Cash Management – How to Prepare Daily Cash Position Report – Part 2

If your company maintained 2 or 3 banks for payment processing, we have to modify a little bit of the technique so that we can control effectively all the bank's accounts and at the same time manage to earn extra income by carefully invest surplus fund in short term investment. Lets assume that your company has 3 bank accounts and we name it as Bank A, Bank B and Bank C. We should choose one bank as your major bank where you pool all your cash in that bank. Let's assume that our major bank is Bank B. That means all your major collections must be deposited into this bank account. Your major payment which comprise big amount such as subcontractors and salary payment must also from this cash pool account.

Any payment prepared which is small in amount but the rate of recurrence is high such as utilities bills payment, petty cash reimbursement, staff claim and other payment should be prepared by using Bank A. We will deposited the incoming cheques into Bank A with more or less the same amount of cheques prepared so that the account balance in Bank A is always in ideal balance.

If we have specific payment pattern for the month, for example we only pay for our suppliers and workshop every 25th of the month, then we use Bank C for our cheque payment. Here we use ZBA technique which means Zero Balance Accounts technique where we will only transfer fund from our cash pool account which is Bank B to Bank C only once a month. That means there is no extra cash in Bank C, which means we have pool all extra cash in Bank B for our short term investment purposes. I will explain further the topic of short term investment when we reach to that topic soon.

All the suggested techniques above looks complicated but the reason behind that is we manage to prepare daily cash position more faster and accurate without spending your time to figure out the serial number for every categories if we use one bank only. From our example above, you will notice that bank A is for bills payment, staff claims and other payment. That means you only have to identify 3 series of serial cheque numbers for the payment using Bank A. Bank B only has 2 payments which is subcontractors and salary while Bank C meant for suppliers and workshop payment. The second reason of doing that is to avoid idle balance in Bank A and Bank C which do not earn any interest income. All our income has been pooled in Bank B where we can place short term investment placement from tenor of overnight to one week.

To reach our bank balance for that day, we just calculate by simply using simple arithmetic which is Opening Balance + Incoming Cheques – Payment made = Closing Balance. When place all the bank column side by side, we manage to get the total closing balance when we total up Bank A, Bank B and Bank C closing balance. This is what I call the cash dashboard where we can see all our bank balance with only one glance. Of course it is not complete yet because we still have not taken into consideration the available balance and cash & cash equivalent figure. I will explain in depth all this terminology later.

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Debt Settlement – What Percentage of a Debt is Typically Accepted in a Settlement?

I'm often asked by subscribers, "What percentage of a debt is typically accepted by creditors if I do debt settlement?"

Below is a current and accurate list of the actual average settlements for industry leading debt settlement companies and law firms negotiating unsecured debt.

First, let me provide a few important keys about your situation that will determine what you can expect to settle for:

1) "Who" your creditor is .

Who your creditors are makes a huge difference in the amount of the average settlement and what you should expect. Certain creditors are aggressive and you will simple need to pay more than you would with other creditors. These "aggressive" creditors change over time, and also behave differently depending on your state of residence.

2) Your "payment history".

Your payment history is a very important part of your credit. However, the difference between a perfect payment history (never reported 30 days late / no derogatory items) and missing your VERY FIRST PAYMENT is the biggest difference.

It's as if missing that first payment knocks your score out of the sky, but then each additional late payment has less and less of a negative affect.

If you are current on your debt, then you have virtually NO chance of settling for less than the full balance. If you want to settle your debts for less than what you owe, you must be behind on the debt. Being current on significant unsecured debt "undermines" the negotiation process for delinquent debts you are attempting to settle.

If you are behind on a debt you are attempting to settle, but you are current on other significant unsecured debt (with balances of $ 500 +), then the creditor you are behind on and negotiating a settlement with may see you are current, paying 100 % of what you owe PLUS interest to another creditor and will be unwilling to settle for a low amount or possible at all. Thus, you should be behind on ALL unsecured debt in order to successfully settle your accounts for the low amounts I am about to list.

