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WHAT IS FINANCIAL MODELING? HERE’S A CLOSER LOOK

The lifeblood of your business can depend on how and when you use your finances when you are initially starting out. About 20% of small firms fail in their first year, according to the United States Bureau of Labor Statistics. For this reason, getting financial support right away is crucial.

What Is Financial Modeling?

A financial model is a quantitative tool for analyzing a list of a company’s costs and profits. A financial model, frequently in the form of a spreadsheet, can be used for several purposes, but it is most frequently used to determine how a choice or event in the future would affect the company’s bottom line. In a variety of contexts, financial models are used to examine things like:

  • Risk management
  • Company valuation
  • Asset valuation
  • Acquisitions and mergers
  • Raising capital
  • Option pricing
  • Budgeting and forecasting
  • Allocation of capital

From this short list, it is easy to see how many ways a good financial model can help a business. Financial models are also used by financial analysts to evaluate and predict stock performance based on a variety of variables.

Learn More About How to Understand Financial Modeling

Financial modeling means looking at numbers. What kind of numbers? By looking at the past, present, and possible future of a company, financial models help business owners and executives to make informed financial decisions. Are you thinking of expanding your company? A financial model may be beneficial to look at the costs and benefits of expansion.

Not an entrepreneur? Financial experts, such as data analysts and investment bankers, frequently utilise financial models to comprehend or predict how events will affect or have already affected stock and company valuation. Both internal and external factors can affect stock valuation, ranging from changes in management or business strategy to external factors like amendments to laws or regulations that have an impact on a company. When it comes to estimating a business’s value or comparing the value of one business to another in the same industry, financial models are also beneficial.

What Is Financial Modeling Used For?

Individuals inside or outside of business might use a financial model to assist in decision-making. A financial model can be a useful tool whether it is being used to try to raise money, expand a business, sell a firm, plan for the future, or value a business.

Examples of Financial Models

There is no one-size-fits-all financial model for every scenario. Take a look at a few types of financial models to see how they could benefit your company. It will likely depend on what you are trying to forecast.

1. Discounted Cash Flow Model

A popular method of valuation in the finance world, the discounted cash flow model determines the value of a company by looking at the net present value as the sum of future cash flow discounted to the present value. The “discounting factor” is typically determined by looking at the weighted average cost of capital.

The discounted cash flow model helps to determine how accurate the value of a stock is for a particular company.

2. Sensitivity Analysis Model

A sensitivity analysis model helps predict what will happen to a company under a set of conditions. For example, a specific set of independent variables can impact the overall performance of a company quite dramatically. A perfect example is thinking about how the cost of raw materials can cause changes in the finished goods or services offered to customers and how that has to be communicated to your customer base.

3. Three Statement Financial Model

In the traditional three-statement model, accounting looks at the income statement, balance sheet, and cash flow statement to analyze the relationship between the three. By looking at profitability, assets, resources, and liabilities, you can get an accurate picture of the financial health of an organization and make predictions for the future.

What Information Should Be Included in a Financial Model?

The best financial models contain a lot of information. Graphs, charts, and numbers accompany items like income statements, balance sheets, and cash flow statements, along with schedules, valuations, and more.

What Types of Businesses Benefit From the Use of Financial Modeling?

There are a wide variety of businesses that benefit from the use of financial modeling. Bankers are an obvious group, especially those involved in trading and sales. Bankers and investment professionals use financial modeling to justify sales and purchases of stock, predict future trends, and make recommendations to clients. Likewise, accountants also use financial modeling. In the accounting world, financial models can assist in audits as well as due diligence investigations and valuations.

How Do You Know a Financial Model Is Accurate?

When it comes to financial models, accuracy is imperative. Mistakes and errors can be expensive. Sometimes, financial models are validated by outside sources to ensure accuracy. When you are trying to make accurate predictions for the future health of a company, you need to know that your financial model is accurate and reliable. Don’t hesitate to seek third-party validation when time and money are on the line. Research indicates that inaccurate financial reporting costs United States businesses nearly $8 billion a year.

Conclusion

Financial modeling is the task of building an abstract representation of a real world financial situation. This is a mathematical model designed to represent the performance of a financial asset or portfolio of a business, project, or any other investment.

 

 

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5 BEST ACCOUNTING SOFTWARES FOR 2022

Small business owners benefit from accounting software because it enables them to manage accounts receivable and payable, evaluate their profitability, and get ready for tax season. Accounting software that comes out of the box can be used by small businesses without major modifications. A tailored enterprise resource planning (ERP) system is required as a firm grows and its accounting needs become more complex.

