Pros and Cons of Critical Ilness Insurance Coverage

Critical illness insurance is a relatively new type of policy that is frequently misunderstood. Today, we will clarify what it is, and what it covers.

How Does Critical Illness Insurance Work?

Critical illness is similar to term life insurance, except it is paid out when you are diagnosed with an illness covered by the policy, rather than being paid out upon death. However, some people confuse this type of insurance with disability insurance, which substitutes your income if you become disabled.

Illness insurance, like term life insurance, is paid in a lump sum, should you be diagnosed with a pre-defined disease such as cancer. You decide how this amount will be spent – some people put it into additional medical treatment (especially if there are some treatment methods that are not covered by provincial healthcare), others decide to take time off work to spend with family, or to travel.

As with many insurance products, this type of insurance plan comes with an extensive insurance quote, application and underwriting process that the insurer analyzes before you can get a policy; and as with any insurance policy, a critical illness policy comes with both pros and cons.

Let’s take a closer look at the pros and cons of this type of insurance.

Pros of Critical Illness Insurance

There are several positive aspects:

  1. Funds that can help where needed: The lump sum you receive if you are diagnosed with a critical illness will allow you to get better treatment and, hopefully, fully recovery in some cases. You can also spend these funds on other needs or projects (such as travel or taking items off your bucket list).
  2. Protection for your own business: If you have your own business, you might need to work part time, after being diagnosed with a critical illness (reduced work hours are common when extensive medical treatment is required). It closes the financial gap created by your reduced hours at your company. With the funds, you could hire somebody to help out with your business.
  3. Stackable protection: Unlike disability insurance, critical illness coverage is “stackable”. With disability insurance, coverage is limited because it is based on your income, and you cannot go over that limit even if you have several disability policies. You can, though, have several policies with varying coverage amounts of different diseases. If you have, for example, two policies with benefits of $250,000 and $300,000, you can get a $550,000 payout when you make a claim.

Cons of Critical Illness Insurance

  1. Expensive: This type of insurance policy is not cheap. As an example, a Term 10 insurance policy with $500,000 coverage (Term 10 means a policy that covers you for 10 years) for a 35-year old non-smoking male without any pre-conditions costs around $180/ month (exemplary quote) whereas a Term 10 life insurance policy with coverage of $1,000,000 for the same person costs around $50.
  2. Definitions matter: If a diagnosed disease, such as a heart attack, is not aligned with the definition of this illness in the policy, your claim may be not paid.
  3. Does not cover you immediately: Policy typically comes with a waiting period (e.g. 90 days) during which you are not covered.
  4. Payout is not immediate: If you are diagnosed with a critical illness, there is “survival period” – (e.g. 30 days). If you die within that period, your claim will be not paid.


Critical illness insurance provides solid coverage for being unexpectedly diagnosed with a serious disease, but this coverage comes at a cost. It’s a good idea to work with an insurance broker to get a critical illness insurance quote and to apply for a policy. Brokers have access to multiple insurance companies and will help you navigate through the complex application process, especially if you have medical pre-conditions.

The Difference Between A Check and A Check Stub

The difference between a check and a check stub can sometimes become confusing, especially if you’re just starting out in the world of banking or being employed for the first time. Most often, employers that write or print checks will submit both a check and a check stub to the employee to explain how the final pay was calculated. However, there are instances where a payment is made by check and no stub is attached, which is often the case for contractors or independent workers. Vice-versa, those that are paid through direct deposits may only receive the check stub as proof of payment.

What is a check?

According to the website, a check is “a written order directing a bank to pay money”. When a person receives a check as payment, it provides bank authorization for them to receive the check’s full amount, which is taken from the account of the check provider. If funds are not available (insufficient), then no funds are dispersed. As a legally binding document, checks can be used in court as a contract between the writer and its recipient.

What information does a check contain?

Three types of information are located on checks – recipient information, provider information, and bank information. Recipients will find their full legal name, the amount they are being paid on the check in both the numeric and standard numeral form. Traditionally contact information of the writer is also on the check, to include their name (or company name), address, and contact phone number. Bank information which includes the bank’s routing number and the account number of the writer. In addition, some banks may have a logo prominently displayed.

What are the most common uses of checks?

Checks are most commonly used in exchange for a good or service. They represent legal tender and serve the same functionality as currency.

What is a check stub?

A check stub is a record detailing the information contained on a check. Since checks are submitted to the bank in exchange for its cash value, no proof of the transaction is retained by the person(s) cashing the check. Therefore, stubs are traditionally retained by the check recipient as a receipt.

What information does a check stub contain?

Check stubs come in a variety of forms such as payment check stubs that are used in payroll or business stubs which are given to contractors. The most common information contained on the check stub includes the recipient’s name and account identifying information (employee number, last four digits of social security number, etc), the business information of the check writer (name, address, etc), the check amount, and a breakdown of how the check’s final value was calculated (deductions, fees, etc). On some check stubs (especially those records of payroll), a history of payments over a time period may be present.

What are the most common uses of checks stubs?

Most often check stubs are used as proof of earnings by the recipient. As a legal record of payment, these documents verify the amount that was received and is most often used to report proof of income.

Radiology Medical Billing

Radiologists perform both interventional and non-interventional / non-invasive procedures. Interventional radiology procedures include diagnostic radiology imaging and ultrasound, while non-interventional procedures comprise standard radiographs, single or multiple views, contrast studies, computerized tomography and magnetic resonance imaging.

To get proper reimbursement for the procedures they perform, radiologists need to execute proper disease and diagnosis coding or ICD-9 coding (using three-digit codes that are modified by including a fourth or fifth digit as characters following a decimal point), and procedural coding using Current Procedural Terminology (CPT), comprising 5 digits with 2-digit modifiers. The procedure will be considered medically necessary only with a supporting ICD-9 diagnostic code. Sometimes multiple codes, such as radiological and surgical codes may become necessary to report a full procedure. Cardiology medical billers have to be thorough with radiology CPT codes that are bundled with other CPT codes. When billing for radiology services, 'upcoding' (coding a higher or more complex level of service than what was actually performed) has to be strictly avoided since this is regarded as fraud or abuse. Another important factor is to ensure whether the services require prior authorization to be properly reimbursed by the carrier.

