Just Pay Us Later: Why Businesses Should Comply with Consumer Credit Laws
 
Mar 18, 2015
Category:

What better way to build a lasting relationship with a customer than to allow them to receive services or goods now in exchange for a promise to pay them later? After all, extending consumer credit typically means you’ll get more customers looking to purchase your products or services, boosts your product/service’s reputation, increases sales, and gives you an edge over the competition.

While this may sound like a win-win situation for business owners, if you’re considering the possibility of extending credit to eligible customers, you’re going to need to consider the matter realistically. You’ll need to discern how it may impact your business and your customers in its entirety to ensure that you’re making an informed decision.

Consumer Credit Laws: Is Your Business in Compliance?

Before you decide to offer credit to your customers, it’s important to know the law. Failure to comply with federal (and local) laws could result in the demise of your business or at the very least fines and lost credibility. The government has laws in place that are designed to protect the consumers (and businesses that comply) and keep them better informed as it pertains to their credit purchases. If you’re going to extend credit to your customers, you will need to be aware of five federal consumer credit laws.

1. Truth in Lending – under this act, business are required to provide your customers with accurate credit terms. It also regulates how credit opportunities can be advertised. Your credit offers must clearly point out finance charges, interest rates, payment due dates, total costs of purchase, and any other fees or late charges that can be assessed.

How This Helps Your Business: When in compliance with the truth in lending act, businesses can cut down on the fraudulent claims from consumers. For example, if a consumer makes a claim that they were unaware of what they were signing, how much it would costs or even how fees were assessed your business is protected against any fines and the consumer is held liable for repaying the debt.

2. Fair Credit Billing– this act spells out what businesses must do in the event that a customer claims they’ve been improperly billed. If a customer sends in notification that they dispute a charge (within 60 days of receiving the bill), you as a business are required to send a response that details why the charges were accurate or a revised bill having removed the charges.

How This Helps Your Business: Mistakes happen all the time. Maybe a staff member transposed the numbers and charged the wrong amount, OR maybe the amount you billed was 100% accurate and the customer is mistaken. Either way, this act is put into place to provide protection for both parties.

In the event that the customer was wrong, if you haven’t completed the requirements under this act, you run the risk of having to give the customer a credit on their account (even if the billed amount was accurate). It also protects you in the event that the customer researches and consults a credit repair company to dispute the charges later. Your response letters and supporting evidence go a long way in making sure that the customer doesn’t get out of paying what is owed to you.

3. Equal Credit Opportunity– this act simply states that no business is allowed to discriminate on who they offer credit to based on their race, gender, religion, national origin, or marital status.

How This Helps Your Business: The act also provides certain factors that businesses can use to determine eligibility for credit. This protects your business from the various risks of extending credit to an unreliable consumer. While it’s not foolproof, using legitimate factors such as credit rating and financial circumstances can minimize the potential for unpaid balances.

4. Fair Credit Reporting– this act essentially provides consumers with protection as it pertains to information reported to credit bureaus. It prevents businesses from reporting inaccurate information that would otherwise tarnish an applicant’s credit status.

How This Helps Your Business: Reporting inaccurate information on a customer’s credit report could result in serious repercussions. As long as you’re in compliance with this act, it keeps you have documented proof that you’ve reported only accurate information as it pertains to the account holder.

5. Fair Debt Collection Practices – this act touches on collection practices that are considered illegal, harassing, and abusive to consumers. With all the various scams out there, it protects consumers against the potential of paying a fraudulent company.

How This Helps Your Business: Not every customer is going to repay the credit in a timely fashion. When it’s time to collect money that is owed to your business, it can be tempting to do and say whatever you feel might get the customer to repay the outstanding balance. The only trouble is, if you decide to go renegade on your consumers you could end up being hit with a hefty fine that surpasses the amount owed to you. Therefore, by remaining in compliance and avoiding such illegal collection practices, you can continue to collect your debt and avoid the financial burden of fines and lawsuits.