There is accounting software available for small businesses with a range of features and costs. In general, the number of employees and the industry are factors that could help a small business owner choose the best accounting software. For instance, a freelancer doesn’t need the same accounting software features as a restaurant proprietor.

We researched and assessed 19 accounting software vendors before deciding on our top five accounting software companies for small businesses. We assessed businesses based on their cost, ease of use, features, integrations, and scalability.

5 Best Accounting Software-Overview

  • QuickBooks Online– Best Overall
  • Xero- Best for Micro-Business Owners
  • FreshBooks– Best for Service-Based Businesses
  • QuickBooks Self-Employed– Best for Part-Time Freelancers
  • Wave– Best Free Software

QuickBooks Online- Our Top Choice

The best accounting software for small businesses overall, according to the reviews, is QuickBooks Online. QuickBooks Online is the preferred accounting software for small businesses, and there are numerous online training resources and discussion groups where you can get support when you need it.

A single central dashboard provides easy access to all accounting components, facilitating more fluid and effective bookkeeping.

One of the most well-liked accounting applications among small businesses and their bookkeeping and tax specialists for a long time has been QuickBooks Online from Intuit. The cloud-based program can be accessed using a web browser or a mobile app.

Simple Start ($25 per month), Essentials ($50 per month + $80 per month), and Advanced ($180 per month) are the four membership options after the 30-day free trial. The first few months are typically marked down significantly, and some accountants may even be able to give small businesses wholesale pricing.

Each plan comes with additional features including cash flow, time monitoring, additional users, and inventory management. The great majority of small enterprises that provide services will have their needs met by Simple Start. Small businesses that sell products will have more customization and inventory options with Essentials or Plus. A new option that offers extensive financial reporting is a Fathom-powered Advanced membership. A leading supplier of financial services online is Fathom.

Xero-Best For Micro-business Owners

Our research shows that the best option for microbusinesses searching for reasonably straightforward accounting software is Xero. This program collaborates with a different payroll source and features an intuitive user interface. Due to Xero’s integration with Stripe and GoCardless, customers may make online payments to businesses.

Since its 2006 debut in New Zealand, Xero has grown to include more than 3 million users worldwide. In countries like Australia, the United Kingdom, and New Zealand, this kind of accounting software is widely utilized. About 4,000 employees work for Xero, which is rapidly growing in the US.

In addition to a full-service payroll add-on, Xero offers three different monthly membership options: Early ($12), Growing ($34), and Established ($65).

Gusto charges an additional $39 per month plus $6 for each employee for a full-service payroll solution. They provide a 30-day free trial.

A maximum of 20 invoices or quotations and five monthly bills may be used under the Early plan. This restricted plan can be appropriate for a small service provider or consultant who does a few high-ticket transactions each month. Unlimited invoices and bills are included in both the Growing and the Established plans. The Established plan has extra features including multi-currency, spending control, and project costing, which is the only distinction between the two. All three tiers of Hubdoc, a program for keeping track of invoices and receipts, are accessible.

Freshbooks- Best For Service-based Businesses

Invoicing is typically the most important accounting need for service-based firms. More customization options for invoices are available with FreshBooks than with other accounting software. Its main job is sending, receiving, printing, and paying invoices, but it can also do some simple bookkeeping for a business. For service-based enterprises, this accounting software automates sending bids, monitoring project time, and accepting payments.

When FreshBooks was first established in 2013, it began as an invoicing program. FreshBooks now has over 30 million users and has more features added. There are four alternatives, and businesses can save 10% by paying annually as opposed to monthly. In addition, FreshBooks regularly provides special prices for the first few months of your subscription.

The least expensive of the four options, Lite, is $15 per month. The monthly prices for Plus and Premium are $25 and $50, respectively. And Select, which offers individualized care and discounted prices. Prior to any discounts, these are the costs.

The number of clients who can get monthly invoices makes a significant difference. The Lite plan allows for the monthly payment of up to five clients. The Plus plan allows for the monthly payment of up to 50 clients. Under the Premium package, an unlimited number of customers may get monthly invoices.

Although there is no cap on the number of customers who can get monthly invoices under the Select plan, there are some special advantages. The accounting program may be used by several team members for an additional $10 per month, and the advanced payment feature, which enables users to instantly charge a credit card or set up regular credit card charges for clients, costs an additional $20 per month.