Radiology Codes

Radiology codes comprise the 70,000 series of codes organized by the method or type of radiology and the purpose of the service. They are subdivided on the basis of the type of service and anatomical site.

These include:

• Diagnostic Radiology 70000 – 76499
• Diagnostic Ultrasound 76500 – 76999
• Radiologic Guidance 77001 – 77032
• Breast, Mammography 77051 – 77059
• Bone / Joint Studies 77071 – 77084
• Radiation Oncology 77261 – 77999
• Nuclear Medicine 78000 – 79999

Interventional radiologists use certain surgical codes to signify the procedures they perform. Some major surgical codes include the following:

• Mechanical Thrombectomy: 34201, 34421, 34490
• Biliary Drainage: 47510, 47511, 47530
• Cholecystostomy Tube Placement: 47490
• IVC Filter Placment: 37620
• Biliary Stone Removal: 47630


Medical services and supplies that are not included in the CPT coding terminology are listed in the HCPCS (Healthcare Common Procedure Coding System procedural codes). These are represented by 1 letter (from A to V) followed by four digits. Numeric or alphanumeric modifiers can be used along with these codes to clarify a procedure.

Billing for Radiology Services

Radiological service can be billed for the physician's work as well as the use of equipment or supplies. The technical component (TC) includes facility charges, equipment, supplies, pre- / post injection services, staff and so on. The professional component (PC) involves studying and making inferences about the radiological test and submitting a written report with the findings. Modifiers are used to signify the technical and professional components in a radiological service. They are 2-digit numbers that are used to explain a procedure in more detail. They can indicate repeat or multiple procedures, such as radiographs performed bilaterally. When billing for the technical component only, the modifier 52 has to be used; when billing only for the professional component, the modifier 26 is to be used. In the latter case, a written report by the physician providing the services is required to avoid claim denial.

Some other examples of modifiers:

• -22 – unusual (increased) procedural service
• -32 – mandated services
• -51 – multiple procedures
• -66 – surgical team
• -76 – repeat procedure by same physician
• -77 – repeat procedure by another physician
• -LT, -RT, -TA to -T9, -FA to -F9, -LC, -LD, -RC – Anatomical modifiers

The global fee comprises the total payment due for the technical and professional components and this also requires a formal written report.

Billing for Professional Component

Physicians can bill for the professional component of radiology services provided for an individual patient in all settings regardless of the specialty of the physician who performs the service. Reimbursement will be given under the fee schedule for physician services. However, for radiology services provided to hospital patients, insurance carriers reimburse the professional component only under the following conditions:

• Services should meet the fee schedule conditions
• Services provided should be identifiable, direct and discrete diagnostic or therapeutic services given to an individual patient

Payment for the Technical Component

As regards the technical component or TC of radiology services furnished to hospital patients and to Skilled Nursing Facility (SNF) inpatients during a Part A covered stay, insurance carriers might not provide reimbursement. The fiscal intermediary (FI) / AB MAC makes the payment for the administrative / supervisory services offered by the physician, as well as for the provider services. The TC of radiology services offered for inpatients in hospitals, excluding CAHs or Critical Access Hospitals are included in the FIs / AB MAC payment to hospitals. In the case of hospital outpatients, radiology and related diagnostic services are reimbursed according to the Outpatient Prospective Payment System (OPPS) to the hospital. In the case of a SNF, the radiology services offered to its inpatients will be included in the SNF Prospective Payment System (PPS). For services offered for outpatients in SNFs, billing can be made by the provider of the service or by the SNF according to arrangements made with the provider. When the billing is made by the SNF, Medicare reimburses in accordance with the Medicare Physician Fee Schedule.

Radiology Billing Standards

Radiology services can be billed in a number of ways. Some of the services are split billable and the codes for these are separately reimbursed by different providers for the professional and technical component. The physician and the facility can bill for their respective component with modifiers 26, TC or ZS. In full fee billing, the physician bills for both the professional and technical components and makes the payment due to the facility for the technical component provided. In standard billing, the facility bills for both the professional and technical components and reimburses the physician for his professional component. Services that can not be separately billed are not individually reimbursed for the professional or technical components. These codes are reimbursed only for one provider and must not be submitted with the 26, TC or ZS modifiers.

Assigning the Codes

• Medical documentation is carefully studied to identify the radiological service performed.
• Identify the anatomical site
• Find the terms in the CPT index
• Select the codes on the basis of radiology terminology
• See whether modifiers are to be assigned

The following skills are essential for accurate coding and billing for radiology services:

• Ability to review clinical issues and CPT, ICD-9 and HCPCS coding guidelines for interventional and non-interventional radiology
• Knowledge about the differences between diagnostic radiology codes and therapeutic interventional radiology codes
• Skill to review coding guidance for modifier usage with interventional radiology procedures
• Ability to code challenging case scenarios

Professional Coding Services for Accurate Billing and Coding

When it comes to coding, the radiologist faces two main issues: first, understatement of completed treatment could mean insufficient reimbursement; second, if the codes overstate the treatment, it could result in risk of abuse, repayments and fines. Another problem is the complicated and ever-changing directives with regard to CPT procedures.

Radiologists can resolve all these issues by going in for the services of professional medical coding companies. They have skilled CPT coders to do the job. With great attention to detail, in-depth knowledge of the coding system, application of basic coding principles, and thorough documentation, these companies offer accurate, customized and affordable radiology medical billing and coding services in quick turnaround time. Most of the professional companies utilize state-of-the-art billing software to guarantee efficiency and accuracy in billing and coding, for checking local coverage determination and so on to ensure that all claims are reimbursed.

Do I Need a Florida FR-44 Or SR-22 If I Got a DUI?

Let me first start by defining what a Florida FR-44 and SR-22 are and then we can decide which one you really need. If you got a DUI in the state of Florida most likely you need to file either an FR-44 or SR-22.