Exceptions: You may remain current on certain types of unsecured debts without harming your negotiations. The exceptions include Federal Credit Unions and military accounts.

While good settlements can be made after only 30-90 days past due, we usually get the best settlements AFTER an account is "charged off", usually after 180 days late, and especially when it's then sold to a third party debt collector.

A "charge off" is an accounting term that means the creditor is taking a tax-break on the account as "bad debt". This devalues ​​the account, and the creditor begins to "get in the mood to settle". Once this happens, if you have a lump sum in the amount listed below, you can most likely settle.

Often, creditors sell the account to a third party debt collector after it has been charged off and lost value. The average amount paid for "bad debt" in recent year is $ 0.034 of the balance owed. That's 3.4 cents on the dollar.

3) Legal status.

Lawsuits are always a risk when attempting debt settlement. Within one year of the statute of limitations (3-10 years, depending on your state) lawsuits are rare, typically occurring in about 2-5% of accounts held with reputable firms. Over half of these cases are settled BEFORE going to court because clients have funds available to settle. AFTER a summons is received and BEFORE the court date (usually a 30 day window) is an opportunity to settle because the creditor will usually want to settle and avoid the additional cost and risks involved in suing you. You may often get better than average settlements ahead of a lawsuits. Thus, legal action can be seen as a settlement opportunity if you have funds available to settle.

When you offer the amounts listed below … it's a smokin 'deal to the creditor or collector. A win-win-win deal for all.

Now with these key factors in mind, take a look at what professional negotiators at top debt settlement companies are currently seeing:

(Description of Debt / Estimated Payback%)

  • Credit Cards, Department Store Cards 40%
  • Citibank Accounts 65%
  • Discover Accounts 65%
  • Cell Phones (Collections $ 750 over) 50%
  • Apartment Lease Re-letting Fees 40%
  • Medical Debts, Collections 50%
  • Judgments / Garnishments, Repossessions 80%
  • Pay Day Loans, Signature Loans 40%
  • Collection Balance Greater than $ 750 Settlements 40%
  • Collection Balances Under $ 750 Settlements closer to 85%
  • Debts between $ 750- $ 1,000 60%
  • Debts under $ 750 80%

* These are "typical" results, actually slightly "padded". The best negotiators have even better percentages on average, but these numbers represent reputable, although rare, professionals as a whole.

** The circumstances of your financial hardship play a huge role in negotiations.

These numbers are also for professional negotiators representing many clients who may have millions of dollars in debt owed to a creditor in negotiations at once. You should not expect these numbers on your own, but many of my subscribers have reported much better (non-typical) percentages, as low as 10% with major creditors.

IRS Tax Definitions of Negligence Vs. Fraud

An IRS audit is mainly carried out on taxpayers who are suspected to have understated their taxes in a given tax season. The IRS has up to 3 years to initiate an audit on a given taxpayer. If the taxpayer has understated their incomes by at least 25% in a given tax year, the IRS's time limit is extended to 6 years. For taxpayers who were involved in fraud or for taxpayers who did not file a tax return in a given year, the IRS can audit them indefinitely with no time limitation. There are two tax crimes that an IRS auditor investigates when auditing a taxpayer. These are considered tax negligence and tax fraud.

Tax Negligence

Tax negligence ranges from a simple erroneous entry on tax forms to frivolous tax filing. The IRS considers understated or overstated incomes, undisclosed incomes, erroneous deductions or credit claims, and other mistakes committed on tax returns as negligence (if the taxpayer made the error unknowingly). However, for some of the gray areas, the IRS can not really pinpoint whether it is willful or erroneous, and substantiating it may be difficult. Therefore, the IRS categorizes most of their tax-error findings as "negligence."

What is Tax Fraud?

Tax fraud, on the other hand, is a willful attempt by a taxpayer to cheat on their tax returns so as to avoid paying their due taxes. This includes businesses having two sets of accounts for fraud purposes, taxpayers intentionally overstating donations and other tax deductions and credits, intentional non-remittance of taxes for incomes (such as foreign incomes), and forging of receipts and other payment documentation. To identify tax cheats, the IRS auditors and reviewers will closely scrutinize areas and taxpayer groups that are prone to tax fraud.