Gusto, G Suite, and other third-party software connections are among those that are accessible.

A distinctive feature of FreshBooks invoices is the ability to change and customize them for a professional appearance.

Planning projects, providing estimates or proposals, and collecting money from clients are all really easy with FreshBooks.

Quickbooks Self-employed- Best For Part-time Freelancers

Our best recommendation for part-time freelancers and independent contractors who wish to monitor their income and spending largely for tax purposes is QuickBooks Self-Employed accounting software. Small business owners who include a Schedule C with their tax filings are the target audience for this program.

Freelancers would have to sift through all of their bank and credit card accounts at the end of the year to tally their revenue and spending if there was no software to track business activities. This may take a lot of time. All business transactions in QuickBooks Self-Employed will be automatically totaled.

An Intuit product called QuickBooks Self-Employed has both a mobile app and a cloud-based web interface. This program was created to help independent contractors maintain their organization during tax season. The features of QuickBooks Self-Employed include tracking mileage, categorizing expenses, organizing receipts, and tax computation and filing via TurboTax.

Self-Employed ($15/month), Self-Employed Tax Bundle ($25/month), and Self-Employed Live Tax Bundle ($35/month) are the three plan choices available to users. 50% off is offered for the first three months. A membership to TurboTax is included with both tax preparation packages. Access to a CPA both throughout the year and during tax season is also included in the Self-Employed Live Tax Bundle.

The CPA will also finish the final audit of your TurboTax tax return before submitting it.

The smartphone app makes taking pictures of receipts for business expenses and calculating miles traveled while driving straightforward. The vast majority of accounting software is not designed to differentiate between business and personal transactions. However, QuickBooks Self-Employed has a function that lets you specify whether a transaction is private or commercial. For independent contractors without a separate company bank account, this is helpful.

Wave- Best Free Software

For a service-based small business that produces basic invoices but doesn’t require payroll processing, Wave is a great accounting software platform. Wave is the best free software in our study since its free features can meet the accounting demands of many independent contractors or businesses that provide services. In order to compile a company’s tax return at the end of the year, accountants can use Wave to retrieve the reports they need.

The wave is a Toronto-based company that was established in 2010. The company, which has over 250 employees, was acquired by H&R Block in 2019. Most small firms may use this free accounting software for basic accounting functions like income and cost management, financial reporting, invoicing, and receipt scanning.

Both the mobile app and the internet offer these features. Payroll and customer payment processing are premium services that are optional, but other bookkeeping, invoicing, and reporting activities are free.

Two payroll options are available as an add-on service from Wave. The first month’s payment is $20 plus an additional $6 for each employee or contractor. The user is in charge of manually filling out payroll tax forms and sending tax payments under this plan, but the wave will handle payroll and calculate payroll taxes. The second choice is $35 a month plus $6 for each worker or contractor. With this plan, payroll is full-service, meaning Wave takes care of all tax filings and payments. This option for full-service payroll is only available in 14 states.

Best Accounting Software- Conclusion

After a thorough analysis of 20 options, we discovered the best accounting software. The top eight were then selected based on accounting features, functions, non-accountants usability, and affordability.

Our best solutions need minimum accounting expertise, provide cloud-based backup options, and provide affordable, adjustable accounting features that connect with other programs and applications.

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WHY FINANCE TEAMS NEED TO GO BEYOND NUMBERS TO AN ACTIVE RELATIONSHIP WITH DATA

The majority of job postings for positions in finance specify “an ability to deal with numbers” or “like working with numbers” as requirements for candidates. So it makes sense to think that those in the financial and accounting fields would also possess some degree of data literacy—the capacity to read, work with, evaluate, and communicate with data.

Given how much of the finance function involves working with data, it may come as a surprise to hear that data literacy is not as common as it ought to be. Yes, finance teams are skilled at reporting on data, but harnessing the insights data may offer to take informed action is a totally different ability.

Did you know that a lot of finance teams still use spreadsheets to analyze data? They spend most of their time manually extracting and preparing the data, and just 20% of their time actually analyzing it.

This balance has to start shifting from a passive to an active engagement with data as a result of the rising digitization of businesses and, subsequently, finance.

The transition is already beginning. Our most recent research reveals that 75% of finance department employees regularly review and use data to inform decisions about what action to take, and more than two-thirds (69%) believe that having a strong understanding of data literacy will help them remain relevant in their roles as technology continues to advance. However, the training needed to get finance teams ready for a more automated and data-driven workplace is inadequate.