An SR-22 is a form used by insurance companies to ensure the driver is meeting state liability limits. Florida auto insurance companies submit this form electronically to Florida’s Bureau of Financial Responsibility for those drivers that are mandated to submit this proof of insurance. The state requires you to carry minimum liability limits of $10k in bodily injury per person and $10k in property damage. Drivers who are required to carry an SR-22 generally pay more due to the nature of the traffic violation. In addition to the extra premium for the offense you will also pay a $15 filing fee to submit the SR-22.

The state of Florida may also require you to file an FR-44 which is similar to an SR-22 only it has higher minimum liability requirements. The minimum liability requirements are ten times that of the states minimum requirements at $100k per person and $50k property damage. The cost to file the FR-44 is $15 just like the SR-22 but your overall cost to get insured will increase due to the nature of the traffic violation and the increased liability limits. This form is referred to as Florida Uniform Financial Responsibility Certificate FR-44 or just FR-44 for short. You must maintain this filing for three years but there are no driving restrictions associated with the FR-44.

Now that we understand what each type of form is and the requirements each possess let’s look at which one you need if you are convicted of a DUI in Florida. Effective October 1, 2007 Florida Statutes increased the required liability insurance for bodily injury in those circumstances where a person has been convicted of driving under the influence. Basically if you have been convicted of a DUI after such stated date you will need to file an FR-44 Form instead of an SR-22. The only difference between the two forms is if you were convicted of a DUI in the state of Florida it now requires higher liability limits on your auto policy.

Tire Insurance: Myths and Facts About Road Hazard Policies

Insurance – it's everywhere. One can insure just about anything. Are tires an investment one needs to insure? Tire insurance, also called a road hazard policy, road hazard warranty, or tire reimbursement plan, is a rapidly growing industry in the automotive world.

Tire warranty plans pay in full or in part for the replacement or repair of damaged tires and / or rims from "road hazards." Road hazards are defined as pot holes, debris, nails, wood, and other hazards found in the road. Curbs, sidewalks, and stone walls are not road hazards. This is an important distinction to consider when deciding if tire insurance is right for you (discussed further ahead).

Tire plans last for a specific period of time and tire wear tread-depth. Some plans last 2-3 years. Others can last 5 years or 60,000 miles. Several plans come with fixed amounts of coverage: $ 500 per year up to 4 years. Many contracts require three years of law school to comprehend. In terms of tread depth, a tire is usually considered worn out (and thus the plan null and void) at 2/32 to 3/32 of an inch.

Another important distinction is in the type of plan.

Tire reimbursement plans are just what they say . You, the plan holder, will be reimbursed after the claims process is finalized – usually 2-8 weeks. There is an out-of-pocket expense. These plans are often sold by new car dealerships. The prices can range from $ 300 to $ 600 dollars.

Road hazard policies operate similarly to reimbursement plans . However, some tire insurance providers, in partnership with the repair facility, may have a direct-pay relationship. Thus, there would be no out-of-pocket expense, except for applicable deductibles, and items not covered in part or in full. These plans are primarily sold by tire dealers and repair shops. The prices range from $ 10 to $ 30 per tire. They also can be based on a percentage of the cost of the tire: usually 12% to 15%.

Both types of plans have a number of variables, requiring a magnifying glass to read the fine print. Also, many are pro-rated warranties, covering only a percentage of the cost of the tire based on its wear.

Claims and Coverage

Depending on the plan, claims are initiated by the repair shop. The process is fairly smooth, although there can be a significant delay from the provider for authorization. This delay may be an hour or an entire weekend. This means that you'll have to "ok" the tire replacement, and then hope it's authorized for the full amount, or drive on your spare.

Some plans offer national coverage either among their service facilities or from other repair centers. Claims procedures will vary. Others only provide local coverage, or coverage at the selling facility.


Tire insurance does not mean that everything is covered. Pro-rated warranties are based on the wear and tear of the tire. You may get 75%, 50%, or only 10% coverage depending on the tread-depth. You'll pay the remainder. While there are plans that offer full coverage, even these have limitations, or they may conflict with a repair shop's policies.

For example, many plans allow for a maximum of $ 30 to mount and balance one tire, and a maximum of $ 15 to repair a tire. However, sport tires often have significantly higher mounting and balancing fees – upwards of $ 50 per tire – and tire repair prices can exceed $ 90. There are also discrepancies on the tire and rim prices themselves, which in the end, may have to be supplemented by the service customer.

Although there usually is not an issue with the latter given the competitive market, the service center's price mark up may be unacceptable to the plan provider. In this case, the service center needs to lower the price or you, the service customer, need to pay the difference – or go somewhere else. This does happen!

Rim Replacement and Repair

Rim replacement is becoming less frequent. With the high cost of aluminum wheels and sport wheel packages, tire insurers have opted to have them repaired. Repair will only be done if the rim does not hold air. What this means is that even if the rim is warped – enough to cause a vibration and even premature tire wear – they will not replace it. Rather, they will send it out to be straightened and repaired.

Rims are replaced only if the damage is so extensive that the new tire, when mounted on the rim, will not hold air. However, even in this case, especially if it's an expensive sport wheel, they may still attempt to repair it.

Repairing rims is a bad option. While some rim repair is acceptable, badly warped or damaged rims will in no way ever be the same.


If a car hits a road hazard hard enough, such as a pot hole, it's wise to have the alignment checked. Road hazard policies and tire reimbursement plans do not cover alignments. The service customer will have to pay for this procedure.

Road Hazard Protection Positives

Some plans include tire rotations, wheel balancing, and nationwide coverage.


Can I pop all 4 tires and get a new set of tires?
You can try. But this type of claim will trigger a number of red flags with the insurer. The policy holder will likely send out adjusters and / or require photographs. You will also have a difficult time explaining how a "road hazard" caused all 4 tire pop.

New tires come with a warranty.

New tires do come with a warranty by the tire manufacturer (Michelin, Yokohama, Goodyear … etc), but not a road hazard warranty. The warranty by the tire manufacturer only covers defects in workmanship. New tire warranties do not cover punctures or damages from external sources. This is why "road hazard" protection is being pushed.

New tires are rarely defective. If there is a problem, it's usually noticed when balancing the tire. Or, there is a drivability concern such as vibration or noise. If there's a defect it's generally caught right away, and the tire swapped out.

It's so cheap; it's a no-brainer, right ?

Actually, the experts do not agree with this statement.