Statistics on Tax Crimes

The IRS estimates that about 17% of taxpayers cheat on their returns, denying the IRS billions of dollars in due taxes. Of these taxpayers, 75% of them are individual taxpayers and the majority of the rest are corporate organizations. Individual taxpayers will normally understate or not include earned incomes or make fictitious claims. The most common culprits are service industry workers and businesses that are cash-intensive. Doctors, lawyers, IT consultants, and handy workers are some of the examples of service industry workers known to commonly cheat on their returns. This is mainly due to the low audit trail, especially in cash receipts. Waitresses and bartenders, for example, are known to understate tips by 84% on average. Corporations normally cheat on their taxes by understating or not remitting payroll taxes, making fictitious business expense claims, and understating their corporate taxes.

However, according to a recent report by a leading government watchdog organization, there were only 2,472 taxpayers who were convicted for tax crimes. This accounted for about 0.002% of the taxpayers who filed returns. The number of those convicted has also been reducing over the years, according to the same report.

Implications of Negligence and Fraud

There are various consequences of tax fraud and tax negligence. For outright tax fraud, the civil penalty is a 75% charge on the taxes due and the IRS may also pursue criminal charges on the offender. For errors made through negligence, the IRS charges a civil penalty of 20% of due taxes, including any interests that have accrued.

Setting Up Quickbooks – Entering Accounts Part One


Adding accounts to Quickbooks is very easy, the warning here is that it is so easy that making a mistake either in placement of the account or the identification of where to put it may be a little deceiving. It is always advisable that you consult a professional to help you as once you add these accounts and begin using them, it can be a long procedure to correct mistakes. And because each business is unique in it's accounts, it may take a little creative maneuvering to best fit your type of business. Having said that, let's look at your different options in adding accounts.

I. Income Accounts

There may be several ways that your business receives income. (This is where the help of a ProAdvisor comes in) For example if you are a service industry business, let's use a lawn care company as an example. The overall easy way to handle this is to enter ALL income into one account. However, this does not help you as a business owner decide which of your services is more profitable than another. You may not care about that, but it only takes another few minutes of effort to get it right, so let's make sure we do so. Create an account for income for lawn maintenance, another for landscape design and yet another for pest control or another similar service. Create a parent account named Lawn Services and a sub account for each of the areas you earn income in. Upon entering these sub-accounts you will see a box labeled sub-account of, check that box and type Lawn Services. The description, note and tax-line mapping boxes are optional, for the best results however, at least utilize the tax-line mapping and an income account will more than likely fit the first category listed which is Income: Gross Sales or Services. Consult your tax professional for more help with this area.

II. Expense Accounts

The expense window looks identical to the income in every way. I highly recommend a wise use of sub-accounts in the expense accounts area as well. For example, grouping your electrical, water and phone bills under utilities is what a lot of businesses do, however, what happens when you add a cell phone?

I would create a parent account for utilities and sub-accounts for power, water, phone, and other utilities. I would also suggest doing the same with advertising expenses, having one parent account for advertising and sub-accounts for signs, yellow pages ads, internet ads, and more so you can keep more careful track of your cash flow.

When you get to payroll expenses, you are definitely going to need to use sub-accounts appropriately and create sub-accounts for FICA payable – Company, Social Security Payable – Company, Worker's Comp, etc. If you do not use Intuit's Payroll services, that's okay, but it increases the risk of mistakes in transmission of information from the payroll companies' to the Quickbooks files.

III. Fixed Assets

There is a step by step procedure in entering fixed assets into Quickbooks and a detailed explanation of how to categorize your fixed assets. Fixed Assets include buildings, land, Machinery, vehicles and Accumulated Depreciation. The only difference in the Fixed Assets window is that the Tax-Line Mapping is automatically entered for you.