How can organizations bridge the gap between the opportunities that data presents and the expenditures required to ensure that teams have the data literacy abilities to take advantage of them?

From gut feel to data-led insight

Finance is now a team that helps drive efficiency, provides insights into business performance, measures and improves returns on digital investments, and makes business bets, rather than just being reliant on historical data and static quarterly and annual predictions.

Active Intelligence, or the capacity to give current knowledge intended to prompt immediate actions when they matter most, is necessary for this evolving position. With its aid, financial teams can precisely compare forecasts with actuals in real-time for continuing trend research, or they can set up alerts and thresholds for real-time spending monitoring to prevent budget derailment and force action.

Teams from the finance sector ought to be here. Instead, 59% claim that they still frequently base choices on intuition as opposed to data-driven insight. More money needs to be invested in raising data literacy if finance teams are to succeed, and by extension, their employer.

Building a data-literate finance function

It takes time to improve the data literacy of finance staff. To be sure, getting staff on board is one of the most difficult aspects of any significant change, but fortunately, they are. Sixty-nine percent of respondents said they would like to increase their data literacy, and 74% said doing so is essential to doing their current jobs.

The main problem is that only 34% of people have had formal training in data literacy that includes practical exercises, and only 31% have access to self-service e-learning platforms with data literacy modules. Businesses must provide their finance team with the knowledge and abilities to work with data effectively if they are to feel empowered by it to drive decisions and assist their organization in becoming truly data-driven. This will allow businesses to take full advantage of the benefits that an active relationship with data can offer.

In order to get new insights and challenge presumptions about the data, they must also foster an environment where employees may develop non-technical abilities like curiosity, creativity, and teamwork. And provide them with chances to apply what they have learned. This is significant for both the present and the future. As 69% of those working in finance and accounting believe that data literacy will increase their professional chances and help them be more successful in their careers, 70% of them agree that it will.

Going beyond simply numbers

Organizations must equip their finance teams with the abilities to move beyond just numbers and develop a relationship with data that is far more collaborative, innovative, and effective if they want to be one of the success stories.

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WHY BANKING CIOS SHOULD EMBRACE OPEN BANKING?

It is obvious now, five years later, that those worries were unjustified. Five million open banking-driven payments were made by UK businesses and consumers in May 2022 alone. In the same month, the open banking community in the UK made a record 1 billion API calls.

So, rather than being a limiting action by the regulators, Open Banking turned out to be a welcome surprise. It created new possibilities and demonstrated that working with APIs is not a restriction, but rather exactly the contrary.

The market has only recently realized that. Twenty years ago, disintermediation—the notion that you needed to own and manage your own supply chain to decrease complexity—was advocated by every management consultant in the industry.

When major banks began to operate online, this continued to be their primary motivation. They created their own websites, banking applications, and mobile solutions with the intention of controlling everything from back-end operations to mobile banking.

In actuality, this increased complexity. It meant that a bank’s internal database, which was set up on its on-premise server farm, had to be talked to when the bank wished to develop a web page. From the beginning to the end, it was all the bank’s duty. As a result, the company might have needed several developers to work on this entire tech stack, each with overlapping skill sets.

To be a significant player in banking today, however, you must be skilled at exposing and consuming APIs owing to Open Banking and APIs. To enable this modern method of software development, you must have the appropriate architectures, expertise, and tools in place.

I’d even go so far as to argue that we are now living in a time of “de-disintermediation” since what Open Banking truly means is that the bank can no longer keep anyone out and that everyone must operate in a new, “more open” manner.

Welcome to the new de-disintermediated financial services IT world

Customers can see this on their mobile banking app, which is now filled with cordial inquiries about if they want to connect another one of their accounts and consolidate them all in one location. Personally, I appreciate this since it makes sense to me as a consumer, a businessperson, and a digital citizen.

I also admire how de-disintermediation and open banking have fostered the growth of numerous new firms. Because of embedded banking, which enables Buy Now, Pay Later and allows Klarna to operate, there has been a significant increase in creative FinTech firms.

Additionally, I am observing a great deal of progress in the ecosystem’s technology and architecture sectors. You must design your application so that someone else can intervene at the application server layer if you want to implement open banking. Additionally, you must permit the application server of the third party to communicate with other application servers, each of which has a database as its back end.