The Economics of Tire Warranties

An article from the Washington Post by Terence O'Hara explains the economics of extended warranties and purchase protection plans in general. It is quite fitting for road hazard warranties. He writes:

The decision to buy an extended warranty … defies the recommendations of economists, consumer advocates and product quality experts, who all warn that the plans rarely benefit consumers and are nearly always a waste of money.

'[Extended warranties or purchase protection plans] make no rational sense,' Harvard economist David Cutler said. 'The implied probability [of having an issue with the product] has to be substantially greater than the risk that you can not afford to fix it or replace it. If you're buying a $ 400 item, for the overwhelming number of consumers that level of spending is not a risk you need to insure under any circumstances. '

In short, road hazard warranties are a waste of money. Do not insure that which you can afford to replace.

Numbers Game and Slim Chances

Like all insurance, tire insurance plans are a numbers game. However, this is a game you have a 98% chance of losing. Insider statistics show that the percentage of claims paid out by providers is as low a 2%.


Another interesting note is that a lot of tire damage is caused by curbs. Curb damage is not covered under most road hazard policies. High granite curbs with sharp edges slice through tens of thousands of tires per year.

You Will not Notice

Many people do not even notice tire damage. Other than to see if the tires are holding air, who "really" looks at tires? Tires are subject to a whole host of external influences which cause bubbles, slices and gouges. Despite the potential dangers of damaged tires, the damage very often does not translate into any noticeable drivability issue. The point is that if you do not notice any tire damage you can not benefit from the coverage.

Research Shows

Those raving about the benefits of a road hazard policy are the actual folks in the industry who stand to benefit from the sale. They'll argue that it's so cheap – only $ 10 to $ 20 per tire. Even so, for four tires, that's $ 80 based on the "possibility," the "chance," of damaging a tire that meets the repair / replacement requirement protocols.

Auto Insurance

If a rim and tire has incurred significant damage, it's quite likely that other problems have resulted as well. The first is that the vehicle may have been jarred out of alignment. Secondly, hub bearings, front end components: tie rods, spindles, ball joints, and a variety of other components may have sustained damage. In this case, auto insurance, which you are already paying for, will pay for everything – brand new.

Free Road Hazard Warranties

Many tires come with road hazard warranties FREE. In other words, in an effort to secure retailers, many tire distributors provide service centers FREE road hazard insurance. Some shops pass this on to their tire customers, others sell them. Ask if the tire "comes" with a road hazard protection policy. If not, request that one be provided at no additional charge. It's worth a shot.

Also, some car manufacturers provide road hazard warranties FREE of charge for 12 months or 12,000 miles. If you're buying a new car or even used, ask that the dealer provide a complimentary road hazard policy (after all the wheeling and dealing is done, of course), and just before you commit.

What's the best road hazard policy?

Money in your bank account.

Internal Control Systems As They Relate to Risk Management

Tyco, WorldCom, and Enron are examples companies that failed because of improper internal controls. Internal control systems are useful to organizations because they identify and correct accounting frauds or errors. However, internal controls are useless if risks associated with an organization's routine decisions are not monitored. Enterprise risk management (ERM) focuses on risks to an organization's operations and ensures that controls are in place to eliminate, mitigate, or compensate for those risks (Louwers, Ramsay, Sinason, & Strawser). Additionally, ERM identifies and assesses risks to management's objectives by evaluating internal control components; control environment, risk assessment, control procedures, monitoring, and information and communication.

Control Environment

An effective control environment primarily defines organizational structure, commitment to competence, assignment of authority and responsibility, and internal audit functions. Control environments are important any type of risk approach because it establishes organizational tone, the foundation of organizational internal control, and its response to risk (Louwers et al).

Risk Assessment

Risk assessment is the process used to estimate the likelihood and impact of risks on management's objectives. Risk assessment generally includes risk-response. After potential risks are identified, they become part of an organization's risk portfolio. Risk response is then used to evaluate correlations and total impact and make changes to optimize the risk portfolio (McCarthy, Flynn, and Brownstein).

Control Procedure

Control procedures are actions taken by management to eliminate, mitigate, and compensate for risks (Louwers et al.). The most frequently used control procedures are performance reviews, segregation of duties, physical controls, and information-processing controls. Performance reviews gives management the opportunity to perform periodic evaluations of the organization's objectives and ensure they are being met. Segregation of duties separates tasks such as authorization to execute transactions, recording transactions, and periodic reconciliation of existing assets to current amounts to reduce the risk of an individual creating and concealing errors, frauds, and misstatements within the organization (Louwers et al.). Organizations have physical controls in place to prevent access to documents, inventory, and specific areas by unauthorized individuals. Information-processing controls create audit trails and are in place to ensure financial statement transactions are processed correctly.


Monitoring is an ongoing assessment of the quality of an organization's internal controls. Examples of monitoring controls may include analyzing customer or vendor billing complaints, supervising the accuracy of transaction processing, and comparing recorded amounts to assets and liabilities (Louwers et al.). Monitoring activities are similar to control activities. Unlike control activities, monitoring activities are more in-depth because they include identifying weaknesses in other controls. Although monitoring includes management related tasks, audit committees are generally assigned these tasks.

Information and Communication

Information and communication are necessary for management to complete an organization's objectives. Information systems are effective when they consistently provide timely, current, accurate, and accessible information related to an organization's external sources. Communication is the means of relaying information to internal and external sources through report production and distribution (Louwers et al.).


Insurance and portfolio approaches are good tools because they give organizations the opportunity to align their investments within their tolerated risk range and save costs on investments that are immaterial and relevant to their investment objectives. However, these approaches do not provide for periodic and timely evaluations that lead up these approaches or ensure that the organization's objectives are consistently met. To ensure all of an organization's objectives are met and properly handled, implementation of a system that will complement an effective internal control system and the insurance and portfolio approaches in necessary.

Things You Need to Set Up an Auto Insurance Policy

Money is an obvious one. And, of course, having a vehicle to insure and a garaging address is another. A completed application with signatures applies to all polices. Also, each company will have their own unique set of guidelines for what you will need. Lastly, legal requirements can change in different jurisdictions.