IV. Bank Accounts

In Quickbooks a Bank Account is not always necessarily an actual bank account. When entering a regular bank account whether it's checking or savings, Quickbooks will ask for the opening balance as of a certain date. (If this is a new account, the opening balance is not necessary, it will $ be 0.00) For a more accurate picture of your business' financial situation, and to ensure an accurate reconciliation of your bank account, enter the opening balance, which will be the ending balance of the previous month. If this account was used for any business transactions prior to the date you install Quickbooks, it would be a good idea to have a Professional help you enter these transactions accurately.

When is a bank account NOT a bank account? If your business is using petty cash system, (to make change for customers, etc) it is best to set up Petty Cash as a separate bank account so that you can transfer funds from Petty Cash to Undeposited Funds when necessary.

What if you have a customer with whom you have an agreement to trade your services / products with theirs? In this case, you can create a bank account called Trade or Barter and deposit the value of your products / services to offset those of your customers. Neither one are actually bank accounts, but they make it easy to keep track of those 'creative' transactions.

V. Loan

A Loan account keeps track of the amount you owe on loans from those who you owe money to. This is NOT a long term liability account, this is money lent to the business by others and which you intend on paying back within the year. You have use of the funds, which is an asset, and you owe the loaner, which is a liability. If you need to enter a loan for a vehicle, building, etc, it needs to be in the Long Term Liability accounts.

VI. Credit Card Accounts

You must add a credit card to your account list to gain access to the Enter Credit Card Charges feature on the Quickbooks home menu. Credit Cards can be used to pay for expenses, items or bills. When using Credit Cards to pay bills, one common mistake business owners make is not choosing the correct account to pay the bill out of. If you are using more than one Credit Card, take it slow and make sure that your payments and credits to the account are appropriately applied or reconciliations will be a nightmare and a half.

You are given the option of being able to enter the account number, expiration date and more as you are entering the card for the first time. As long as you do not have a situation where innumerable people have access to your Quickbooks files, it is perfectly safe to enter this information, if you do have that situation, consider hiring someone else or restricting access to others on your Quickbooks network.

VII. Equity Accounts

An equity account includes owner's draw, owner's contributions, etc (these categories change names but not function, depending on the legal formation of the company). This is the money the business owner invests in order to begin the company and the subsequent money they have to draw from in order to keep the company running. The retained earnings account is an equity account that is added by Quickbooks at year end when the revenue and expenses are calculated. The description that is given this account by Quickbooks is "undistributed earnings of the company". In the case of a company just beginning to use Quickbooks, the account can be created manually for previous years balances in another accounting software system by creating the account manually and entering in the opening balance from the previous year.

The rest of the accounts are going to be examined in a separate article where we will discuss common mistakes made in entering these accounts and the occasional symbiotic relationship these accounts have with one another.

Get Paid to Write Articles Online – Finding Buyers of Articles

Even if you do not consider yourself a professional writer, you can get paid to write articles online. There are many opportunities to sell your articles online for use on websites or in email newsletters. It is not hard to get paid to write articles online if you know where to look. The three best places to find article writing work on the internet are sites that pay for articles, freelance websites, and forums where website owners browse.

Sites that Pay for Articles

Many people who want to get paid to write articles will naturally start with sites that pay for articles. On these websites, you can choose what you write about so it's a great way to get started. It is not, however, a great way to get rich.

Not all articles are worth the same. You might get a small payment upfront, get paid by views to your article, or you might wait until someone buys the articles you have listed on the site. Three companies you can start with are Associated Content, Helium, and Constant Content. If you want to hone your writing skills and make some extra cash, these companies are a great place to start.

Freelancing Sites

Freelancing sites are for people who want a part-time or full-time career writing articles. On many freelancing sites you need to pay upfront before you can get any work. You are not being hired by the website, but by publishers that need content written for them.

After you become a member of a freelance writing site, you look at the various projects that are posted. When you see one that you are interested in, you will bid on it. You write what your rate is (unless that is specified by the publisher) and provide samples of your work. Some of the most popular freelancing sites are Guru, Elance, and RentACoder.

