by Stephen Reed | Accounting News, News, Social Security
According to the Social Security Administration, the last 12 Trustees Reports, which report annually on the current and projected financial status of the Social Security program, indicated that reserves will be drained between 2033 and 2035. If that happens, scheduled tax revenues will be adequate to pay only about three-fourths of the scheduled benefits. Here are some of the legislative measures that policymakers have proposed to address the issue.
Raise the Retirement Age
One proposal is to gradually increase the retirement age. Currently, the retirement age is set at 67 for those born in 1960 or later. The proposal would increase the retirement age to 68 over the next decade, and eventually to 70 for people born in 1978 or later. Proponents of the increase claim that it would reflect longer life expectancies and help to ensure the program’s long-term sustainability. Critics of the increase argue that this would disproportionately affect low-income and blue-collar workers who have physically demanding jobs and may not be able to stay in the workforce as long.
Increase Payroll Tax Rate
The payroll tax rate funds Social Security. Employers and employees each pay 6.2 percent of wages up to the taxable maximum of $160,200 (the self-employed pay 12.4 percent). Under this proposal, the tax rate would gradually increase over the next decade, thereby garnering more revenue for the program. Advocates of this approach assert that it would be a fair way to fund the program, as it would require higher earners to pay more into the system. However, those against this move argue that it could discourage economic growth.
Invest in Private-Sector Stocks and Bonds
Social Security funds are invested in special-issue government bonds, and these bonds have a lower rate of return than stocks or other investments. Proponents of this move argue that investing Social Security funds in a diversified portfolio of stocks and bonds could potentially earn higher returns and increase the program’s financial sustainability. Critics point out the obvious risks and market volatility associated with investing in the stock market.
Change the Way Benefits Are Calculated
Social Security Benefits are based on a worker’s highest 35 years of earnings, adjusted for inflation. One proposal is to implement a formula that is less generous to higher earners. While this could address Social Security’s regressive aspects, where higher earners receive more benefits than lower earners, critics argue that this could disincentivize workers to increase their earnings and could dissuade entrepreneurship.
Invest in Private IRAs and Savings Accounts
Finally, some lawmakers have recommended creating individual retirement accounts (IRAs) or other private savings accounts as alternatives to Social Security, allowing individuals to invest a portion of their earnings in the stock market or other investments. While this would grant individuals more control over their retirement savings, and could potentially earn higher returns than the Social Security system, critics point out that private accounts expose individuals to market volatility, and that the Social Security program provides a safety net for individuals who may not have the means or knowledge to invest in private accounts.
by Stephen Reed | Healthcare, Industry - Healthcare, News
Healthcare practices rely on prompt payment for provided services to maintain financial health of their business. Point of service collections refer to the process of collecting credit card or cash payments at the time of service, rather than going through a billing cycle, which can take months. Below we’ll go over some of the ways that healthcare practices can use point of service collections efficiently in order to cut the billing cycle, improve cash flow, and get paid more quickly while providing a positive experience for patients.
Train Staff to Discuss Payment Options in a Way That is Polite and Professional
Staff members who interact with patients should be trained to discuss payment options and expectations in a polite and professional manner. They should be prepared to explain services as they relate to a patient’s bill and answer any questions the patient may have about the billing process. This helps the patient feel comfortable paying their bills without confusion, surprise, or frustration regarding the cost of care. Transparency and approachability also help to build positive relationships with patients.
Offer Multiple Payment Options
Accepting multiple forms of payment increases your chances of receiving payment more promptly. Offering flexibility with methods of payment, including credit cards, checks, debit cards, cash, and virtual payments like Apple and Google Pay makes payment more convenient for patients. You can also consider offering payment plans or financing options for patients who cannot afford to pay in full at the time of service. Offering payment options that fit a patient’s financial situation can help ensure timely payment and build trust with patients.
Be Proactive and Transparent About Payment Expectations
By providing pricing transparency and establishing financial responsibilities, you help to create a more successful patient/provider relationship. This information can be provided over the phone, during the appointment scheduling process, or through the practice’s website. Staff should be prepared to provide a price estimate upfront, discuss the various payment options available to patients, and emphasize that point-of-service payment is preferred.
Use Technology to Streamline Payments
Medical billing software with an integrated payment processing platform that allows for point of service payments is essential in collecting up-front payments from patients. Look for one that offers point of service collections as a default. You could also implement a patient portal where patients can view and pay their bills online. This will help streamline point of service collections, reduce administrative burdens, and improve collection rates.
by Stephen Reed | Accounting News, Business Growth, News
Whether anticipated or unexpected, small businesses in every industry face a lot of challenges. Both veteran and new businesses need to be prepared, flexible, and adaptable in order to succeed. Here are the most significant business challenges in 2023.
Economic Uncertainty
The economy has been wavering for some time now, and it appears that we’re on course for the same in 2023. This makes long-term planning a difficult task. When the economy is more balanced, business owners are equipped to make better investments and more informed decisions. However, with rising inflation, as we have now, small businesses face the possibility of stalled growth. It will be imperative for small businesses to budget costs and manage their operations efficiently.
Inflation and Rising Costs
Small businesses are not immune to the effects of inflation. Increasing costs of raw materials, shipping, and energy can all influence the profitability of a small business. Whereas larger companies might be able to pass these costs onto customers, small businesses typically don’t have the pricing power to do so. To attend to this challenge, small businesses may need to reduce costs through more efficient operations, renegotiating contracts with suppliers, or exploring new revenue streams.