The Federal Trade Commission mandates consumer credit laws as a means for protecting their credit against fraudulent businesses and business practices. However, what is often overlooked is that when in compliance with these laws, businesses can also do a great deal to protect themselves and their own personal/business credit.

There’s certainly nothing wrong with offering customers credit when they don’t have the means to purchase your products or services outright, however, neglecting to comply with the laws described above can leave you on the bad end of a bargain. Don’t wait until you receive a complaint or court summons to decide to make the necessary changes. Ensuring that you’re in compliance is not only beneficial to you, but it goes a long way in showing your customers that you too care about their credit and doing things the right way.

Written by Jane Brown

 
 
Legal Considerations Of Expanding Your Asian Business To The US
 
Oct 06, 2014
Category:

If you are in the process of making the decision to expand the operations of your Asian company into the US, being equipped with the knowledge to start your US-based company correctly is extremely important. While international expansion of Asian companies is becoming more common, it involves risk. Foreign companies have to face unfamiliar state and federal laws, regulations, rules and business culture and practices. Understanding the analyzing the challenges of doing business in the US will increase chances for success.

The following considerations represent some of the best-practice techniques to reduce the time and effort to adhere to the legal considerations of doing business in the US market and mitigate the risk of variations in business culture:

Reporting and registration requirements

The United States has certain reporting requirements for foreign companies expanding to the US, and failure to comply with these requirements can lead to significant penalties. The reporting requirements depend on the level of investment, but some forms need to be filled and submitted within 45 days after making the initial expansion investment. The Federal Income Tax Return could also have reporting requirements of its own.

Local, state and federal registrations will be required once operations begin. Among these, local and state regulations are unique to respective jurisdictions, so it will be crucial to have knowledge about the requirements of the jurisdiction in the location where you plan to start your business. Certain documentary evidence is required to support business registration.

Corporate and employee taxation

The type of entity an Asian business selects to operate business in the US will determine tax considerations. The most common entities include S-corporation, C-corporation, limited partnership and limited liability company (LLC). Taxes are levied locally by the state, federally by the US Department of Treasury and, sometimes, by the town or city municipality. Corporations such as LLC are treated as tax residents of the country and are subject to state and federal taxes.

When it comes to employees, it is important to understand the payroll taxes in the US tax system. Medicare and Social Security taxes are divided between the employee and employer, but the employee may be able to consider the US Social system if the work terms are temporary: less than 5 years. Foreign employers can reduce some of the complications by going with the option of software that handles complex, multi-jurisdictional payroll taxes on its own. Some software even provide a fully compliant system that adheres to the legal requirements in the US and makes payroll tax processing accurate, easy and quick. ADP.com says this kind of software provides agency approved returns and coupons for over 10,000 thousands of taxing jurisdictions.

Accounting and tax identification numbers

The entity will require an accounting system to maintain its records and books in the US. The nature and scope of the business in the US will determine the needs of the legal software. If the company is expecting fast growth in a short span of time, it would be a good idea to invest in a system from the first business day that can grow with the company, and this will also avoid the cost of retraining employees on new software.

The new business will also need to file paperwork with the IRS to obtain a Tax Identification Number, which will need to be done before a bank account is opened in the US, and payroll is set up.

Written by Jane Brown

 
 
How To Move A Business To Asia
 
Sep 30, 2014
Category:

Although opening a business in Asia is an important development, the move has to be strategic. Before considering the logistics of how to make a smooth transition from a firm’s home country to Asia, it’s important to first get clear why opening up a business division in Asia is a good business idea.

Asia: The New Business Frontier

Asia’s economy is growing at a rapid rate. It’s an important target zone for emerging or established companies looking for a global business. Research shows that as much as 40% of the global economy is now in Asia. What’s more, over the next ten years, Asia is expected to be a thriving marketplace for international commerce.

One reason why Asia is becoming an economic hub for progressive companies in the West to migrate to or open branch offices in is the rapid increase in urban population. All the diverse countries in Asia have one thing in common: the cities are growing by more than 120,000 people a day.