Payments to start a policy are mostly made by check or credit card. Many policyholders now a days use an electronic form of payment. For credit and debit cards the account number, expiration date, and security code are needed. For an electronic funds bank transfer the account and bank routing numbers. In either case the account holder, which is not always the policyholder, must provide authorization.

Before a policy can begin the exact Vehicle Identification Number or VIN (17 digit alpha numeric) is needed. Providing the year make and model is insufficient. Each car has a unique VIN which identifies the characteristics for that particular car. Air bag, antilock brakes and other vehicle features are verified. CLUE reports (Claims Loss Underwriting Exchange) indicating vehicle claims history require the correct VIN.

Information not provided on computer generated reports such as the MVR and CLUE are necessary to complete the application and issue (begin) a policy. Be prepared to provide the employer (school) name and address for all drivers. When making payments on the car the bank or leasing company name and address is necessary. The application will have to be signed and payment authorized.

Companies often require a variety of documentation supporting the policy. Proof of prior insurance or school transcript for discounts is typical. Photographs of the vehicle or policyholder picture identification are less common. If there are different vehicles in the household covered by another insurance policy you may be asked to provide proof. Not all jurisdictions have the same legal requirements. For example, 7 counties in Florida require mandatory vehicle inspections when starting a new policy that include physical damage coverage.

Most, but not all, of the necessary information for a policy is generated by reports from your name, address, drivers license and VIN numbers. It is imperative that the 17 digit VIN number you provide is correct. Complete information, payment details, specific requirements, and signatures are the things you need to set up an insurance policy.

Human Resource Information System – HRIS

Human Resource Information Systems

The purpose of this paper is to identify other companies who have faced similar human resources issues in regards to information technology. Through benchmarking different companies we can learn how other companies have handled certain human resources issues related to information technology, information systems, new technology, and data security. An overall analysis has been completed using research on IBM Europe, Ameriprise Financial, Terasen Pipelines, Shaw's Supermarkets, CS Stars LLC, IBM, WORKSource Inc., and Toshiba America Medical Systems, Inc. This paper also includes eight synopses of companies facing similar issue to those in the reading.

New Technology

With the changing world and constant new technology that is available, managers need to be aware of the technology that will increase effectiveness in their company. Human resource information systems (HRIS) have increasingly transformed since it was first introduced at General Electric in the 1950s. HRIS has gone from a basic process to convert manual information keeping systems into computerized systems, to the HRIS systems that are used today. Human resource professionals began to see the possibility of new applications for the computer. The idea was to integrate many of the different human resource functions. The result was the third generation of the computerized HRIS, a feature-rich, broad-based, self-contained HRIS. The third generation took systems far beyond being mere data repositories and created tools with which human resource professionals could do much more (Byars, 2004).

Many companies have seen a need to transform the way Human Resource operations are performed in order to keep up with new technology and increasing numbers of employees. Terasen Pipelines moved its headquarters from Vancouver to Calgary to be closer to the oil and realized a major growth in employees. In the past recording keeping was done on paper and with spreadsheets. Mangers at Terasen realized that there was a need to change to a more computerized system and looked into different HRIS vendors. By making the move to a HRIS system, Terasen is able to keep more accurate records as well as better prepare for future growth. Another company that saw the benefits of keeping up with new technology is WORKSource Inc. To meet the challenge of handling 100 new employees, WORKSource Inc. acquired Web-based technology programs from GHG Corp. like electronic pay stub, electronic timesheet software, time-off system, and human resource information system ( "Tips," 2006). By adapting these new programs, WORKSource was able to reduce waste and cost.

The Internet is an increasingly popular way to recruit applicants, research technologies and perform other essential functions in business. Delivering human resource services online (eHR) supports more efficient collection, storage, distribution, and exchange of data (Friesen, 2003). An intranet is a type of network used by companies to share information to people within the organization. An intranet connects people to people and people to information and knowledge within the organization; it serves as an "information hub" for the entire organization. Most organizations set up intranets primarily for employees, but they can extend to business partners and even customers with appropriate security clearance (Byars & Rue, 2004).

Applications of HRIS

The efficiency of HRIS, the systems are able to produce more effective and faster outcomes than can be done on paper. Some of the many applications of HRIS are: Clerical applications, applicant search expenditures, risk management, training management, training experiences, financial planning, turnover analysis, succession planning, flexible-benefits administration, compliance with government regulations, attendance reporting and analysis, human resource planning, accident reporting and prevention and strategic planning. With the many different applications of HRIS, it is difficult to understand how the programs benefit companies without looking at companies that have already benefited from such programs.

One such company is IBM. IBM has a paperless online enrollment plan for all of its employees. Not only has the online enrollment saved the company 1.2 million per year on printing and mailing costs, the employees enjoy working with the online plan. "Since we began offering online enrollment, we've learned that employees want web access," Donnelly [Senior Communications Specialist] says, so they can log on at home rather than through the company intranet. So the company has been working to put in place a web-based enrollment system that employees and retirees can access from anywhere (Huering, 2003). By utilizing the flexible-benefits application HRIS has to offer, IBM was able to cut costs and give employees the freedom to discover their benefits on their own time and pace.

Another company that has taken advantage of HRIS applications is Shaw's Supermarkets. In order for Shaw's to better manage its workforce, the company decided it was time to centralize the HR operations. After looking at different options, Shaw's decided to implement an Employee Self Service (ESS) system. The use of self-service applications creates a positive situation for HR. ESS gives HR more time to focus on strategic issues, such as workforce management, succession planning, and compensation management, while at the same time improving service to employees and managers, and ensuring that their data is accurate. With this solution, employees have online access to forms, training material, benefits information and other payroll related information (Koven, 2002). By giving employees access to their personal information and the ability to update or change their information as needed, HR was given more time to focus on other issues. Understanding the different applications HRIS has to offer will give companies the chance to increase employee efficiency and reduce costs.

Measuring the Effectiveness of HRIS

The evaluation should determine whether or not the HRIS has performed up to its expectations and if the HRIS is being used to its full advantage (Byars & Rue, 2004). One of the most significant challenges faced by public personnel executives today is measuring the performance of their human resources information system (HRIS) In order to justify the value-added contribution of the HRIS to accomplishing the organization's mission (Hagood & Friedman, 2002). Implementing an HRIS program may seem a necessary stem for a company, but unless it will be an effective tool for HR operations, it will not help increase efficiency and may hinder it instead.