Hiring and Retaining Labor
Most industries have experienced a labor shortage since the onset of the Covid-19 pandemic. The inability to find and retain qualified employees could impact the ability of small businesses to deliver goods and services or focus efforts on growth. Small business owners should think about offering more competitive wages and benefits, improving working conditions, and investing in automation to help reduce the work load of employees.
Competition
Competition isn’t a new challenge to small businesses, but the pandemic accelerated the shift toward e-commerce and digital channels. It’s now up to small businesses to find a way to stand out from the crowd in order to retain existing clients and attract new business. They might want to consider investing in digital marketing and advertising, improving their website and social media outreach, and offering products or services that set them apart from competitors.
Funding
Securing funding will be difficult this year as lending firms await to see what the economy does. On the positive side, this is an opportunity for small businesses to stand out among the competition. Business leaders will need to come up with creative pitches that prove the value their company offers.
by Stephen Reed | Accounting News, Business Growth, Industry - Professional Services, News, Professional Services
Professional services firms often face the challenge of distinguishing themselves in a highly competitive market. Developing a strong brand is a surefire way to stand out among the crowd. A well-crafted brand development strategy can help your firm establish a clear identity, communicate your company values to potential clients, and build trust and loyalty among existing clients. Read on to learn how to create a brand development strategy for your firm.
Research Your Target Market
Conduct a thorough analysis of your target market, including clients, competitors, and industry trends. This should inform your firm’s overall brand positioning. You should fully understand your target demographic to the point where you can anticipate their wants and needs, thereby creating purposeful messaging that will ring true. Furthermore, research will help you determine strengths and weaknesses in how your business and brand are regarded.
Develop Your Brand Positioning
Aim to develop a brand messaging platform—or market position—that clearly communicates what sets your firm apart from competition as well as key benefits to potential clients within your target audience. Why should they choose to work with you? This messaging should be consistent across all media communications, including your firm’s website, social media, email marketing, and other promotional materials.
Create a Positioning Statement
Typically three to five sentences, a positioning statement conveys the core of your brand positioning. It should be ambitious so your firm has goals to work toward, but remember that you will need to deliver on promises.
Establish a Name, Logo and Slogan
If your business is already up and running, there’s usually no need to change your firm’s name. However, if you feel you’ve outgrown your original name or you’re going through a merger, a name change might be in order. Either way, you want to develop a visual identity that aligns with your brand positioning and messaging. Along with a slogan, this can include a logo, color palette, and typography that are distinctive and memorable, and that can be easily recognized by its target audience. Keep in mind that these are symbols of your brand that serve as a way to communicate with your audience and potential clients. Therefore, they should be designed with your target market in mind.
Create a Content Marketing Strategy
Visibility and reputation drive brand strength, and effective content marketing has the potential to increase both. Aim to create quality content that reflects your brand values and goals. When done correctly, this will make your brand relevant to your target market and boost your firm to a position of authority in your niche.
Get Involved and Build Relationships
Building trust and credibility with both existing and potential clients is an important piece of brand development strategy. This can be achieved through a variety of means, including:
- Building a robust online presence
- Publishing thought leadership content
- Participating in industry events and conferences
- Effectively communicating in a timely and responsive manner
- Providing ongoing follow-up
Implement Your Brand Development Strategy
Creating a brand development is one thing, but consistently applying it is another. Once created, a brand development strategy all too often falls off the priority list. The strategy needs to be put into play if you want to grow your brand. Not only that, but it’s an ongoing effort that requires continuous monitoring, evaluation, and adjustment. Remember to conduct regular brand audits, track brand visibility and perception, and gather feedback from clients and employees. And as the market and industry evolve, your firm’s brand should be adapted accordingly.
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by Stephen Reed | Accounting News, News, Retirement, Retirement Savings
Retirees routinely withdraw cash from retirement accounts to cover basic living expenses, but selling low could negatively affect your retirement portfolio. If the economy experiences a downturn during your retirement years, you can use the strategies discussed below to minimize the impact to your long-term financial plan.
Before Making Any Withdrawals
While younger investors are generally advised to leave their cash invested and wait for the market to rebound, retirees typically rely on market withdrawals to create cash flow. In an effort to avoid or postpone withdrawals during tricky market conditions, try to find assets unlinked to the market that you can tap into until the market normalizes. Market downturns and steep inflation can be considered financial emergencies if you’re struggling to make ends meet, so you can certainly dip into emergency funds without feeling guilty. Just be sure to prepare a plan to replenish the funds as soon as possible. If you must withdraw from your investment accounts, it’s important to be strategic in your withdrawals.
Begin with Interest and Dividends
Before selling low, try to leave your original investment intact by only withdrawing the interest and dividends from your taxable accounts. This move could allow you to conceivably grow your income when the market rebounds in the future.
Sell Lower Volatility Investments
Short-term bonds and bond funds generally aren’t as affected by market unpredictability, and their values are ordinarily stable. Selling them in a down market can supply necessary cash and not cause too much damage to your retirement savings. They also favor smaller price fluctuations than stocks during stretches of market volatility.
Rebalance Your Portfolio
If your investment portfolio is out of alignment with your asset allocation goals due to market volatility, it’s an opportune time to look for opportunities to raise needed cash by rebalancing. In order to return your allocation to its original goal, sell assets where values have increased disproportionately in value relative to your desired allocation, and buy assets that may have dropped in value.
Make Tax-Smart Choices
If you’re forced to sell assets from taxable accounts for needed cash flow, be sure to make tax-smart choices. You can minimize your taxes owed by selling investments that you’ve held longer than one year. Those gains are taxed at the long-term capital gains tax rate of 20% and not at the federal ordinary income tax rate. Keep in mind that some gains may also be subject to state and local taxes.