Website Owner Forums

One of the best ways to get paid to write articles is to go straight to the people who need the writing done. You can build relationships with website owners and work directly with them without having to pay a cut to the middle man.

When you do this, you'll need to have a portfolio with a few different kinds of articles in them. You'll have to decide what your rate is and how much work you can handle. It's easy to become overwhelmed if you take more work than you can comfortably write. To avoid risk, charge a percentage of your fee upfront.

The easiest way to find website owners is to go where they go. Do a search for forums for website owners and internet marketers. Many of these message boards allow you to post a link in your signature file, so make a nice site with your rates and writing samples. Eventually, you'll find people who need regular content and if you provide good value, they'll be happy to recommend you as well.

Whether you want to earn some extra cash or want to make a career as a freelancer, getting paid to write articles is a good way to start. Start by building a portfolio and discovering what others want. You do not have to stop with writing articles-you can also write ebooks, email newsletters, or press releases. Study successful freelance writers, follow the steps, and you'll become a successful writer as well.

The Cheque Rule in the UK

The cheque rule in the UK – what is it? It is based on a simple legal rule that means if you write a cheque to pay money to somebody you are creating a contract by writing the cheque. If for example you have worked for someone who then pays you with a cheque and then the cheque is dishonoured, eg it is stopped by the person drawing the cheque, you are able to rely on some old but well established law. Under the Bills of Exchange Act 1882 cheques are classed as a 'bill of exchange'. In fact the law in this piece of legislation is very strictly interpreted even now.

The use of cheques as payment: the law. When any goods or services are paid for with a cheque, there are legally two separate contracts made by the parties involved in the transaction. The primary contract is what you expect which is for the sale of goods or the provision of services. The second contract relates to the cheque itself. This is the important part of the 'cheque rule'. The person who writes the cheque to pay the primary contract is legally making an undertaking to pay the sum written down on the cheque. How can this help in practice? It gives an extra option to get payment if a cheque is stopped or bounces. Firstly, as expected, there is the normal option to take legal action for non-payment of the monies due under the primary contract. Additionally relying on the law in the 'cheque rule' there is the extra option to sue on the dishonoured cheque itself. In most every case suing on the cheque delivers the significant advantage of leaving the buyer who dishonoured the cheque with a very limited set of available defences. The defences that can be raised can only relate to the issuing of the cheque itself, eg the cheque was issued under duress or as a result of a fraud.

Is it quicker to use the cheque rule than the normal approach? In most cases it will be a lot quicker. If the seller sues on the primary contract, the buyer can put forward any of the normal defences that relate to the contract itself to defend the court action eg bad quality of work, defective products etc. This will normally result in a full trial of all the issues in dispute between the parties. However, by suing on the dishonoured cheque you can make an application for summary judgement. This allows a judge to decide the case without having a trial. Summary judgement is normally granted when there is no defence to the action. The above mentioned color : as, 'Cheque rule' Defences only relate to the Cheque are On Itself and rarely available. So suing on a stopped cheque can be a more certain and simple process of litigation than suing for non-payment for the initial contract. This method of getting payment with so little to prove is something every business person should be aware of the.

Save Your Time and Energy Through Online Shopping

With the advent of the internet, human life has become much easier. People use the internet to pay their monthly bills, to book travel tickets and for shopping. You can save a lot of time and energy by shopping through online. In online you can purchase anything you want by just sitting at home. You need not waste time for travelling to the shop or for any shopping mall. You get a different and interesting shopping experience through online shopping. All the leading brands have their own website, where they provide all the relevant details about their products and services. Online shopping is the right choice for purchasing any electronic items.

Computers are the most common electronic goods sold through online. You can purchase different brands of laptops and desktops from an online store. To make an online purchase, you need to place the order in the respective website. Once you select the model of the computer you wanted to buy, you can pay for it by using your credit card. After you are done with the payment, the product will be delivered to your home within a few weeks. If the computer is readily available, it will be delivered immediately and you can get it within a week at the maximum. If you have ordered for a computer with many specifications, it may take more time to be delivered.

