QuickBooks vs. Peachtree

I work with a lot of small business owners and not-so-small business owners who use either Intuit QuickBooks or Sage Peachtree accounting software.  I see QuickBooks more often but according to David Matthew, ERP Analyst and Software Advice Blogger, “with the recent release of Peachtree 2012, Sage has taken major strides in usability.”  David does an excellent job in comparing the two in his recent post, complete with an Overview of Essential Features, a Cost Comparison, and screenshots of graphics.

Your bank can offer services that integrate with your accounting software for the sole purpose of creating efficiencies.  For instance, you can download your paid checks from your bank’s online banking system and you will be able to import that data right into your bank reconciliation module of your accounting software.  This will automatically populate your cleared checks and allow for quicker, more accurate statement reconciliation.  Your bank can also provide Direct Deposit service to your employees by exporting a payroll file out of your payroll module and uploading it into your online banking service.   A last example would be a scenario where the business owner would use a bank lockbox to collect payments.  The bank can create a “posting file” to export and upload into your general ledger to close out an invoice.  I don’t know to what extent QuickBooks or Peachtree can provide these aforelisted functions but you should consider many other aspects of your software package in selecting one that fits best for your company.  I know you will find David’s blog entry helpful in that regard.

I Wish My Bank Could P2P

While home for summer break, my 20-year old college student daughter recently made a visit to our dentist.  She was slightly confused when they asked her to (gasp!) make a payment for services rendered.  Turns out she had a procedure done that was not fully covered by insurance.  Luckily she had a credit card with her.  It was actually her personal card as she is working diligently on establishing credit through Navy Federal Credit Union (NFCU).  She used her own savings account to get a cash-secured card.  She knows she needs to use it to establish a track record but she is a bundle of nerves if she has a balance on it (I only wish my 19-year old felt the same way!).  My point here is that she used her credit card to pay the $151 fee and she promptly called me to let me know that they “made” her pay for this.  The next day she headed back to college to work on a summer project so I couldn’t get her to deposit a check at NFCU and I needed to figure out how to pay down her credit card.  She and I both have accounts at NFCU but I don’t have access to her credit card.  She and I both have an account with Big Bank but it isn’t easy to get $ transferred over to NFCU from there.  So I ended up writing a check off my account at Big Bank, then using my Online Deposit Voucher from NFCU.  NFCU allows you to make an online deposit just by entering the info on their website and forwarding the check in a special envelope.  This allowed me to deposit it into my checking account at NFCU and two days later I went online and transferred it from my NFCU checking account to my daughter’s NFCU savings account, which I could do because I am a joint owner.  She could then turn around and do an online transfer from her NFCU savings account to her NFCU credit card to paid for the dental visit.  It seems convoluted but anything I can do from the comfort of my big home office chair is preferrable to running around town to stand in line to make a deposit.

Given that whole pain-in-the-rear scenario, I was very interested in a service I came across in my blog-surfing.  It was about a P2P (person to person) service called POPmoney (Pay Other People) and despite the fact that it has been around for about 2 years, I had not heard of it.  It is provided by a company called CashEdge and apparently a lot of banks have made this service available to their customers.  POPmoney works by doing two payment transactions:  The first is an ACH debit (electronic withdrawal) out of the sending consumer’s account, and the second is an ACH credit (electronic deposit) to the recipient’s account.  CashEdge is able to monitor and mitigate the risks involved with such transactions.  The best part about the service is that the only thing the sender needs to know is the email address or the mobile phone number of the recipient.  Once the payment is sent, the recipient will get an email or text message stating “you’ve received funds from (name).” They will then be directed to go to their bank or the POPmoney.com hub to collect the payment.

So….if my bank offered POPmoney, getting that dang dentist bill would have been a lot quicker and a lot easier.