One company that implemented a HRIS system is Toshiba America Medical Systems, Inc. (TAMS). TAMS put all employee benefits information online and created an open enrollment option when TAMS changed healthcare providers. Almost immediately upon rolling out the UltiPro portal [new HRIS technology] to employees, TAMS began seeing improvements, with an estimated 70% increase in open enrollment efficiency (Wojcik, 2004). By determining the efficiency of the new program, TAMS was able to realize the benefits of the new HRIS system.

Security of HRIS

The privacy of employee information has become a major issue in recent years. With identity theft becoming a common problem, employees are becoming more sensitive about who sees their personal information, and the security it is kept in. By making sure employee information that is kept in the HRIS is relevant to the company and making sure there is limited access (password protection) to such information, companies can make its employees more secure with the safety of their information. Whether electronic or paper, employee files deserve to be treated with great care. Establishing security and end-user privileges calls for a balance of incorporating, HR policy, system knowledge and day-to-day operations (O'Connell, 1994).

One company that faced a major security issue was CS Stars, LLC. CS Stars lost track of one of its computers that contained personal information that included names, addresses and social security numbers of workers compensation benefits. The bigger problem was that CS Stars failed to notify the affected consumers and employees about the missing computer. Though the computer was retrieved and no information seemed to have been harmed, many employees lost their sense of security with the company. New York's Information Security Breach and Notification Law, effective in December 2005, requires businesses that maintain computerized data which includes private information to notify the owner of the information of any breach of the security of the system immediately following discovery, if the private information was, or is reasonably believed to have been, acquired by a person without valid authorization (Cadrain, 2007).

Another company that experienced a breach in security is Ameriprise Financial. In late 2005, a computer that contained personal information on clients and employees was stolen. Because many of the employees at Ameriprise take their computers between work and home, the company determined there was a need to put more security into those computers. Ameriprise made sure all employees had the new security suite installed on their computers. By responding quickly to the need for more security, Ameriprise made sure all information is being kept secure. Making sure employees information is kept as secure as possible there will be more trust in the company and the HR employees working with that information.


IBM, Terasen Pipeline, CS Stars LCC, and Toshiba America Medical Systems, Inc. are good examples of companies facing issues similar to human resources information technology and human resources information systems. All of these companies know the importance of new technology, human resources information systems, and data security. The remainder of this paper provides synopses of more companies facing human resources issues, how the company responded to the issues, and the outcomes of the company's responses.

Companies Benchmarked

IBM Europe

The Situation:

IBM is a global organization offering research, software, hardware, IT consulting, business and management consulting, ring and financing. It employs around 340,000 people, speaking 165 languages ​​across 75 countries, and serving clients in 174 countries. In January 2007, IBM established a separate "new media" function within its corporate communication department. IBM main goal is to educate, support, and promote programs that utilize social media. IBM Europe decided to expand internal communication by blogging guidelines. The recognition was that blogging was already happening among IBMers, just in an unregulated way. In a similar way, institutionalizing a function to deal specifically with new media is not a corporate move, or establishing from scratch. It's a response to the issues already emerging in the company. Now that those technologies are here, people are using them, they're growing and there here to stay-we're just going to put some structure around them so that we can try to optimize their use. "The users decide what technologies they want to use and how they want to use them. That main idea is that IBM understands that they must remember to respect the fact that social media are social. IBM had the need to connect its 340,000 global employees more effectively.

The Response:

IBM's intent around social media has now been officially formalized. From January 22 2007, the company established a separate "new media" function within its corporate communication department. "Its remit: To act as expert consultants inside and IBM outside on issues relating to blogs, wikis, RSS and other social media applications. The main idea is to educate, support and promote programs that utilize these tools. IBM has a history of being at the forefront of technology based corporate communication. From the multimedia brainstorming "WorldJam" that made news headlines back in 2001 in which 50,000 employees worldwide joined a real time, online idea-sharing session about the company's direction. IMB has always prepared itself to use breakthrough technologies to establish a two-way dialogue with its employees. The need for social media was necessary and could no longer wait.

The Outcome:

In the last few IBM years has been recognized as being the vanguard of social-media use: IBM was on of the first Fortune 500 companies to get behind collaborative wikis, published internal blogging guidelines as far back as 2003, and is now moving fast beyond RSS and podcasts into videocasting and "virtual world" technologies like Second Life. The intranet search facility extends to all areas of the site, including new media aspects. When an employee logs onto their portal an executes a key word search, the results they get back not only come from the main intranet pages, but include results from IBM forums, wikis, blogs and podcast / videocasts tags. IMB has an understanding that employees are no longer staying in a company their entire lives. It's just not like that any more. In Belgium for example over 50 percent of 2,300 employees have been there fewer than five years. The company has come to the conclusion that with an increasingly young and mobile workforce, the likelihood is that an employee population full of a younger generation, for whom these tools are part and parcel of life, is not that far away. In years to IBM come will have to deal with employee base for which blogging is just the natural way to interact over a web platform. IBM has created centralized platforms for most tools that fall under its remit, which includes wikis. For Philippe Borremans, new media lead Europe for IBM, has the potential business applications of a wiki cover two broad benefits: Collaborating and knowledge sharing. IBM has scored some notable successes on both fronts in the near 5000 wiki pages now up and running in the organization. The company has been a huge pick-up in interest in podcasting over the last 18 months writing can seem such a technical skill, whereas people feel they can talk more freely than they can write. One of the most consistently popular IBM podcasts, with over 20,000 downloads a week.

Ameriprise Financial

The Situation:

The Department of Justice survey estimates that 3.6 million US households were victims of identity theft in 2004. Trafficking in personal date goes beyond US borders: the New York Times reports that stolen financial information is often distributed among participants of online trading boards, and the buyers are frequently located in Russia, Ukraine, and the Middle East. One reason clients are concerned about data security is the widespread publicity generated by breaches at financial services firm. In late December 2205, an Ameriprise Financial employee's laptop that contained unencrypted data on approximately 230,000 customers and advisors was stolen from a car. Other financial services firm, including Citigroup and Bank of America, also acknowledge large-scale customer data losses in 2005. President of NCS, Rita Dew, a compliance consulting firm in Delray Beach, Florida, says that the Securities and Exchange Commission requires investment advisors to have policies and procedures that address the administrative, technical, and physical safeguards related to client records and information.

