the importance of their manpower in the entire growth process. The Small Business Accountant has a lot of areas where he/she can showcase his talent and capabilities in the initial stage of his/her career, which is a big challenge in the big company.

At the same time it is very easy to enter in a company which operates on the smaller platform. This helps you in building your confidence and earns a good amount of money. The work structure of such companies is simpler and less complicated. The Small Business Accountants are appointed to take care of all the financial transactions and other accountancy related transactions or information. The firms have limited fund and limited areas to locate them. Thus the load of additional responsibility is very low in such fields. Thus it is suggested that those who aspire to make their career successful in the field of accountancy management, going for the small scale business is not at all a bad choice.

For planning your career in this field and beginning with the small scale industries, there are number of characteristics that you must develop in your personality for being a perfectly suitable candidate. These prerequisites include quality of work, qualification & knowledge of accountancy, proficiency and additional skills with the touch of intelligence. If you develop all these characteristics in you, then you can be able to plan a bright future in the field of financial and accountancy career with no looking back.

International Standards of Accounting and Financial Reporting

International standards of accounting and financial reporting (IFRS), also known by its initials in English (IFRS), International Financial Reporting Standard, are accounting standards adopted by the IASB, a private institution based in London. The Financial Reporting Standards (IFRS) are the International Standards or international standards development activities are a manual accounting and accounting, as defined therein guidelines for keeping records of how the world is acceptable .

The rules are known by the acronym IAS (International Accounting Standards) and IFRS (International Financial Reporting Standards) depending on when they were approved and qualify through the "interpretations" that are known by the acronym SIC and IFRIC (Committee interpretations of International Financial Reporting Standards).

The accounting standards issued between 1973 and 2001, are known as International Accounting Standards (IAS) were issued by the International Accounting Standards, International Accounting Standards Committee (IASC), the forerunner of the current Board of International Accounting Standards, Intemational Accounting Standards Board, IASB. Since April 2001, year of establishment of the IASB, the agency adopted all IAS and continued their development, calling the new standards with International Financial Reporting Standards (IFRS).

The Financial Reporting Standards (IFRS) are becoming the universal accounting language to ensure that in all countries speak the same language financial information homogenizing frameworks and facilitating the interaction of markets, taking a step towards globalization.

In recent years, countries of the European Union, Canada, Hong Kong, South Africa, Australia, Russia, Chile, Panama, Venezuela and Ecuador, among others, have adopted International Financial Reporting Standards (IFRS), directing its economy towards strengthening investor confidence, which shows the great interest in this topic to the world.

Structure of IFRS (International Financial Reporting Standards)

IFRS (International Financial Reporting Standards) are considered "principled" as a set of rules in the sense that establish general rules and dictating specific treatments. The Financial Reporting Standards (IFRS) include:

International Financial Reporting Standards.

International Accounting Standards.

Interpretations IFRS (International Financial Reporting Standards).

IFRS for Small and Medium Enterprises (SMEs)

In July 2009, published version of the International Financial Reporting Standards for Small and Medium Enterprises (IFRS for SMEs, for its acronym in English). IFRS (International Financial Reporting Standards) for SMEs is a simplified version of IFRS (International Financial Reporting Standards).

The 5 characteristics of this simplification are:

Some topics in IFRSs (International Financial Reporting Standards) Totals are omitted because they are not relevant to typical SMEs.

Some alternatives to accounting policies in the IFRS (International Financial

Reporting Standards) Totals are not allowed as a simple method is available for SMEs.

Simplification of many recognition and measurement principles of those in IFRS (International Financial Reporting Standards) Totals.

Substantially fewer revelations.

Simplification of Reason.

Ideas for Being a Perfect Accountant

What qualities does one need to become an excellent accountant? This is the question that wanders in the minds of all the aspirants of career in accountancy. The reason behind people's inclination towards this field of work is because, there are number of scopes for growth in future. But it is not an easy task to become a bookkeeper or accounting professional and getting hired for this position in a brilliant company. This is because every company looks for the person who is simply fabulous in the accounting and financial record management area. For being one, people need to work on their skills and educational qualifications.

The educational qualification in financial and accounting field can be termed as the first and foremost milestone in this journey of being the perfect accountant. The secondary thing includes a bunch of qualities. Talking about the educational prerequisite, one has to be a graduate of accountancy or the master's degree is even more beneficial. If not this then one needs to have a diploma or professional training in bookkeeping of financial training. The additional qualities part comprises of quick execution of work, intelligence and deep knowledge and skills about general mathematics. In addition to that the need of perfect management skills and patience is required. If you can possess all these qualities, then you can earn high amount of money by this promotion.