Ladies – a banking career could be hazardous to your livelihood

In reading some of the news outlet articles and blogs I follow, I was struck recently by two stories around the misfortunes of women in banking.  The first article referred to a “Hit and Run Bandit” who has been knocking down women bank employees and stealing the money bags they were carrying.  Apparently 9 such crimes have occurred in California since May 19th.  One of the women attacked is in her 70s and she suffered a broken hip after being knocked to the ground.  They have a suspect in custody.  I am trying to think of what these women would be doing with bank bags outside of the branch and the only thing that comes to mind is restocking an outside ATM.  Aren’t 2 people required to handle this function?

The second article discusses female bank employees but they were not innocent victims in this case.   The “Don Juan” bandit has been convicted in Philadelphia after apparently running a large ID theft ring with the help of girlfriends working on the inside at various banks.  These women ended up providing him with account information which allowed him to steal more than $1 million.  Included among the implicated was a Wachovia Bank teller and a PNC bank branch manager.  He must have been some Don Juan.

Be Smart about Passwords

Image via Wikipedia

J.P. Morgan recently published a white paper titled Payments Fraud:  A Moving Target where they discussed the overall weaknesses of passwords in general.  It states that studies show that nearly one-half of online users use the same or very similar passwords to all websites that need logging in.  I am personally guilty of this because I have so many sites that need a user id/login and password that it can be unmanageable.  We all know how frustrating it is when you wish to use a site but can’t remember your login credentials.  Hackers have a high level of sophistication around cracking passwords so these reminders are worth reviewing.

The article suggests the following tips:

• Be complex: use a combination of upper- and lower- case characters plus numbers and symbols
• Go long: the longer the password, the more difficult it is to guess
• Use phrases rather than a specific word: consider using a phrase that reminds you of an event.  I like “welcometoSt.Thomas.”
• Use different passwords for different sites:  I consider this a personal challenge.
• Create combinations:  perhaps use the first two letters of several familiar things, places, etc.  Huh? I need help on this one.
• Create a private acronym: use the first letters of a phrase that has meaning for you and is easy to remember, then add digits and/or special characters to make it strong.  Can someone try this and let me know how it goes?
• Use capitalization and substitution creatively: for instance, use capitalization in the middle of your password instead of the beginning and substitute letters for numbers
• Change assigned passwords: ALWAYS (and immediately) change initially assigned digital passwords to personal, unique passwords
• Change your passwords often: but avoid patterns (guilty) and do not recycle recent passwords
• Do not enter passwords on “public” computers: computers used by many people are often unsafe for accessing sites containing private information

I think this list is really good and I have to admit it has given me some things to think about.  When my work computer forces me to change my password, I simply change the last 2 digits – i.e. 01, 02, 03, etc.  It is easy enough to stop doing that and I think I’ll opt for using phrases.  This could be fun.

Get Ready for New Internet Addresses

Internet domain endings such as .com, .org, and .net are expanding from the current 22 offerings to possibly hundreds of new domains.  A plan was approved by the governing body of internet names (ICANN) on June 20 which will create an exponentially larger universe of website names.  One of those new domain endings will be “.bank” which has the banking industry aflutter as they want to make sure that the use of such a financial domain will protect the interest and security of banks and bank customers.  The American Bankers Association is actually looking into whether they may want to apply to become a registrar for “.bank” to prevent misuse of the domain.  According to ICANN, any entity expecting to secure rights to and run a new domain can expect to pay a $185,000 application fee in addition to spending up to $2 million in start-up costs and $2 million a year on operations and infrastructure costs.  At that price tag it will be interesting to see if there are any takers. 

According to ICANN, they have “opened the Internet’s naming system to unleash the global human imagination. … We hope this allows the domain name system to better serve all of mankind,” said Rod Beckstrom, President and Chief Executive Officer of ICANN.  “We have provided a platform for the next generation of creativity and inspiration,” said Peter Dengate Thrush, Chairman of ICANN’s Board of Directors.

Internet address names will be able to end with almost any word in any language, offering organizations around the world the opportunity to market their brand, products, community or cause in new and innovative ways.

This is some lofty talk here:   unleash the global human imagination, better serve all of mankind, provide a platform for the next generation of creativity and inspiration.…Gosh, I’m tingling all over just from reading the words.