The API has truly excelled in this area. The fact that application programming interfaces—a technology that has been too long without a business case—make it so simple for two pieces of software to communicate with one another via a contract is welcomed by IT professionals at forward-thinking financial services companies.

Even better, the contract requires fair play from every link in the chain. For instance, I must disclose the API call I use to get the data if I’m developing an application that lets users access their bank accounts and returns their statements or most recent transactions. You must provide me with live session credentials and the information I require, and everything must be done in the same format that has been agreed upon—usually JSON, or JavaScript Object Notation.

App modernisation + liberalisation = good times ahead

The truth is that those who construct their processes, skill sets, tools, and architectural designs in a manner that welcomes this mode of working will prosper in an open banking/de-disintermediated/API-centric future. Delivering on this novel strategy will create economic value.

Moreover, this signals the demise of huge, monolithic financial applications. Developers can now remove the front and use APIs instead of proprietary apps. This means that even if your back end is still a monolithic mainframe app in your data center, you can outsource the value it provides more successfully. You can add value to it by exposing it to the web and granting access to it to selected partners thanks to APIs.

You may be more familiar with this method of operation as cloud-based microservices architectures. The modernization of apps and the widespread understanding that microservices architectures are effective for utilizing cloud architecture are two distinct technological and commercial development strands that intertwine in this context. The push for Open Banking, which aims to increase market competitiveness, has demonstrated that using the API is the best approach to adhere to legal requirements and embrace this fantastic new architecture.

There is also a database component to this since breaking up the large financial systems is the first step toward de-disintermediation, which also breaks up your data. On the back end, you can’t just rely on your tried-and-true monolithic database (which is fairly pricey). Even if you succeeded, you would still be plagued by the persistent issue that cloud-based microservices, which attempt to put all data processing as close to the client as feasible globally, never mesh well with on-premise monolithic proprietary databases.

Given this, it is not really possible to have all of your data stored in a fantastic data barn outside of London. You must transition to the contemporary data layer, which is essential to this microservices design.

How about ending the banking IT ‘technical debt’ issue

Now is the time to give thanks to the Open Banking creators, who weren’t (as feared) awkward individuals who wished to prevent you from doing things. As a banking CIO, you should consider them as benefactors who have opened the door for you to access a significant amount of innovation and business value in a supply chain that you are no longer required to fully own.

If you accept this, a lot of your daily job—which is actually simply paying off technical debt and fixing the work your predecessor accomplished when John Major was the prime minister—can be eliminated. You can rewrite it from scratch, make it an API, and let someone else create a front end for it.

The advantages of Open Banking are obvious to me. However, if you don’t see this as an opportunity and instead view it as just another IT responsibility, you might want to rethink how much of an impact you actually have on the company.

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HOW TO GET GENERAL LIABILITY INSURANCE?

There are many catastrophes that might severely hurt your bottom line. Your employee might, for instance, spill a can of white paint on some items. Or a client could suffer an injury after stumbling over a rug at your establishment. Or you can face legal action for reputational harm resulting from something you or a worker said.

A small firm is protected from issues of this nature by general liability insurance. It is a crucial sort of coverage for the top small business insurance.

What Is General Liability Insurance?

A company’s general liability insurance shields it from a range of potential claims, including those for bodily harm, property damage, copyright infringement, reputational damage, and damages to advertising.

  • Bodily injury caused by a business is a common claim. If someone comes to your place of business and is injured, a general liability policy would cover their medical costs. A bodily injury claim could be something as simple as a fall by a customer at a store or office.
  • Property damage is another common liability claim. Your business may be legally responsible if a person’s property is damaged while at your business. Property damage claims could also include damage to a client’s home or other property if you are visiting them on business.
  • Copyright infringement claims come about if you are accused of using someone else’s work in your business ad or other business marketing without their permission.
  • Reputational harm can happen, for example, if you’re being interviewed by a news outlet and you say something about another company that hurts their business.
  • Advertising injury can happen if your business defames another person, business owner, or company.

Since these liability claims are frequent, you should keep your company covered with the appropriate insurance. For instance, a slip and fall claim typically costs $20,000 to settle. A reputational harm case might also cost you $50,000 in legal fees.

What Does General Liability Insurance Not Cover?

Although general liability insurance for businesses doesn’t cover everything, it does cover a lot.
It excludes coverage for business-related auto accidents, worker illnesses, and injuries, property damage, errors made by professionals, claims that exceed the policy limit, and unlawful conduct committed by you or your employees.

