What if your company could add 5% to its bottom line this year?  Don’t look to Sales or Marketing for this one — turn an eye to Finance.

Turns out you can do it without adding a new product or service or landing a major new customer?

The revenue booster: Plug the holes that allow organizations to lose 5%  of their revenue to fraud each year, according to the Association for Certified Fraud Examiners (ACFE).

Whether it’s expense padding, inventory shrinkage or phantom vendors, occupational fraud costs … big. Unfortunately, most companies still take a reactive rather than proactive approach to financial funny-business.

That’s one trend you want to buck in 2012, says James Ratley, President of the ACFE, in a recent podcast. His appeal to companies of all sizes and in all industries: It’s much more cost-effective to prevent fraud and detect it early.

And how successful your company will  be rests on the people you tap to do that.

Have you assembled the right team?

In fact, there’s one key trait you need the people in charge of ferreting out fraud to possess: sharp investigative skills.

That’s what sets apart your peers who are most successful at fending off fraud from the ones who take the bigger hits, says Ratley.

No one’s talking about the ability to play amateur P.I., per se. But just because someone works in Finance doesn’t make him or her best at spotting financial funny business. There’s a specific skill set your company should seek out.

Encourage your CFO to zero in on which of his or her staffers possess the following three traits and tap them to drive your fraud prevention efforts:

1. Attention to detail. Hopefully the majority of your finance staffers have this – it’s key in Finance overall. But hunt for your sharpest staffers who’ll spot the tiniest discrepancy others might overlook.
2. Strong communication skills, particularly interview skills. Staffers will have to ask probing questions when they find something fishy. Not only must they be good at interviewing, but they’ll need to be able to switch gears mid-interview if they uncover something new.
3. Strategic thinkers. Your more tactically-minded staffers won’t have the big picture awareness to understand all the places fraud could extend nor know the right questions to ask.

Of course, it’s more than just your Finance department that needs keen investigative skills. Another critical area? IT. The tech members of your fraud prevention team should include “forensic” experts – folks who can retrieve vital info that’s been deleted, for example.

1. Biology: There are nearly 2 million Bio majors out there, and 6.7% of them are in the top 1% of earners in the country. In terms of what portion of the entire 1% of earners Bio majors account for, they lead the pack at 6.6% (See chart below).
2. Economics: A lot of Econ majors go into Finance, which is why it should come as no surprise that more than 8% of them are in the top 1% of gross earners in the country. Overall, Econ majors account for more than 5% of the top earners in the U.S.
3. Biochemical Sciences: This is a highly specialized degree program, a fact which is reflected by the fact there are less than 200,000 BioChem majors in the workforce right now. Yet, those who graduate with a degree in BioChem are on the fast track, as more than 7% of those with an undergrad or advanced degree in this field are in the top 1% of earners.
4. Zooology: Who would’ve thought, right? But, again, this is a specialized field where high-level professionals are in demand, and well-compensated for their skill set. Of the 160,000 Zoology majors out there, nearly 7% of them are in the top 1% of U.S. employees.
5. Health/Medical: Anyone who studies to go into Health or Medicine (e.g., Doctors, Nurses, etc.) is in very exclusive company. According to the New York Times, nearly 12% of medical professionals are in the top 1% of earners, accounting for nearly 1% of the overall 1%  (Say that 5X fast).

(For the full breakdown of 1%ers, see the chart below)

One example: As of Jan. 1, the minimum wage in Washington State went to  $9.04 an hour, up from $8.67. Business groups there are saying the $9 mark is the point at which business owners — especially small-business owners — will say “enough” and stop hiring, or maybe even start laying off a few people to keep payroll costs level. True or false?

Obviously, every business is different. Some will figure out a way to maintain or increase staff, and certainly some will have to cut costs to stay above water. And some industries get hit harder than normal by an increase in the minimum wage. In general, though, most economists say incrementally increasing the minimum wage should result in a small drop in hiring, and only among those who are making minimum wage.

In an interview with National Public Radio, David Neumark, an economist with the University of California, Irvine, said his studies show that a 10% increase in the minimum wage results in an increase in unemployment of 1% to 2% among low-skill, low-paid workers, who make up about only 5% of the workforce nationally.