Before proceeding with online shopping, you must decide the model and the brand you want to buy. This in turn depends on your usage and the purpose of buying a computer. If you want to check mails and prepare documents, you can simply opt for a basic model with minimum features. If you are looking for a computer for official purpose or for gaming, you have to select a system with many features. There are numerous brands of computer and each brand will have different features. So, according to your needs and preferences, you can choose the brand and the model.

You need to be very cautious and careful while buying from an online store, as you are dealing with costly products. You must ensure that online transactions are done in a secure way. So, it is always better to choose well-known websites for online shopping. You can take suggestions from your friends and peers to know about the most reliable website for online shopping. Before choosing any new website, you must read reviews about the website to know about its authenticity. Only if you are well convinced about the website, you should go ahead with the online shopping. There are many famous websites which mainly deal with online shopping. When you purchase through these websites, you need not worry about the security aspects. A website can be considered to be authentic and secure if it has 's' after the protocol code (https: //). By using this technique you can find out the authenticity of any website before you make an online payment on their website.

Make sure that you read the policies and norms of the website before buying computer from online stores. A few online stores will mention their guarantee and money back details on their website. You need to be aware of these details before you purchase a computer from them.

What Income Is Reported on 1099-Misc Gross Rents Box?

I have noticed that there seems to be some confusion as to what constitutes reportable annual rental income that should be listed under the Gross Rents box on form 1099 and 1042-S. The purpose of this article is to help all property managers and property landlords to have a clear understanding of the tax rules that apply to this box.

The following are common types of income:

Advance rent

Advance rent is any amount you receive before the period that it covers. Include advance rent in rental income in the year received regardless of the period covered or the method of accounting you use.

Example On May 15th, 2011 you signed a 2 year lease to rent property. The tenant decides to prepay the entire lease. You receive $ 10,000 for the first year's rent and $ 10,000 for the rent on the second year. The whole $ 20,000 must be reported on form 1099 in 2011.

Canceling a lease

If tenant pays to cancel a lease, this payment is reported as income. Include the amount on form 1099 in the year that it is received.

Expenses paid by tenant

If tenant pays any of your rental expenses, the amount paid should be included in gross rent and you would also deduct the expense.

Example: If the furnace in the rental property stops working and the tenant pays for the necessary repairs and deducts the amount from the rent payment. The amount paid by the tenant would be included in rental income and the repair would be deducted as an expense.

Property or Services

If you receive property or services as rent instead of money, include the fair market value of the property or services as rental income in the year received.

Example: Tenant is a house painter. He offers to paint your rental property instead of paying two months rent. You include in rental income the amount he would have paid for rent and deduct the same amount as an expense. Security Deposits: This is the area I see the most confusion in. Do not include a security deposit in rental income when you receive it if you plan to return the deposit to the tenant at the end of the lease. If you keep part or all of a security deposit during the year because your tenant does not live up to the terms of the lease, include the amount you keep in rental income for the year. If an amount called a security deposit is to be used as final payment of rent, it is advance rent and should be included in rental income in the year received.

I hope that this article gives clear direction on the IRS tax guidelines for what is reportable rental income.

What Dave Ramsey Does not Tell You About Getting Out of Debt

As a result of the dramatic changes in our economy over the past few years, a cottage industry has developed that is dedicated to providing consumer debtors with the "gospel" on how to get out of debt. However, while there are many voices giving advice on debt reduction, the guru of the debt reduction movement is Dave Ramsey. I am a listener and fan of Ramsey. To some extent, I am an adherent to his debt reduction philosophy. However, unlike Ramsey, I am an attorney specializing in consumer debt relief. While Dave Ramsey provides helpful information and good common sense advice on debt reduction, there is a lot he does not tell you about getting out of debt.