The future looks bright for Western companies who want to establish a presence in Asia. By the year 2025, incomes in Asia will be a quarter less than they are in the United States. To put this in perspective—in 1980, incomes in Asia were one thirtieth less than they were in the U.S. In other words, the economic and population growth in Asia over the past few decades has been nothing short of staggering.

What this means for forward-looking Western companies seeking a foothold in Asia is that Asia is destined to be the biggest producer and consumer in the world.

How to Move a Business to Asia

When a company moves from one state to another, one city to another, or from one region to another, it can be challenging, but the cultural norms and structures are similar enough to make the move fairly predictable. However, when moving a business in the West to a new home in the East, there are cultural, linguistic, and logistical challenges that need to be understood for the move to go smoothly. Consequently, the best way to make the transition go well is to hire a trusted moving partner. Visit Unigroup Logistics to access a relocation network in well over one hundred countries.

Without a doubt, it can be a complex thing to create an international business. There needs to be a lot of thought put into moving a division, expanding operations, or relocating the entire company. If breaking into a new market is done in a haphazard way, it can actually determine whether the business itself will succeed or fail.

Conclusion

Asia is re-emerging as the most dynamic economic region in the world and this offers many opportunities for a business that is eager to find new production opportunities and consumer markets. This is going to be the century when Asia gains momentum and become the new frontier for business growth.It offers exciting, new possibilities.

Written by Jane Brown

 
 
5 Tips for Expanding a Business into China
 
Apr 09, 2014
Category:

The Chinese market for Western goods is expanding, and businesses are beginning to look at ways to be successful in Asian markets. China is experiencing solid economic expansion, and the country has expanding influence on the world stage. Several Western companies have already made the jump to China, and you can too. It’s a matter of understanding your market and planning accordingly.

Understanding Culture

China’s history goes back thousands of years in time, so it’s important that you understand some of the cultural nuances that have evolved over the course of that time. Perhaps the most widely known aspect is the concept of one’s “face.” Face is complicated for Westerners to grasp because it embodies one’s standing in society, public perception, and one’s own self esteem. Managing all of these elements together can seem daunting at first. You can give or save face through attendance of meetings, offerings of small but suitable gifts, and general sensitivity toward Chinese culture.

The good news is that Chinese business people will still want to do business with you whether you can hold chopsticks or not, as long as you have something to offer that interests them.

Honing Your Focus

Westerners hoping to break into the China should conduct market research for the media industry to discover what Chinese people are into. Understanding your market is one of the first steps toward writing a business plan, so you can think of this research as an extension of that plan. You’re no longer selling only to Westerners, so you have to work on what your market wants to see and give them a product they hunger for. One big example is how Starbucks managed its expansion into China. They were able to persuade a tea drinking nation to start trying coffee by offering them an olive branch, the Green Tea Latte.

China is an extremely diverse market, and it would be foolish to assume that a product that works in the West will be equally as exciting to the Chinese.

Approaching the Market

Once you know more about the target you want to hit, look at the hard facts to see what could potentially produce revenue for you. Write down your top methods for gaining users, driving revenues, and marketing your business. You will still need to pay attention to things like your cost per acquisition, but you will have more ideas on where to begin marketing your products and ideas. Look at China specific social networks or online meeting places where you can begin to market. Make a list of the most highly trafficked sites relevant to you niche, then visit those sites frequently to form a picture of how you will fit into their model.

Business Takes Time

China is growing fast, and Westerners will need to show some willingness to stay and invest in that growth. Therefore, it is important to realize that any company looking to expand into the Eastern market should anticipate an expensive and slow-paced journey. If you do plan to expand into China, it will be important to maintain an open mind about the direction the country is headed in.

Boots on the Ground

Equally important is a strong team that is local to your operations in China. You can visit as much as you want, but it will be expensive for what amounts to micro management. Instead, look for a strong localized team that you can trust to run operations when you’re not around. The chances of your brokering a deal without some Chinese presence are also lower, so having boots on the ground is more practical than simply having someone to manage operations.

China is not an easy market to break into, but many Western businesses are seeking opportunity there. There is an exploding middle class, and plenty of room for upward mobility if you study the markets.

By Jane Brown