What about the argument that raising the minimum wage has a “push up” effect on all wages — in that employers feel pressure to raise everyone’s pay when those at the bottom start earning more? Not so in this economy, according the Neumark. He insists that overall wages tend to go up only when labor is scarce. With generally high unemployment and lots of applicants for openings, businesses are unlikely to increase wages.

When asked whether he was concerned about inflation in this country, Greenspan flatly responded, “Very much so, yes.”

Greenspan went on to expand on that answer, insisting, “History tells us that when you go through a period such as this, with huge amounts of liquidity in the system … which – at the moment – is not being used at all, that eventually it takes hold and it begins to move at a price level. I don’t know a single economist or any member in government who deals with this area, who isn’t worried about that issue.”

Greenspan also corrected Rose, who assumed the rate of inflation is incumbent upon the price of/demand for food and fuel, and other commodities. According to Greenspan, it has more to do with the country’s rate of “liquidity” – the ratio or abundance of a good/commodity, in relation to the amount of money in a specific economy.

Here’s a video clip of the interview:

In fact, the companies that have tried to wrangle better prices or perks so far in 2012 report they’re butting up against a brick wall — and higher rates and fewer amenities.

Still it’s early in the game to throw in the towel and simply swallow higher lodging totals for the next 10 months.

However, your organization will need to encourage your business travelers to get a bit more creative (and persistent) when they negotiate. We have the intel to help you do that, courtesy of the folks at Business Travel News.

Not the time to give up

First and foremost, make sure your travel purchasers understand it’s always still worth asking. While hotel bigwigs have made it clear they plan to raise rates by 6%-12% this year, by negotiating companies can hold rates to a 2%-6% increase.

That’s nothing to sneeze at. You might ask your CFO to work up a quick calculation on how much that could save you, based on what your company spends on hotels on average in a given year. That’s bound to open some eyes and get people to put their best negotiator hats on.

Different destination, different approach

As for where you’ll make that money back, it depends largely on where employees are traveling and what they ask for. Here’s a rundown of how to set your road warriors up for hotel negotiation success in 2012:

• For North American hotels, have employees negotiate for free amenities like breakfast or Internet – but not both, as hotels are only willing to bend so far these days, while
• For European hotels, you’ll want to urge your company’s buyers to be persistent. Hotels across the Atlantic are leaving amenities out of first-round negotiations completely, but will offer them up in the second round.

Fact: The policies and practices many companies use every day in the sales and credit process could actually be triggering antitrust violations.

That was the topic of a jam-packed session at the recent National Association of Credit Management Western Region Conference in Las Vegas.

It’s not just an issue for large companies. In fact, it’s easier than you may think to fall into the traps.

Whether it’s your sales force, a customer service rep or a finance staffer, any one of these little moves could inadvertently run you afoul of antitrust laws, which carry penalties up to $1M for individuals and $100M for companies.

Here’s what you need to know to make sure their moves don’t grow some civil (and even criminal) penalties for you and your company.

Changing terms

They’re critical to your company’s cash flow: customers’ payment terms. But there are issues your company need to beware of:

• Shortening terms. True, getting customers to pay you sooner will give your cash flow a boost. But if you tighten up on terms for some customers but not others without a legit business reason and a policy saying you can (like for delinquent customers), you could be in trouble.
• Offering special terms. Especially now, finance staffers have been forced to get a little more creative with customers to keep them paying you. But if you offer to extend payment terms to some customers but not others who compete in the same market, buy the same product or compete in the same level in the market (buy the same quantity from you), antitrust laws may be violated.

Adjusting pricing

Even if you’re confident your terms are fair, you also need to watch another key part of the process: pricing. Particularly watch Sales. In an effort to seal the deal, they may make promises that violate antitrust laws:

• Incentives to buy more. Who doesn’t want customers to buy more (and more often)? But you must be careful about how equally all the following are doled out: credits, rebates and return programs.
• Volume discounts. Buy more, save more – makes sense, right? Could land you in hot water if smaller customers who can’t buy as much as the big guys balk. Tiered pricing is a better (and safer) option.