The Ramsey approach to resolving debt is summarized as follows:

1. Start a small cash emergency fund.

2. Pay off the smallest debts first and the larger debts last using Ramsey's "debt snowball" technique.

3. Build cash reserves with money that used to be paid towards debt.

While this is a valid method of debt resolution, it will likely result in the payment of far more money than is necessary to resolve the debt. Most debtors using this technique will end up paying 100% plus interest on the debts they wish to settle. Utilizing the services of a consumer debt specialist will yield a far more effective and affordable strategy for resolving and settling consumer debt. On behalf of my clients, I rarely settle any unsecured debt for more than 50% of the balance. In fact, many debts are eliminated altogether with no payment to the creditor.

When I am contacted by a debtor seeking information on how to resolve their debt crisis, there is never a "one size fits all" explanation. It is important to know the identity of the creditor, whether the debt has been assigned to a third party, the dollar amount of the debt, the type of debt, the law firm or collection agency handling the account, the debtor's place of residence and the debtor's overall financial situation. These factors determine the difficulty that the creditor will face in attempting to obtain a judgment and the extent to which they will try to obtain a judgment. If a case is difficult to litigate, or the creditor is not very aggressive in litigation, the debtor has more leverage in settlement negotiations.

There are two main types of creditors; original creditors and debt buyers. Original creditors are the banks and companies with whom you originally contracted. Debt buyers are companies that buy collection accounts for a substantial markdown, with the intent to make a profit through collection of the debt. Generally, debts can be settled with debt buyers for far less than you would pay to an original creditor. One reason for this is that an original creditor is attempting to recover the money loaned as principal in addition to the interest that forms their profit. A debt buyer on the other hand, usually makes an investment of no more than 2% to 5% of the face amount of the debt.

Therefore, it takes less money for a debt buyer to turn a profit. The identity of the creditor is also important in pre-litigation in order to assess whether the creditor is likely to sell off the debt or to retain and collect the debt in-house. Many debt buyers often employ practices that run afoul of the Fair Debt Collection Practices Act and generally have little documentation to support their claims. A counterclaim in a debt buyer lawsuit will often result in a dismissal of the debt. Original creditors employ various settlement policies and guidelines. This information, if unknown to the debtor, will result in the payment of more money than necessary. From an attorney's perspective, the overriding concern is the probability of successfully defending the debtor against a collection lawsuit. The stronger the possibility that a debtor can win a lawsuit seeking a judgment on the debt, the more leverage that they will have in settlement negotiations.

Even though we win the overwhelming majority of consumer credit lawsuits we handle, some are harder to win with than others. For example, lawsuits involving credit card debts, foreclosure confirmations and auto repossessions are much easier to win than medical debts and homeowner's association dues cases. Knowing the type of case helps in evaluating the value of the creditor's claim and to determine how much should be offered as settlement. The amount of the debt can also affect the possibility of settlement. While it would seem to be common sense that the larger the debt, the more you have to pay, that is not always the case.

For example, I recently received a call from an AMEX representative stating that a new policy was in place for a limited time allowing credit card accounts with balances over $ 25,000.00, and that were in litigation, to be resolved for 20% of the face amount of the debt. However, accounts in litigation with balances of $ 15,000.00 or less could only be settled for 50% of the face amount of the debt. Under this policy, the larger debt will settle for less than the larger debt. However, this option is only available to debtors that hired an attorney to fight the lawsuit. Where the debtor is involved in litigating the debt, it pays to know the law firm and the judge you are facing. Many collection firms handle every case the same way. Knowing their methods helps to exploit their weaknesses. Knowing a judge's attitude towards collection cases and his knowledge of civil procedure is also important in determining how to best defend the debtor's case. Lastly, the county where the debtor resides will be where the suit is filed. This information helps in assessing the length of time the case will take to get to trial and the distance to be traveled by the creditor's witnesses to the court when engaging in settlement negotiations. Out of state creditors rarely produce a witness for trial.