The Response:

Ameriprise Financial had to fight back and had to implement "layers of protection." It is important for employees who their primary business computer, and employees regularly transport the computer between home, office, and meeting sites. The vulnerability of this arrangement and the need for a safety software program is much needed.

The Outcome:

Employees who are transporting lab tops should install the Steganos Security Suite on their computer. This software allows employees to create an encrypted virtual drive on the laptop that serves as data storage safe. Employees stores all client related data and tax preparation software database on the encrypted drive, which employees has set up with one gigabyte of storage space. The best thing is that when an employee turns off the computer the information is stored "safe", the software automatically encrypts the virtual drive's data. The software also generates encrypted backup files, which employees store on CDs in a fireproof safe. This should keep the data secure if any employee's laptop is stolen or if the drive is removed from the laptop. Other financial advisors are relying on encryption both in and out of the office. Other programs that are being used to protect client's information are RAID Level 1 system to store data on the drives that are encrypted with WinMagic's SecureDocs software. Encryption ensures that anyone who steals the computer will be absolutely unable to read the data, even by connecting it to another computer as a "slave drive. This has given many financial advisors the greatest peace of mind.

Terasen Pipelines

The Situation:

Terasen Pipelines is a subsidiary of Terasen Inc. located in Vancouver, Canada and is located in several provinces and US states. In 2001 the company changed its headquarters to Calgary to be closer to the oil. With the big move, the company went through a growth spurt. With the company in many different locations and the growing numbers of employees, the HR department saw a need to find a new system to keep more accurate records.

The Response:

In the past Terasen had kept records on paper and with spreadsheets and with the growth of the company, this system does not work as well as in the past. In order to compensate for future growth, Terasen began to look into HRIS companies to help with the HR operations. After researching different companies, Hewitt's application service provider model with eCyborg was found to be the right fit.

The Outcome:

Although there was difficulty adapting to a new way of recordkeeping, Terasen was able to find a system that will help support the current and future growth of the company. Fortunately, some of the HR staff had experience working with an HRIS and were able to help their colleagues imagine new processes, as aided by a system. One theme often voiced throughout this process was: "You guys do not know how hard we're working when we can make it so much easier with a system that could do a lot of this for us. You do not always have to run to the cabinet for the employee file just to get basic information. It can all be at your fingertips. " (Vu, 2005). In order to help Terasen ease the HR burden of implementing a new HR system, the management of Terasen was convinced to look for a vendor to help implement and maintain a HRIS system. This system has helped Terasen better prepare for current and future growth.

Shaw's Supermarkets

The Situation:

Shaw's Supermarkets is the second largest supermarket chain in New England. With a workforce of 30,000 located at 180 stores throughout six states, Shaw's HR staff is responsible for managing employees' personal data. Their employee mix includes approximately 70 percent part-time employees, consisting of students, senior citizens, second-job part-timers, and career part-timers. One third of the workforce is made up of union associates, and Shaw's staff oversees the company's involvement with three unions and six separate contracts (Koven, 2002). In order to help manage the workforce, the HR staff became interested in centralizing its HR operations.

The Response:

In order to centralize HR operations Shaw's decided to implement an ESS (employee self-service) solution. The use of self-service applications creates a positive situation for HR. ESS gives HR more time to focus on strategic issues, such as workforce management, succession planning, and compensation management, while at the same time improving service to employees and managers, and ensuring that their data is accurate. With this solution, employees have online access to forms, training material, benefits information and other payroll related information.

The Outcome:

Shaw's has had positive feedback since implementing the ESS solution. "The reaction from our employees has been extremely positive," Penney, VP of Compensation and Benefits, says. "We even had a significant increase in our medical coverage costs, and it was almost a non-issue because the online enrollment featured the plan choices, the employee cost, and the company subsidy. An employee self-service application makes it very easy for them to understand their contributions and coverage options. I received several e-mails from employees saying this was a great change and how easy ESS was, which the case is not often when employees are selecting their benefit options. " (Koven, 2002). By giving the employees more access to their information they are able to see the benefit choices available to them. Employees are also able to update their information online, which helps reduce the paperwork of the past. Shaw's has also seen improvement in productivity because employees are updating information at home, not during work hours.

CS Stars, LLC

The Situation:
New York Attorney General Andrew Cuomo has announced that New York State has reached its first settlement with a company charged with failing to notify consumers and others that their personal data had gone missing. Cuomo's office, which enforces the state's 2005 Information Security Breach and Notification Law, charged CS STARS LLC, a Chicago-based claims management company, with failing to give notice that it had lost track of a computer containing data on 540,000 New Yorkers 'workers' comp claims.

The Response:

The owner of the lost data, which had been in the custody of CS STARS, was the New York Special Funds Conservation Committee, an organization that assists in providing workers 'comp benefits under the state's workers' comp law. On May 9, 2006, a CS STARS employee noticed that a computer was missing that held personal information, including the names, addresses, and Social Security numbers of recipients of workers' compensation benefits. But CS Stars waited until June 29, 2006, to notify Special Funds and the FBI of the security breach. Because the FBI declared that notice to consumers might impede its investigation, CS STARS waited until July 8, 2006, to send notices to the 540,000 New Yorkers affected by the breach. On July 25, 2006, the FBI determined an employee, of a cleaning contractor, had stolen the computer, and the missing computer was located and recovered. In addition, the FBI found that the data on the missing computer had not been improperly accessed.