Talking outside of school

Sometimes it’s not even what your company does but what it says that could trip antitrust laws. Simply oversharing about a specific customer is enough to cause problems. Where that’s especially easy to do:

• E-mail. The “informal” medium continues to get companies in trouble when employees offer up too many details about an account. Remind staffers to be as objective as possible when emailing about the credit risks of a certain customer. And urge them against over cc’ing – not everybody needs this info.
• Trade groups. This can be an invaluable resource for your credit staffers. Let staffers know they can discuss payment histories, as they’ve actually happened with a customer. But urge them never to talk about pricing, competition or do any speculating about what will happen to a given customer.

Based on Richard Macias’ presentation “Antitrust: The Mine Field Every Trade Supplier Must Cross” at NACM’s Western Region Credit Conference.

As most know by now, President Obama signed a bill that extends the tax break on the employee portion of the Social Security Old-Age, Survivor and Disability Insurance (OASDI) for the first two months of this year. But many don’t know about one small stipulation in the bill.

Specifically:

• There’s no cap on the amount that is subject to the reduced 4.2% withholding rate during January and February, other than the 2012 annual wage base ($110,100). So employers will not have to insert a new limitation in their payroll systems.
• However, if an employee’s wages during January and February exceed $18,350 (two-twelfths of $110,100), then, unless the payroll tax reduction is further extended for the remainder of the year, the reduction in the amount withheld from those excess wages (2%) will be added to the employee’s income tax liability for 2012.
• Self-employed persons receive the same benefit. The rate of self-employment tax remains at 13.3% (instead of 15.3%) for 2012, but only on the first $18,350 of self-employment income, reduced by any amount of wages received by the self-employed individual during January and February.

Note: Self-employment earnings can be subject to the reduced rate even if not earned in January or February, though the reduced rate would still apply to no more than $18,350 of self- employment income, which is the equivalent of two months’ share of the annual maximum.

This go-around, however, your finance staff won’t have to do much. That’s because IRS just announced it will be holding the standard mileage rate steady after the mid-year increase it made back in July 2011.

Background: Last year your organization had to make two sets of adjustments to the amount you could reimburse traveling employees for, so the pass will be a welcome one. IRS had made that move in response to rising gas prices that never quite soared as high as many panicked they would. (And most insiders suspected IRS regretted jacking up the rate soon after it happened for that reason.) So the “non-change” for 2012 is most likely a way to right the ship.

Rates for 2012

There’s wasn’t zero movement — IRS did make one minor change. Here are the rates your company can choose to reimburse employees at (without having to tax them on it) in 2012:

• 55 cents per mile for every business mile driven
• 14 cents a mile for charitable organizations, and
• 23 cents per mile for medical or moving purposes. That’s the lone adjustment — down half a cent.

Since your company can be confident it likely won’t be bouncing many expense reports back due to incorrect mileage calculations, use that momentum to increase compliance in other areas.

A compliance challenge

Think about issuing a challenge to your finance department to look for patterns in travel and entertainment (T&E) errors to see which areas could use a refresher in the new year.

Have staffers spend a week or two tracking the most common problems they find when processing employee expense reports. Then they can work together to brainstorm ways to correct these issues. (You might even think about enlisting a “focus group” of your most frequent travelers and approving supervisors to help.)

Info: IRS IR 2011-116, www.irs.gov

First off, if your company’s giving out a year-end or holiday bonus, it’s something that sets you apart from many other employers — and something you’ll want to mention in recruiting.

The human resources consulting firm Challenger, Gray and Christmas recently did a poll asking employers if they were awarding bonuses to employees this time of year. The results:

• 43% said they won’t award year-end bonuses, or any other gifts or perks
• In 2007, 28% said they didn’t award bonuses or gifts, and
• Of the 53% that do award some type of bonus, half give employees either a nonmonetary gift or a nominal monetary award of less than $100; 31% give all employees a monetary bonus based on the company’s overall performance; 19% give bonuses only to selected employees based on the individual’s performance.

For the employers that continue to award monetary bonuses, 75% said the size of this year’s bonus will be about the same as in 2010. Only 17 percent% said they were increasing the size of bonuses compared to last year. The rest said this year’s bonuses will be lower than last year’s.