For these kinds of liability claims, you’ll need different types of business insurance, including:

  • Employee injuries and illnesses. You need worker’s compensation insurance to provide coverage for employee injuries.
  • Auto accidents. For auto accidents, while doing business, a commercial auto insurance policy financially protects you if you own the car. A hired or non-owned auto insurance offers protection if you use a personal car or rented car for work.
  • Professional mistakes. An errors and omissions insurance (E&O) policy provides coverage if you make mistakes in the course of your work. An E&O policy is sometimes called professional liability insurance.
  • Theft and damage to your business property. General liability insurance won’t cover your business equipment or property against theft or damage. You need a commercial property insurance policy to cover these types of problems.

Intentional acts, like tossing a computer out the window, are not covered by insurance. Additionally, general liability insurance won’t be of any assistance if you or your staff commit willful, illegal crimes or other wrongdoings.

How Much General Liability Insurance Coverage Do I Need?

Most small firms opt for general liability insurance coverage limits of $1 million per occurrence and $2 million altogether, according to Insureon. Under this kind of coverage, a single general liability insurance claim may be paid up to $1 million, with a $2 million cap on all claims made over the course of the policy year. The policy typically lasts for a year.

Is general liability insurance required by law?

Although it’s not required by law, failing to purchase business liability insurance exposes your company to a multitude of risks that could lead to financial ruin.

How Much Does General Liability Insurance Cost?

According to Insureon, the average monthly cost of general liability insurance is $42. It could be less than that, as 17% of small business customers of Insureon pay less than $25 monthly for their general liability policy.

The price of general liability insurance coverage varies depending on your industry, region, business size, and the quantity of coverage you require.

By selecting the insurance limits that most closely match your requirements, you may control the cost of general liability insurance. Combining general liability insurance with commercial property insurance is simple and affordable with a business owner’s policy (BOP). However, you can also purchase general liability insurance on your own.

How much you pay for general liability insurance depends on key factors such as:

  • Your type of business. If your company is a high-risk business, you pay a higher cost for general liability insurance.
  • The years of experience in your business.
  • Size, location, and condition of your building.
  • Policy details, such as deductibles and coverage limits.
  • The insurance claims history for your business.

Who Needs General Liability Insurance?

Here are situations where you’d benefit from business liability insurance coverage:

  • Your business is open to the public or clients or vendors.
  • You advertise or create marketing materials for your business.
  • You use social media personally or professionally.
  • You use third-party locations for business activities.
  • You need insurance coverage in order to be considered for work contracts.
  • You have temporary employees.

What types of businesses benefit from general liability insurance?

The types of businesses that typically buy general liability insurance include:

  • Small business owners
  • Landscaping companies
  • IT contractors
  • Real estate agents
  • Consultants
  • Marketing firms
  • Janitorial services
  • Artisan contractors

The Risks of Not Having General Liability Insurance

Without general liability insurance, managing verdicts, settlements, and legal expenses may be very costly and may result in a business going bankrupt. A lawyer’s hourly rate could exceed $100. The Hartford claims that if the case goes to trial, court expenses could reach $75,000, and even if the case is dropped, you might still be required to pay a few thousand dollars.

If you don’t have general liability insurance, your business may go out of business. In addition, clients may stop doing business with you if you don’t have general liability insurance.

To prove your insurance coverage, you’ll need proof of insurance. A complete description of the coverage types and limits is included in the official documentation for an insurance policy.

How to Get the Best General Liability Insurance

Here’s a guide to getting the best general liability insurance.

Gather your information and documents

Before you start shopping for a general liability insurance policy, you’ll want to make sure you have all of the necessary information handy. Here’s what you’ll need:

  • Basic contact information
  • Information on what your business does
  • Number of employees
  • Details about your business location, including if you own or rent the building where your business is located
  • Documentation to show how long you have owned your business
  • Estimated business revenue for the upcoming year

Consider a business owners policy

Although it provides basic protection for your small business, a general liability insurance policy excludes coverage for issues like theft, vandalism, fire, extreme weather, and lost revenue. You will need to get additional coverage if you want to be covered for these kinds of problems.

Buying a business owner’s policy (BOP), which combines general liability insurance with commercial property insurance and business interruption insurance, is a smart way to accomplish this. Generally speaking, purchasing a BOP is less expensive than purchasing each of the three insurance separately.

