Seller Financing and the Current Credit Crunch

The banks are hurting so much so, that they have decided to share the pain with the consumer. Even if you have been an exemplary customer, the banks will still pass their pain onto you. The pain of our current economic distress is being felt by all of us in different ways. From an all time high unemployment rate to cutbacks in salary or wages.

People are feeling the money crunch just like, if not more, than the banks. As if all this uncertainty wasn’t bad enough, the banks have decided to make everyone, even customers that pay their credit cards on time or consistently pay on time in full. No matter your account status the banks are lowering the limit on credit cards. So this obviously changes you debt to credit ratio. Making your debts appear as if they have suddenly become higher.

The ripple effect is your credit score becomes lower, in some cases plummets by more than fifty points. This sudden down turn then alerts the banks that you are having a financial problem. In essence the banks are creating your newly negative score.

If you apply for a loan or credit card more than likely you will be turned down or given a very high interest rate. Through no fault of your own the bank has lowered your credit limit making you have a lower credit score.

In some parts of the U.S. this stacking of the deck against you, to favor oneself, and make you think it is okay, would be considered a scam, a confidence game. But all things aside, the consumer will need to overcome the new obstacles and challenges the banks are setting us for.

What will happen if you suddenly stop using your credit card, your credit rating will not improve too much. The reason the score will not improve, the banks will still lower your limit, at least until you call them. Even then this still may not help your situation. This only benefits the banks, being at the mercy of the financial institutions that need a government bail out.

If you currently have a high interest rate you may not be able to get a loan to refinance or purchase a home. This is where a seller, who cannot seem to find a qualified buyer by the banks current standards, can help themselves and a buyer. Seller financing for twelve months or longer can make a property more attractive to all buyers, and relieve the stress of all parties.

Seller financing is a great option for all parties, you may have a buyer that can make the payment but may not qualify for conventional bank funding. The new bank rules are strict, and people who would have qualified for a loan not too long ago may not qualify now due to having a lower credit score because of the new banking practice of lowering the credit limit.

A seller may not have a lot of risks when it comes to financing their property. Some of the ways a seller could offer financing would be a lease with the option to purchase, carrying a second if a person cannot qualify for the total asking price, or holding the entire first loan. Each technique has its benefits and perceived pitfalls; But the benefits out weigh the alternative.

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Finance And Accounting Outsourcing Trends

Outsourcing business operations is one of the new trends followed today by most of the companies. The Finance and Accounting outsourcing industry too has grown to a large extent today. Big, medium and small businesses resort to outsourcing accounting operations, because it saves them a lot of time and money. This is a process when a business hands over its finance operations to an external agency (team or individual). This external agency will take care of all the accounting operations, thereby releasing the burden of the businesses. These agencies charge a nominal fee for the finance and accounting services (preparing entries, finalization of accounts, getting audit compliance reports, year-end reporting, etc.) rendered. Some of the recent trends followed in this industry are as follows:

Robotic Process Automation (RPA)

One of the latest trends that are creating waves in the field of outsourced finance & accounting operations is Robotic Process Automation. As the name indicates, this process involves the use of technology to automate processes, improve their quality and eliminate all the unnecessary and repetitive processes involved in delivering the final result. Through this process, the agencies that take care of F&A operations of their clients, make use of computer software to bring about the speed, efficiency and accuracy in the way accounts are managed and presented.

Predictive & Prescriptive analytics

This is one of the most successful trends employed in the finance and accounting industry today. This method involves in providing a descriptive analysis, predictive analysis on how the future model would turn out to be and prescribing an optimum solution that suits the nature and operations of a particular business. When this trend is adopted by agencies who handle the F&A activities, businesses get an idea of their current situation, forecasts for future and apt F& A model to be adopted. The finance and accounting outsourcing agencies give a detailed report about this to the business for reasonable charges.

Hybrid pricing models

In the finance and accounting outsourcing industry, many agencies charge rates based on the hybrid pricing model. In this model, business owners need to pay the agencies that take care of their F&A activities, only for the exact services that have an impact on the business earnings. If you are a business owner, you can choose this model, because it is tailor-made for you with flexible pricing structure. Delegate only particular tasks to finance and accounting outsourcing companies and pay exactly for that.

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Qualms On Finance and Accounting Outsourcing Fail To Hinder Industry

Finance and accounting outsourcing is one of the branches of outsourcing that has gained traction over the past few years as companies coming from different business sizes have seen the benefits that they can gain from engaging with a finance and accounting outsourcing company. Among the services that outsourcing companies offer are payroll outsourcing and accounts receivables and payables outsourcing. It is this particular department of a company that can be considered as one of those departments that require a high level of patience and a keen attention to detail. The volume being handled in the finance and accounting department of a business is usually heavy, which allows finance and accounting outsourcing companies to pitch in their services to companies as they can easily reduce the burden at a cost that is not heavy on the budget.

