Every time your business interacts with customers is an opportunity to build trust. And it’s an opportunity you can’t afford to neglect. Look at customer data. When customers hand over personal and financial data to your company, they expect you to do everything in your power to protect it from hackers — as well as non-criminal third parties. If you don’t? Just look at some of the companies affected by major data breaches.
Provide fraud notices
Unless you run a cash-only business, you collect financial data from you customers every time you process transactions. If you offer credit accounts to business customers, you probably collect even more information. You’re obliged to ensure this data doesn’t fall into the hands of thieves and fraud perpetrators.
Consumers don’t need to understand the inner workings of your fraud prevention efforts. However, they must trust that you have an effective program in place. Provide notices on your website and train customer service representatives to answer questions about your fraud prevention program. If you require customers to use passwords or answer questions to prove their identities online, explain why these steps are necessary.
Explain how you share data
Criminal activity isn’t the only thing customers worry about. Increasingly, they want to know how businesses willingly share — and often profit from — their data. Given the patchwork of data privacy regulations, most consumers know little about the laws and regulations governing businesses. In layman’s terms, briefly summarize which ones cover your company’s activities, as well as your commitment to honoring the spirit and intent of them. Note that if you have customers in the European Union (potentially any company with a website), you need to comply with the EU’s stringent data protection laws.
As a general best practice, don’t collect any more data from customers than you absolutely need. If you intend to share it with third parties, inform customers at the time you request the data and allow them to opt out, if possible. Keep in mind that some customers will probably go elsewhere if they know you plan to share their data or if your business model is largely based on sharing data. Nevertheless, transparency is critical.
All about communication
Whether you’re trying to prevent fraud or share data with third parties responsibly, keep your customers informed. Good interpersonal relationships are based on trust — and that’s just as true for business relationships.
© 2020 Covenant CPA
If you’ve worked a lifetime to build a large estate, you undoubtedly would like to leave a lasting legacy to your children and future generations. Educating your children about saving, investing and other money management skills can help keep your legacy alive.
There’s no one right way to teach your children about money. The best way depends on your circumstances, their personalities and your comfort level.
If your kids are old enough, consider sending them to a money management class. For younger children, you might start by simply giving them an allowance in exchange for doing household chores. This helps teach them the value of work. Opening a savings account or a CD, or buying bonds, can help teach kids about investing and the power of compounding.
For families that are charitably inclined, a private foundation may be a great vehicle for teaching children about the joys of giving and the impact that wealth can make beyond one’s family. For this strategy to be effective, older children should have some input into the foundation’s activities. When the time comes, this can also be a great way to get your grandchildren involved at a young age.
Timing and amount of distributions
Many parents take an all-or-nothing approach when it comes to the timing and amounts of distributions to their children — either transferring substantial amounts of wealth all at once or making gifts that are too small to provide meaningful lessons.
Consider making distributions large enough so that your kids have something significant to lose, but not so large that their entire inheritance is at risk.
Introduce incentives, but remain flexible
An incentive trust is a trust that rewards children for doing things that they might not otherwise do. Such a trust can be an effective estate planning tool, but there’s a fine line between encouraging positive behavior and controlling your children’s life choices. A trust that’s too restrictive may incite rebellion or invite lawsuits.
Incentives can be valuable, however, if the trust is flexible enough to allow a child to chart his or her own course. A so-called “principle trust,” for example, gives the trustee discretion to make distributions based on certain guiding principles or values without limiting beneficiaries to narrowly defined goals. But no matter how carefully designed, an incentive trust won’t teach your children critical money skills.
Communication is key
To maintain family harmony when leaving a large portion of your estate to your children, clearly communicate the reason for your decisions. Contact us for more information at 205-345-9898.
© 2018 Covenant CPA