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WHAT DOES THE FUTURE OF ACCOUNTING LOOK LIKE?

The moment is now for accountants to position themselves as essential in their roles during this transitory period in a world full of uncertainty, disruption, and change. according to John Edwards, the organization’s chief executive officer (IFA)

Just a quarter of those surveyed (25 percent) admitted to feeling “totally confident” about their future within the profession, reflecting the complex challenges and unique opportunities the sector will face in the months and years ahead. In a recent survey of 136 accountants, when asked how confident they felt about the future in their roles, 30.1 percent said they were “not at all confident.”

Swift digitalization

Without a doubt, the epidemic has sped up the digital transformation process. It’s a truth that has unexpectedly been pressed onto the accounting community and the rest of society. In addition to this, organizations are dealing with a number of significant obstacles, including the need to recover from two years of sporadic lockdowns, the very real threat of bankruptcy, rising energy costs, tax rates, managing Covid, the cost-of-living crisis, and the conflict in Ukraine with all of its global repercussions.

We appear to have jumped ten years in a few months as technological progress continues. How can accountants structure their financial operations to guide their clients’ businesses toward a more lucrative, long-term future? In essence, it involves effectively implementing new technology, taking into account the entire company – the wider picture – and putting an emphasis on hiring and developing the team of the future.

An automated mindset

A decade ago, a financial function’s repetitive processing work accounted for around 75% of its workload, while advising work accounted for about 25%. These numbers have now changed as the majority of organizations automate procedures and systems and turn to their finance department for in-depth research and projections.

It is more important than ever for finance departments to position themselves as revenue-generating rather than cost-saving centers. We are required to perform more with less due to the demands of the current corporate environment. Even the most important, cost-focused operational teams are now expected to contribute more to the bottom line of the company. Accounting employees can concentrate on more strategic work by automating time-consuming, manual tasks.

One significant area of automation, artificial intelligence (AI), is poised to fundamentally alter the way accounting operations are carried out by increasing productivity, decreasing errors, and optimizing workflows. Additionally, AI will help professionals make real-time business decisions based on insights drawn from accounting data. As a result of the pandemic’s significant surge in digital payments, demand for AI-based accounting software has risen.

Processing payments is still labor-intensive and manual, making mistakes simple to make. However, real-time data is enabling organizations to have a more accurate, real-time view as automation solutions enter the market.

With more automation, the finance function will have more time to concentrate on tasks like better collecting additional receivables like deposits, structured payment arrangements, or any other items a firm needs, as well as capturing payments more promptly.

The past two years have taught us that planning ahead is essential for management and the finance department to future-proof their companies. Finance departments are in a good position to advise on hazards and comprehend what is required right away to secure long-term survival.

A good understanding of cash flow, reserves, investments, potential future prospects, and/or expansion plans are required by management. Finance departments will be able to offer more visibility at the push of a button as a result of more automation, and they will then be able to provide more value-added guidance such as how to enter a new market or launch a new e-commerce service.

ESG and sustainable credentials

As companies are held more responsible for not only their financial health but also for the sustainability of their operations, it has also become clear how crucial environmental sustainability issues are to the existence of an organization. With investors’ attention focused on sustainability and climate change, environmental, social, and governance (ESG) issues are growing in importance and drawing more attention. This presents a significant growth opportunity for auditing.

Sustainable business practices might not be at the top of a company’s priority list just yet because for many, the immediate necessity is to survive the post-pandemic world. Businesses need to take into account their ESG capabilities and acknowledge that it is something they must focus on even though the current focus is on survival.

You can gain a competitive advantage by taking into account possibilities like signing up for independent verification through companies like “BCorp.” The mission of B Lab UK, a non-profit division of the B Corporation, is to develop and support sustainable businesses with demonstrable social and environmental responsibility.

Collaboration is key

Collaboration is essential, too, and the future of finance tasks will require a breadth and depth of knowledge and abilities. Finance departments had already begun to reform, albeit gradually. The pandemic forced organizations to move more quickly toward digital transformation. Finance departments must now demonstrate that they are up to the task of changing.

What is becoming more obvious as we make our way through the cloud of uncertainty is how intelligent technology may help businesses make better decisions and how accountants can use them to their advantage. Instead of an accountant who is solely concerned with technical compliance issues, businesses today more than ever require a tech-savvy commercial accountant. Now it is up to them to take advantage of the opportunities that the new accounting period offers.

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