The application period will be from January 12, 2012 until April 12, 2012.

Sweep to Line of Credit

I have mentioned before that sweep accounts for small businesses have fallen out of favor because of the fact that it is difficult to generate enough interest income from your investment to pay for the service.  The return on overnight sweep accounts is paltry – usually in the 0.05% to 0.25% range.   At 0.10% interest, an investment of $100,000 will yield you a little over $8 in interest each month.  Even though sweep investment accounts do not work for most now, there is another type of sweep worth considering.  If you maintain a balance of $30,000 or more on your business line of credit on a regular basis, it makes sense to ask your bank to look at whether or not you should connect your line of credit to your checking account.  This is a “Sweep to Line” service.  Instead of your balances sweeping to an investment, your balances instead go to pay off your line of credit.  This makes a great deal of sense because you are probably paying around 5-6% per annum in interest on that line.  The bank is going to charge you a fee for the sweep to line service, but if that fee is $125 per month, then $30,000 outstanding on your line is the breakeven point.

Let’s do a quick illustration.  Suppose you have a balance on your line of credit of $150,000 at 5.0%.  You are sweeping into an overnight investment account and the balance there is $600,000.  The cost of a sweep to investment service (yielding 0.20%) is $90/month and the cost for a sweep to line service is $125/month.

With Sweep to Investment:  Annual Service Charges = $1,080 ($90/month for the sweep to investment service); Annual interest income from sweep = $1,200; Annual line of credit interest expense = $7,500 ($150,000 x 5%/annum).  Your annual net out-of-pocket expense is $7,380.

With Sweep to Line (drop the investment):  Annual Service Charges = $1,500 ($125/month for the sweep to investment service); Annual interest income from sweep = $0; Annual line of credit interest expense = $0 (the line has no balance as the funds in the investment account paid it off).  Your annual net out-of-pocket expense is $1,500.

Some business owners and/or bookkeepers start off skeptical because they think it means extra work on the reconciliation side.  They see daily debits and credits sweeping to and from the line.  The way to handle the reconciliation is to use the balance on the line and the balance in the checking account on the cutoff date from the bank statement.  Don’t worry about any other days.

Getting rid of the investment and linking your line of credit to your checking account results in annual savings of $5,880.

When rates recover to more generous levels, it will be time to consider getting back into the sweep to investment.  Your account can also be configured to provide you both services simultaneously.  In that instance, if there is a balance on your line, that gets paid down first from funds in your checking account.  After the line balance is zero, then anything left over will sweep up into the investment.  Conversely, if funds are needed, then the investment is liquidated first before the line is ever advanced.

It is important to look at your situation at least once a year, preferably more because situations change and create a need for adjustments.  I would guess that close to 95% of small businesses invested in sweeps 5 years ago have either removed that service or need to do so.  If they haven’t, it is only because they have not been paying attention.

Websurfing at Work

I have recently discovered that I can access my personal email account from work.  I can also watch auction items on EBay and post to this blog if I so desire.  It wasn’t until recently that I tried it, upon the occasion of needing to get into my hotmail account to print my boarding pass for an upcoming flight.  I had not tried it before because when I worked for megabank, it was simply no use.  Anytime you tried to access practically any website that was not business-related, a heart-stopping page would pop up with a black background and a flashing message of “web access denied” in red capital letters with a red circle with a slash on it.  You almost expected it to sound out a loud warning.  It also contained an ominous message about the possibility of being reported for abuse.  So needless to say, I was very particular about the sites I visited and I always knew I was just one step away from someone sitting in front of a computer screen in a dark room somewhere in Charlotte watching my every keystroke.   After this shock therapy programming, I feel guilty now if I happen to access a personal site, despite the fact that my activities are (almost) always after hours.

My point in bringing up websurfing is to warn you that you might accidentally visit a malicious website and have your online banking credentials compromised.  The FBI has observed a trend in which cyber criminals use malware to steal the credentials of small- to medium-sized U.S. businesses and in turn sent unauthorized wires to companies in China.  Millions have been lost this way.  Transfers are sent through intermediary banks in New York (this is typical for foreign wires) for subsequent settlement to businesses in certain cities in China including:  Raohe, Fuyuan, Jixi City, Xunke, Tongjiang, and Dongning.  The victims tend to be businesses with accounts at local community banks and credit unions.