The Wall Street Journal reports that there has been a rising demand for outsourcing services. However, despite the efficiency and benefits displayed by outsourcing, there are still those company executives and companies that are quite uncomfortable with the idea; thus, they would rather host their finance and accounting processes in-house. A research report by Ovum shows that a barrier that prevents big companies to outsource their finance accounting processes would be their loyalty to their staff. Peter Ryan, a lead analyst from Ovum, suggests that a combination of a company’s sense of responsibility for their staff and their skill level could be one obstacle that hinders companies from outsourcing their finance and accounting duties.

Another reason that is being pointed out by the research conducted by Ovum would be the high risks that they attribute to outsourcing is the industry’s low-cost pitch. 38.5% of chief financial officers in the United States and in the United Kingdom are having second thoughts with engaging in outsourcing with a service provider, particularly Indian service providers, who offer finance and accounting services for a low cost because they consider this as an “unacceptable” risk and they would be more comfortable in tapping the services of those who offer services at a higher price.

But despite company executives holding back on outsourcing their finance and accounting outsourcing, there are still some companies like Accenture (NYSE:ACN) and Wipro Limited (NYSE:WIT) that are being tapped for this kind of service and they are showing that their businesses are growing mainly because they have already established a name in the industry.

Other outsourcing companies meanwhile are becoming interested to explore the finance and accounting area of outsourcing. As the month of May began, business process outsourcing company, EXLService Holdings (NASDAQ:EXLS), acquired a service provider of finance and accounting services. US-based Outsource Partners International’s 3,700 professionals and 80 clients would add to the 13,000-population of EXLService Holdings. According to the President and CEO of EXLService Holdings, Rohit Kapoor, this particular acquisition will enable their company to be more known in different verticals, as well as strengthen their company presence in three continents in the globe, namely the United States, Europe and Asia.

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How the Finance and Accounting Process Is Transforming?

The chief financial officers and business owners, nowadays, look beyond cost reduction. Their focus is on developing new revenue streams for their business. They want to make a significant improvement in their performance metrics, while lowering down the inefficiencies. Consecutively, they look to address regulations and mitigate allied financial risks with the growing regulatory norms.

The financial and accounting organizations can elevate the business proficiency of any organization, thus, entrepreneurs seek to meet the following challenges.

Entrepreneurs want to:

• Accelerate revenue growth and reduce costs, without giving any risk to a business
• Acquire a greater understanding over the performance metrics and course of a business, requiring an adequate support for the growth of revenue plans
• Sustain a profitable growth and make a better investment in people and innovation

How service providers can help?

Service vendors operate as an extending arm or technology partner providing finance & accounting services and handling financial functions spanning across the following areas:

• Accounts Payable
• Accounts Receivable
• General ledger management
• Budgeting and forecasting
• Reporting and compliance

The third-party vendors help enterprises manage the fiscal and regulatory risks, drive robust business execution at the best cost and assist a business empire to accelerate growth. Service providers help entrepreneurs to explore new markets and find methods to maintain a stance in the existing market.

The outsourcing procedure not only helps an organization to improve competitiveness, but also, drive efficiency through enhanced KPIs (key performance indicators).

Outsourcing:

Offers financial centers of excellence: to drive best industry practice and benchmark finance and accounting processes.

Integrates technology as a value proposition: to help entrepreneurs reduce process timelines, accelerate process productivity, simplify processes, increase accuracy as well as maximize the value of the existing ERP or enterprise resource planning investment.

Manages risk and assures compliance and quality: to build secure and reliable operations with independent risk management, compliance, and quality assurance for your operations.

Enhances business model: to help entrepreneurs get the full mileage from outsourcing initiatives, reducing costs, enhancing control and reducing process cycle time.

A service provider implements best industry practices to enhance the overall financial and accounting functions. Reputed service vendors build the credentials of a process to support the varied financial needs of an organization, with the help of a large pool of dedicated accounts team.

Outsourcing is transforming the entire finance and accounting value chain, by working on process improvement and offering value addition to the businesses. Service providers offer end-to-end services, ranging from routine services to high-end integrations, which makes the financial stature of an organization robust. The comprehensive suite of outsourcing solutions also include, niche services such as credit referral, revenue assurance, financial settlement and rent disbursement.

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