Most of the fraud is committed by desperate employees, whose desperation is made worse by the financial pressures of the time of year. In fact, the Association for Certified Fraud Examiners’ 2010 report estimates the average organization loses 5% of its revenues annually to fraud, with small businesses most at risk and the risk being greater during and right after the holidays.

Teresa Bengtson, of the CPA firm of Allen, Gibbs & Houlik has identified the top causes:

• Employees who are otherwise honest may feel a bit more pressure to cheat if it means making financial ends meet — especially if those ends are pulled further apart by typical holiday expenses.
• Financial and other controls tend to get softer during the holidays.  People take time off, get busy, or just plain let up. That’s when companies are vulnerable.

The best prevention measures:

• Keep an eye out for employees who are in the middle of difficult financial periods. Offer an open door and whatever help you can.
• Get employee feedback on the weaknesses in your controls. It’s a given in the auditing industry that more problems are uncovered by employee vigilance than by any other means.
• Repeat your messages about maintaining tight controls — in emails, meetings and whatever other methods you have of communicating.

The 504 Loan Refinancing Program — implemented under the Small Business Jobs Act of 2010 — allows small businesses to refinance existing debt and use excess equity to obtain working capital for eligible business expenses, such as, but not limited to:

• utilities
• insurance, and
• salaries.

The SBA announcement on its website describes eligible expenses as “any expense directly related to business operations.”

Under the program, a third-party lender only needs to match or exceed the amount provided by the SBA, instead of 50% of the project. Borrowers also are now able to finance the appraised value of available collateral up to 90%.

The program ends September 27, 2012. According to the SBA website, “As many as 8,000 businesses may participate in this program during the current fiscal year, which will provide up to $7.5 billion in SBA-guaranteed financing leading to total project financing of almost $17 billion.”

For more on the program, go here.

Writing for CBS Money Watch, financial planner Allan Roth describes three stupid moves anyone, him included, can make:

Investing in gold. Roth compares today’s gold bubble with a similar one in 1979, when he invested in the gold market. Here’s what the raw numbers say: The same investment in the stock market for the same period would have produced a yield 10 times higher than the gold investment. Roth said that buying gold was a worthwhile “investment” — in that it taught him to be smarter with his money.

Buying too much house. Roth lays out a typical scenario that might lead someone — namely, him — to buy a house that exceeds need. You move from a high-cost area to a lower-cost area; you have some cash from the sale of an expensive home; and, heck, you just want a big, fancy house. Then you have the confluence of a housing slump and the extra cost of maintaining the larger home — utilities, taxes, etc. –  and all of a sudden, you’re in trouble. And you end up wondering why you ever thought you needed a bigger place.

Buying lots of “stuff.” This one isn’t as obvious as it seems. What Roth means is that too many people think it’s OK to splurge on tangibles while scrimping on experiences. In other words, you justify spending a lot on a new car — whether or not you can afford it — because you can touch it and own it. Meanwhile, you hold back on spending a fraction of the car’s cost for a family vacation because, after all, once it’s over, it’s over. However, what’s better: Spending $30,000 on a car that rusts and needs to be replaced, or $5,000 on a vacation your family will remember for a lifetime?

If you ask the people in your finance department, they’ll quickly tell you it’s anything but straightforward.

In fact, some days Accounts Payable probably feels like the exception is the rule, considering everything they’re up against. Just a few of those exceptions that have the potential to derail their processing:

• invoices that don’t match the purchase order submitted
• lost receiving documentation, like packing slips
• MIA manager purchase approvals, and
• bills coming in from suppliers who aren’t in your finance system.

Resolving any of those issues drains employees’ time and your company’s money. That’s why it’s critical your Finance department has a rule for how to handle such exceptions.

Here are some of the best ways to ensure your organization is covered.

Standard operating procedures a must

First and foremost, make sure you have some standard operating procedures for how to handle each of these Accounts Payable exceptions that invariably crop up.

The best approach? Encourage your CFO to sit down with his or her charges and have them list every type of exception they encounter in a given week. It’s also a good idea to let staffers share how they usually handle situations to see if it matches the procedure you have in place. You never know — they might stumble upon a way to tweak the existing rules if some staffers are having better luck with other approaches.