If you find you are a victim on this type of breach, you can get help from the FS-ISAC Account Takeover Task Force (ATOTF).  They have released a Malware Forensic Vendors Matrix, a list of forensic service providers to assist business clients with the removal of malware on their networks and computers.

Knowing that this could happen is as good a deterrent for me as the flashing lights of the “web access denied” page.

Make Sure That Credit Card Payment is Made on Time

If you are a Bank of America credit card holder, be on the lookout for a notice in the mail soon about a new penalty interest rate the bank is set to implement.  BofA has not had a penalty interest rate on their cards since 2009 but it seems like the coast is clear for them to reinstate the penalty.  Apparently most U.S. credit card lenders have already added penalty interest rates back to their accounts.

The assessment will begin on June 25th and it could be as much at 29.99% to customers who make their credit card payments late.  This new rate would only apply to new purchases after the change is applied.  Customers will receive a 45 day advance notice before receiving the penalty.  I am one to believe it is okay to penalize abusers of credit but I hope the bank has a review policy for those good clients who inadvertently make honest mistakes because those are not uncommon.

The bank’s card unit recently reported that revenues in the first quarter of 2011 dropped to $5.6 billion from $6.8 billion a year ago.  Gotta get it back up somehow. 

This is the second penalty rate BofA cardholders are seeing this year.  Earlier in the year BofA introduced an annual fee of $59 for some of its card holders.  If you are one of the unlucky ones, you will see that fee on your May statement.

Blind can now “See” Currency Notes

Blind and visually impaired people can now use a downloadable app to aid them in knowing exactly how much money they have in their hands.  The app is called EyeNote and it is designed to work with the Apple iPhone and 4G iPod Touch and iPad2 platforms.  It is available through Apple iTunes.

The app uses a mobile device’s camera to scan the front or back of the currency/note/bill and in a matter of seconds, it provides an audible or vibrating response.  It is able to identify all Federal Reserve currency notes issued since 1996.  From a handheld device and with a circular motion, the app can detect the denomination within 2-4 seconds.  Spoken output can be in English or Spanish and it can also identify the front and back to help with vending machine operation.  When discretion is required, pulses are emitted indicating the denomination:  one dollar is 1 pulse, two dollars is 2 pulses, five dollars is 3 pulses, ten dollars is 4 pulses, and so on.

Unfortunately the device cannot authenticate real notes from counterfeit notes.

This app was developed by the U.S. Bureau of Engraving and Printing (BEP).  It is free and it is available at www.eyenote.gov.

Home is Not What it Used to Be

While home is still where the heart is, it is no longer where a good value is.  Yep, apparently home ownership is not all it is cracked up to be and home owners are being encouraged to look elsewhere for long-term investment returns.  According to Brian Moynihan, CEO of Bank of America, housing prices in some areas may not rebound long-term.  Low population growth in certain regions of the country along with the long-term effects of the worst financial crisis since the Great Depression will keep prices from rising.  “It’s sobering to think, but some people shouldn’t be thinking of (their home) as an asset,” Moynihan said on Tuesday, April 12th at the 2011 National Association of Attorneys General conference.  He also added “they should be thinking of it as a great place to live.”  Moynihan went on to further explain that the gains in the past were due to the explosion in the domestic population as well as the relaxation of credit standards in mortgage underwriting.  Given the swinging of the pendulum around credit standards as well as a slowing rate of population increase, the trend is not expected to continue.

Personally, I am not sure if I can accept the premise that home ownership is worth less now.  We grew up believing in the value of home ownership.  I don’t think conclusions can be drawn around how people may begin to think about their homes differently, given that they may not appreciate in value.   While you can look for higher returns on investment elsewhere, can you find a better investment if your ROI objective is sanctuary?  For me, there is no better investment.