Anti-identity-theft rule in effect. The Fair and Accurate Credit Transactions Act was signed into law in December of 2003, but one important part of the law — the Red Flags Rule — just went into full-enforcement mode in November. It requires any company that offers its customers any sort of credit arrangement (even a simple month-end bill) to establish a formal “Red lag” plan to fight identity theft. If this is news to you, the time to learn more about the rule is now, because penalties, fines and an FTC investigation may occur as a result of noncompliance.
Health insurers often compete on a severely slanted playing field. One reason health benefits are so expensive may be that the few major health insurers out there don’t have much competition. In a recent American Medical Association survey of 314 major metropolitan areas, 94% could be called “highly concentrated” when it comes to providers — meaning only one or two insurers dominate those markets. Regularly review your health benefits provider to determine whether you’re getting the best deal possible and if any alternatives are available.
Pay raises probably won’t go much higher in 2010. If you struggled to give employees raises over the past year, you’re not alone. Median 2009 pay raises had an estimated range of between 2% and 3%, according to a recent study by HR consultants Watson Wyatt Worldwide and Hay Group. The same survey forecasts raises to run around 3% nationwide next year. If your company faces pay raise problems, look into other ways to keep staff morale up, such as flexible work schedules and advanced training.
Many businesses consider loan covenant amendments. If your company finds itself not being able to maintain compliance with its bank loan covenants (for troubles related to items such as EBITDA and debt-to-equity ratio), you might want to call your bank about a loan covenant amendment. It’s an increasingly common practice among bigger companies — 98 publicly disclosed covenant amendments to high-yield corporate loan agreements were reported in Standard & Poor’s Leveraged Commentary & Data in first quarter 2009. That’s up from 62 in the previous quarter. But be careful — many large businesses were violating these covenants, and smaller ones might also do so. •
Barry Schimler, CPA
Braver Schimler Pierce Jenkins LLP