Exceptions to the exceptions

Of course, nothing’s ever simple. These days, even the exceptions have exceptions, which is something especially apparent at this time of the year. The culprit? The holidays.

So say Finance has a hunch that a particular invoice is awaiting approval on a manager’s desk. The only glitch is that person has taken the week off to visit family for the holidays. A situation like that has the potential to hold up the works for days. But it doesn’t have to.

You probably want to encourage mission-critical departments like Finance to designate extra backstops, like naming a backup approver for every approving supervisor, so nobody’s caught short.

Whether you’ve been watching every debate or are waiting until the field narrows, the 2012 presidential election push has gotten underway. So what will the impact be on your business?

No denying, the economy will be a hot topic this go-around. And tax reform remains an integral part of any strategy to right the ship.  One specific target? Corporate taxes.

With good reason: The United States is well above-average in its corporate tax rates. While the international average falls around 20%, we blow that away.

But maybe not for long.

The candidates vying for the Republican presidential nomination plan to change that. Each has pushed for a flat tax approach to even things out.

Election Day will be here before we know it. Let’s take a look at what each major candidate is currently proposing to see how it would translate to your business.

Same structure, different rates

The fact that there should be a flat tax seems to be something all the top contenders in this race agree upon. Depending on who gets the Republican nod, here’s what your company would be looking at:

• Romney: A corporate tax rate of 25% is key to his 59-point jobs plan.
• Perry: A 20% corporate tax rate on domestic earnings. However, Perry wouldn’t dump the existing graduated rate system. For the time being, you’d get to choose which you went with.
• Cain: A 9%  corporate tax rate on corporate net income, under his famous 9-9-9 Plan. You’d kiss payroll taxes goodbye under Cain, too. However, you’d be saddled with a nationwide flat 9% sales tax rate.
• Gingrich: A 12.5% corporate tax rate.
• Bachmann: A 0%? Bachmann has said she’s “open” to the idea of eliminate corporate taxes all together, just like Sarah Palin was. Though she has yet to come out and officially announce this as her plan.

Only time will tell which person (and rate) will triumph. We’ll keep covering the candidates and their plans for your business. Stay tuned.

You know it’s bad when company leaders don’t have high hopes for an economic turnaround in the near future.

In fact, a recent report out of The Conference Board shows a huge drop in confidence among top bananas across the country. CEO optimism is at its lowest level in two years. At the end of the third quarter, only 11% of chief execs said conditions were better than they were six months ago. That’s a 33% drop from those with that bleak attitude a quarter ago.

New research shows the people in charge of the purse strings are awash in uneasiness as well.  A full 14% of CFOs say they’d characterize the current level of economic uncertainty facing their business as “very high.” Another quarter regard it as “high,” reports Adaptive Planning’s Business Volatility & Variables: Q3-2011 survey.

Pessimism is one thing. But it turns out all this uncertainty is wreaking havoc with companies’ business plans.

Could it be doing the same to yours?

86% of companies reforecast, replanned in the third quarter of 2011

You’d certainly be in good company. A whopping 86% of CFOs said they were forced to replan, reforecast or create new what-if scenarios in the third quarter, thanks to — you guessed it — the economy.

We’re not talking about a one-time adjust, either. One in four (24%) businesses replanned on a monthly or more frequent basis – at three least times! – last quarter.

That has the potential to throw not only those businesses, but their suppliers and customers into a tailspin. Which means you’ll want to stay in touch with your key business partners to keep communication open. That way if they have to make adjustments that impact your business, you won’t be the last to know.

Unfortunately the worst may not be behind us. Prepare for more unrest ahead – 52% of your peers expect to have to do even more revisits this quarter.

That’s because unplanned absences cost companies a bundle each year – though few realize just how much cash they devour.

Fewer than half of employers currently track the indirect costs associated with these types of absences, says the latest HR online poll by the Society for Human Resource Management.

It’s a financial hit few organizations can afford, no matter what their size.

The average total cost of unplanned absences adds up to 5.8% of total payroll a year. That’s according to Mercer, Inc.