Another flaw in Ramsey's approach is that he fails to acknowledge bankruptcy as a legitimate debt resolution strategy. While we utilize bankruptcy only as a last resort, for some people, bankruptcy is their best method of debt resolution. Any person truly seeking to help someone facing a debt crisis will honestly evaluate the debtor's entire financial situation to determine whether the debtor can and should file bankruptcy in order to escape a financial meltdown. No one should be advised to risk their family's financial well-being in order to make interest payments to a bank or credit card company.

My approach to debt resolution is much different from the Ramsey approach and can be summarized as follows:

1.) Stop paying your unsecured creditors immediately.

2.) Dispute the debt in writing and seek validation and verification of the account and amount.

3.) Do not speak with the creditors on the phone.

4.) Save all of the money you can afford to be used later to settle those debt accounts that you can not defeat through litigation.

5.) If you are sued by an unsecured creditor, hire an attorney who specializes in Consumer Debt to defend you.

6.) Settle only those claims offering substantial reductions and those you can not defeat.

7.) If you have no assets and no ability to save funds, determine whether you qualify to file a Chapter 7 Bankruptcy.

The largest weakness in Ramsey's approach to debt resolution is that it fails to recognize fighting the collection effort and reducing the debt as a valid means of debt resolution. Payment of the debt is the only option he provides. Although it is counter-intuitive, it is the refusal to pay that makes the creditor willing to negotiate. As long as you believe that you owe the creditor every penny they ask for, they will continue to ask for more money. Once you accept that the debt settlement process is a negotiation and not a moral obligation on your part, the more effective you will become at freeing yourself from debt.

Treatment Of Bills Receivable In The Accounting Process

Usually this agreement entered into by the buyer stipulates that payment must be made within 30 days. In recent years, the tremendous increase in the use of credit cards, issued by financial institutions to their customers, has done much to simplify these accounting transactions.

Bills, although no longer widely used, are still important in the wholesale trade and in foreign transactions. Bills have certain characteristics that make them negotiable documents. A financial document is negotiable if it can be transferred from one person to another. This is achieved by the holder endorsing the document and delivering it to the other party. Bearer documents are transferred by delivery alone. To be negotiable, a financial document or bill must have the characteristic that, under given circumstances, the owner's rights are unalienable, even though his predecessor's rights were defective or invalid.

A bill is a negotiable document in the accounting process. It is an unconditional, written instruction issued by one person to another whereby the latter is instructed to pay on demand, at a specified or specifiable future date, a certain sum of money, either to the order of the person specified, or to the bearer .

There are at least three parties in the accounting bill records, namely the drawer, the drawee and the payee or bearer. The three parties need to be different persons; the same person can be party to the bill in more than one capacity. For example, the drawer can specify that the money must be paid to himself, therefore he is both the drawer and payee simultaneously.

The definition of a bill stated that it could be made out to 'bearer', in which case any person in possession of the bill on the due date could claim payment from the drawee. This means that the right to receive payment of a bill can be transferred to another person merely by handing it to him or her. If the word 'bearer' is crossed out and replaced by 'order' (pertaining to the possible negotiability of the document) it means that the drawee is instructed to pay the amount concerned to the payee, or to any person specified by him in writing , or to any holder subsequently specified. Such written specification must appear on the bill itself (usually on the back) and is know as an endorsement. Therefore, within the accounting process is bill is considered as a negotiable document.

When an enterprise enters into a large number of bill transactions, it is impractical to make a separate journal entry for each accounting transaction. In such cases, a separate journal with the necessary columns is used as a subsidiary journal. Accepted bills are valuable documents and, as in the case of cash, must be controlled properly in an accounting system. They must be safely stored immediately upon receipt. The balance on the bills receivable accounting control account must be compared regularly with the items in the bills book and with the bills on hand.

Bills receivable are current assets and are shown in the accounting balance sheets as such, together with other current assets. They are shown at face value, less any possible provision for doubtful recovery. Bills receivable are often combined with debtors as a single amount, shown as debtors and bills. As in the case of debtors, provision should be made for any bills that could possibly be irrecoverable.