That's not all; the aspiring accountants need to have a complete knowledge of accounting software which is adopted in the technically advanced business sector. The computer proficiency is also required. Those who learn these things with complete dedication and develop the skills on regular basis, get a lot in this career path. There is also an urgent and prominent need to keep oneself updated about the advanced and high tech developments in the accountancy fields.

Thus if you possess all these qualities or you want to groom yourself in this field, then there are number of options available for this modern world. Looking at the popularity and increased scopes of this field, there are number of firms engaged in the field of providing accounting education to the people. At the same time there are various other firms involved in serving the needs of corporations in terms of hiring the right candidate for them. For example a company look to hire skilful accountant in Vancouver, then the companies engaged in the field of accountant consultancy may serve them in better manner.

Thus it is easy and simple to kick-start the career in the field of accountancy and earning handsome remunerations. There are number of options which enable the users to make them ready for this work area, which are appreciated worldwide by the companies and users.

Does your SME Business Needs Accounting Software?

Opening up a small business is a tough decision to make. With today's uncertain economic climate, rising prices of commodities, and fierce competition in the market, there is really no assurance that a company will sell. However, setting up a business means that the owner is decided in entering the competition and should do everything to get ahead of the rest.

Among the many small businesses have to invest on is an accounting software for small businesses. This software allows for convenience, automation, and ease of work for the business owner and the employees alike. It has the capacity to automate payroll processing, manage time in the office, keep records, invoice, and compute taxes. However, before a company spends on this, it must first consider or determine if such software is necessary or not. Will the software contribute to the overall progress of the company? Will it prove to be useful?

In order to determine if a company needs an accounting software, here are some points to make.

1. More than one business. Managing a number of small businesses can be difficult. But with accounting software, all the processes and transactions can be done with the software without mixing everything. With the accounting software for business, the business owner can relax and let the software do its job.

2. There is a long list of customers. What could be more tiring than keeping paper lists of all contacts, customers, addresses, account information, nature of business, and other pertinent details? Even if these are put on word documents, it would be difficult to organize such data. The best solution to this is getting accounting software that will organize all customer information and prevent confusion and mix up.

3. There are many employees. Employees have benefits that need to be satisfied as these are mandated by law. To cite more, their time records have to be computed accurately in order to provide the corresponding salary. And these take so much time in the absence of accounting software. Furthermore, computation of taxes has to be done accurately in order to avoid sanctions and penalties from the government.

4. For inventory. Systematically arranging stocks can allow time and effort savings. But if there is no system, organizing would be difficult. For example, if one customer comes to a store and asks to buy some materials, there would be a need to personally check the stock room to see the availability of stocks. If this is not one's idea of a good business, then using the accounting software is necessary. Also, accounting software allows for paper trail so that auditing will be made a lot easier and more convenient.

5. The company is doing well. If a company is doing well and making sales, then there is a need to use accounting software in order to cope with demands.

6. If the budget is tight and can't afford a regular accountant. The accountant is an expensive professional to keep. And if the company cannot afford it, then the accounting software is way cheaper, as it is a one-time expenditure, than paying an accountant.

With these points, a company may decide if the accounting software business is necessary. However, it's use is highly recommended.

Commercial Debt Collection

Many business owners have great difficulty when it comes to commercial debt collection. Debtors can avoid paying easily; and, without a clear strategy in place for collecting payment from debtors, they may not have sufficient reason or motivation to feel that paying their debt is the best option. With an effective strategy for approaching your debtors in place, you can greatly impact a debtor's decision to pay.

Unfortunately, a major hurdle that many businesses struggle to overcome is the lack of a comprehensive, yet streamlined approach that yields a high rate of debt recovery. The problem is that the process of collecting debt can be quite complicated. Knowing when, how and what to do when it comes to approaching debtors can be difficult for anyone without knowledge or experience at collecting debt.

With commercial debt collection, there are, as with any business process, correct and incorrect methods, time consuming methods and even methods that can create legal problems for your company. The laws and regulations are not only constantly evolving, but they also can vary for different locations where the debt is being pursued. It only takes one savvy debtor to identify and report a violation of a debt collection law or privacy law and you can find yourself in a lawsuit or even have files charged against you or your company. If you are unsure of how to remain compliant while pursuing debtors and avoid repercussions, you might consider contacting a commercial debt collection agency for guidance.

Developing a safe and effective strategy is key when it comes to commercial debt collections, however, it is not as simple as many people think it is. In actual fact, commercial debt collection is an art-form that requires knowledge of the process and experience in understanding what motivates different debtor types to pay.

Effective commercial debt collection also involves investigating the debtor company and their officers. An experienced commercial debt collector will read the debtor to establish what is important to them and what motivates them in order to execute a plan that will generate the most recovery possible.