Employers are especially vulnerable now, whether it’s employees calling out “sick” at the last minute for some holiday shopping, when they’re caught short on childcare when a kid has the flu, etc.

There’s no time to lose – check out the best strategies working today to keep these absences to a minimum.

ID what indirect costs actually are

Odds are your company is tracking how big a bite each employee absence puts on your organization when it comes to direct costs. But you also need to be monitoring the indirect expenses that plague companies when employees are out for a long time or on short notice. Two for your CFO’s calculations:

1. Replacement labor. This is especially critical now, as most companies are running as lean as possible, staffing-wise. Someone calls out unexpectedly, and no one else has enough free time to pick up the slack. That means forking out extra dollars for temporary help or paying co-workers overtime so the work gets done.
2. Productivity losses. Even if you have a great sub, fewer collection calls will get made or widgets produced than if the usual staffer were doing the job. You also want to factor in the toll a drop in morale has on productivity – morale dips almost always accompany an absence where others must pick up the slack.

Get tough (but not too tough)

Understanding the costs of these absences is one thing – controlling them is quite another. Some companies are taking a tougher stance to keep from getting caught short. A few examples you might consider from a “no-fault” attendance strategy:

1. Set limits. Some of your peers have begun limiting the number of unscheduled absences an employee can take in a year – and then charging them for days when they exceed it.
2. Create consequences. One strategy working for some firms: Unscheduled absences are OK; but that person is no longer eligible for a perfect attendance award (usually earning them extra time off), no matter what the reason for the absence.

Cut it off before it starts

Of course you’ll do all you can to keep this costly problem under control with your existing employees.  But there’s a way you can slash your exposure with each new person you add to your payroll … and it’s free.

Have hiring managers probe prospective employees (in questionnaires, testing or during interviews) on their attitudes towards dependability and conscientiousness. Study after study shows hiring folks with a high regard for these traits cuts unscheduled absences by 50%.

Turns out this strategy is falling out of vogue with many of your peers. The reason: the economy (what else?).

Here’s why you may want to revisit it within your own organization.

Interest rates take away urgency

Perhaps one of the most appealing upsides to a JIT approach in the past was cost control. Companies weren’t stuck weren’t forking out mountains of money to pile up stock that was either expensive to finance or that your business could have been making money on, had that cash stayed in your corporate bank account.

But that’s all changed now that interest rates are at a record low. The motivation just isn’t there anymore to keep levels as low as possible.

And because with a JIT approach there always lies the risk that if there was an unexpected spike in demand, you could come up short.

At this critical economic juncture, it may be a good time to huddle with your CFO and head of operations to ask this question: Can we really afford to come up short on demand?

To ensure you don’t, think about:

1. Inching up inventory levels both on key products as well as those that are single-sourced, and
2. Ratcheting up how you monitor suppliers’ and their suppliers’ financial health.

Check out the cash-flow cramping findings in the last 12 months, according to the new Experian Business Benchmark Report:

• U.S. businesses now pay their bills an average of 7.1 days beyond terms – up by more than a day in the third quarter.
• The national average percentage of dollars delinquent is up 11.9%, and
• The percentage of dollars more than 91 days past due has jumped 15.8%.

No organization can afford those kinds of delays.

Now’s the time to huddle with your CFO to see if you can’t implement this three-stage offensive that can keep this trend from hurting your company.

Step 1: Lay the right foundation

Many customers may think they’re being pretty subtle by just taking a day or two longer to pay your company’s bills. Try fighting subtle with subtle. Send a few reminders that let your customers know your company pays attention to terms and has some teeth when those terms aren’t honored. So maybe your A/R staffers start highlighting terms on the next round of invoices. Or you reiterate your late fee policy. Or both.

The goal is to let customers know – in a nonagressive way – that this is one supplier they can’t pull the stretch on.

Stage 2: Act early

Of course, some customers will disregard such subtleties, especially if they’re enduring cash flow woes of their own. So you’ll want to step up your approach. That means reaching out to customers before they go past due. Again, no need for a sledgehammer to crack a nut:

• Make it a “form-al” affair. Rather than getting your finance folks on the phone, think about sending out a form letter asking customers to contact you before the payment due date if they have any issue with their bills. That saves you time, doesn’t appear as too pushy and puts the onus on them.
• Mix up the messenger. If you do decide to call some customers before the due date, try switching up your finance staffers. Having a different finance voice wearing the customer service hat can help keep accounts from getting defensive.

Stage 3: Stay flexible

Even with this much attention, some customers are still going to try to push it as far as they can before they cough up the cash. That’s why it pays to have some flexibility built into your collections process. A “my way or the highway” approach probably won’t work with such stubborn accounts. But if you have some options to work within, your odds of getting paid improve. A few examples of where you want to be sure you have that flexibility:

1. Finance staffer autonomy. So one of your people gets a customer on the phone. The last thing you want is for that individual to have to put the customer on hold to find out what can and can’t be done. Are staffers authorized to accept partial payments? Create payment plans? You need to decide what’s in-bounds and then ensure staffers understand that.
2. Have options at the ready. Even if most customers pay by check, you want some e-pay options in place for an 11th hour payment. Or send a salesperson to pick it up. Whatever it takes; and it’ll likely only take one time.

That’s what new research out of Deloitte just uncovered. More than a fifth (22%) of execs recently polled by Deloitte admitted that their company don’t pursue pricing management strategically.

That can be a serious – and expensive – mistake, especially considering that just a 1% improvement in pricing can have a positive impact on profits, according to those same execs.

Once-lowered prices on rise again

Whether or not your company frequently revisits its pricing, there’s real reason you’ll want to do so in the immediate future. During the economic downturn, many businesses lowered their prices in an attempt to keep as many customers as they could.

But things are slowly picking up, which means prices that kept folks in 2009 and 2010 can probably be increased in 2011 and going forward into 2012. Even if your own company didn’t drop prices in the recession, many of your competitors may have, so you’ll still want to check that you are remaining competitive.

According to Gladwell, time and again, great entrepreneurs have separated themselves by their willingness to take tremendous risks early on … to bank everything on a calculated, yet unproven, business venture.

Gladwell goes on to explain that there is usually a watershed moment that catapults the would-be entrepreneur from respected capitalist to corporate magnate. This is the moment where years of risk and investment give way to tremendous return and growth.

Example: Early on in his career, Time Warner entrepreneur Ted Turner was willing to bank his family’s entire war chest on a small UHF channel in Atlanta. His family had built its wealth via a southern billboard business. Most of the advisers Turner turned to told him the move was insane. They insisted he wouldn’t only lose his investment, delving into an industry he knew little about, he’d also ruin the family’s billboard business in the process.

Oddly enough, Turner’s ace in the hole turned out to be the family billboard business. After investing in the TV station, he used every vacant billboard his family’s company had to advertise and promote the station. So rather than losing money on excess resources, he was gaining tremendous publicity for his new business venture – a move that eventually helped the station boost ratings, advertising rates and profits.

This was one of several watershed moments for Turner, based on his willingness to take risks that may have seemed insane to the casual observer, but were actually based on a brilliant business strategy.

Gladwell also shares the story of John Paulson – a Wall Street investor who spent several months and countless resources researching the housing market. Most assumed Paulson was wasting his time, trying to pinpoint when and how the market would go bust rather than simply investing as the bubble continue to grow. Meanwhile, one of Paulson’s researchers identified the high risk of tens of thousands of subprime mortgage loans being doled out by major financial institutions.

Armed with that info – info no one besides Paulson really had the numbers to double down on – Paulson began investing in credit default swaps, allowing him to collect the insurance on home loans investors defaulted on.

Result: As a result of his willingness to take what seemed like an insane risk, based on solid numbers, Paulson turned an investment of millions into tens of billions of dollars.

The key difference between the success stories and those would-be entrepreneurs who eventually went on to make their mark and those fell by the wayside:

• The ability and ambition to do the research, understand the numbers and identify a correlation or anomaly and exploit it, and
• Having the capital reserves to fail every now and again between major successes. Not every new venture is a winner. But if you can pile up a few major successes along the way, then the unfortunate failures wind up paying for themselves.

Source: “How Entrepreneurs Really Succeed,” by Malcolm Gladwell, New Yorker.