The Outcome:

New York's Information Security Breach and Notification Law, effective in December 2005, requires businesses that maintain computerized data which includes private information to notify the owner of the information of any breach of the security of the system immediately following discovery, if the private information was, or is reasonably believed to have been, acquired by a person without valid authorization. The law affects not only businesses in their dealings with their customers, but employers in their role as custodians of employees' personal data. (Cadrain)

Without admitting to any violation of law, CS STARS agreed to comply with the law and ensure that proper notifications will be made in the event of any future breach. The company also agreed to implement more extensive practices relating to the security of private information. CS STARS will pay the Attorney General's office $ 60,000 for costs related to this investigation. (Cadrain)


The Situation:

IBM's paperless online enrollment system, introduced in 1999, has proved to be a winner for both the company's 135,000 active US employees and the company, according to Cathleen Donnelly, senior communications specialist at company headquarters in Armonk, NY The company saves $ 1.2 million per year on printing and mailing costs alone, Donnelly says, and the employees' can take advantage of a variety of technologies to learn about issues, research program information and access decision support tools from their desktop computers. (Heuring, 2002)

The Response:

One of those tools, a personal medical cost estimator, enables employees to calculate potential out-of-pocket health care expenses under each of the plan options available to them, Donnelly says. Employees log in personally and are greeted by name and with important information regarding their benefits enrollment, such as the deadlines and when changes take effect. They automatically get access to health plans that are available to them, and the calculator lets them compare estimated benefit amounts for each plan.

"Employees can select the health care services they expect to use in a particular year, estimate expected frequency of use, and calculate potential costs under each plan option," Donnelly says. "The feedback that we've received from employees tells us that this tool has really helped them to make a comparison between plans based on how they consume medical services." The calculator shows both IBM's costs and the employee's. (Heuring, 2002)

The Outcome:

"Since we began offering online enrollment, we've learned that employees want web access," Donnelly says, so they can log on at home rather than through the company intranet. So the company has been working to put in place a web-based enrollment system that employees and retirees can access from anywhere.

Employees can get summary information on the plans, drill down into very specific details and follow links to the health care providers for research. Donnelly says the system has received high marks for convenience because employees can "get in and out quickly."

WORKSource Inc.

The Situation:

To meet the challenge of handling 100 new employees, WORKSource Inc. acquired Web-based technology programs from GHG Corp. like electronic paystub, electronic timesheet software, time-off system, and human resource information system ( "Tips," 2006). These tools enabled CEO Judith Hahn to handling payroll procedures efficiently and effectively.

The Response:

WORKSource has eight workforce centers, with approximately 108 employees, located throughout a six-county region. Previously, payroll, benefits, and human resources for those employees were processed and managed by a Professional Employer Organization. The company also has 52 administrative staff in its headquarters office. When the contract with the PEO terminated on June 30, 2006, those 108 employees were immediately moved to the payroll of WORKSource, which meant Hahn's workload more than doubled effective July 2006 ( "Tips," 2006).

Hahn, in an interview with PMR, said she relied on LEAN to help get a handle on what needed to change for her to manage the increased workload. Two years earlier, Hahn's CEO had introduced her to LEAN, a Japanese management concept of eliminating wasteful steps and motion when completing processes. "I began to read as much as possible about LEAN and joined an HR LEAN focus group" ( "Tips," 2006).

The Outcome:

Mastering the concepts of LEAN led Hahn to develop and apply her own acronym of "REASON" to her department's payroll and HR processes. Review the process: map payroll tasks from start to finish. Eliminate waste: determine how to complete a payroll task most efficiently without unnecessary steps. Analyze alternatives: research and evaluate the applicability of new technology. Sell ​​innovations to management: document the return on investment of each innovation. Open the lines of communication: communicate openly-and often-with all stakeholders, including employees and top management. Never allow negativity: make change simple and fun. Give employees plenty of encouragement and time to learn ( "Tips," 2006). Judith Hahn was able to implement the right human resource functions using information systems.

Toshiba America Medical Systems Inc.

The Situation:

Lynda Morvik, director of benefits and human resources information systems at Tustin, California-based Toshiba America Medical Systems Inc. (TAMS), thought it would make sense to add a benefits communication component to it. By having all the benefit information online, the TAMS employee handbook would also be a living document, enabling Morvik to make changes when necessary. Such was the case halfway through the project, when TAMS changed health care plans from Aetna Inc. to United Health Group Inc (Wojcik, 2004).

The Response:

TAMS, an independent group company of Toshiba Corporation and a global leading provider of diagnostic medical imaging systems and comprehensive medical solutions, such as CT, X-ray, ultrasound, nuclear medicine, MRI, and information systems, had been using a payroll service bureau and an in-house solution for HR that did not include easy-to-use consolidated reporting or an employee portal. After evaluating UltiPro alongside several enterprise resource vendors, TAMS selected Ultimate Software's offering and went live in September 2002 after an on-time and on-budget implementation. Almost immediately upon rolling out the UltiPro portal to employees, TAMS began seeing improvements, with an estimated 70% increase in open enrollment efficiency (Wojcik, 2004).

The Outcome:

In an effort to expand the usage of the Web beyond the benefits enrollment process, TAMS has posted a library of documents and forms on its HR portal, including the benefits handbook, which garnered a 2004 Apex Award for publication excellence. That same year, Business Insurance magazine also gave TAMS the Electronic Benefit Communication (EBC) award for outstanding achievement in communicating employee benefits programs over the Web. To continue elevating its use of Ultimate Software's HRMS / payroll solution, TAMS modified the UltiPro portal to meet the imaging company's unique needs (Wojcik, 2004). It was completely integrated with several proprietary applications created to address compensation and performance management issues so that TAMS employees have a central location for comprehensive workforce and payroll information from a Web browser that they can access with a single sign-on (Wojcik, 2004).


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Retrieved June 2, 2007 from EBSCOhost Database.

Security, Surveillance and Access Control

Knowing that only a deadbolt and glass separates your business' assets from would-be burglars or vandals can be disconcerting.

Thinking about the impact of such an incident at your business can cause many sleepless nights.

How are you sleeping?

Benefits of Security and Surveillance systems:
Whether you're a large retailer with multiple stores or a small business with a single office, a good security and surveillance system can make your business safer, more efficient, and less prone to theft and accidents. Other benefits include:

Reduced shrinkage by catching shoplifters.
Deter potential thieves.
Monitor cash registers and integrate cameras with point of sale systems.
Record evidence to prevent bogus accident claims.
Motion based IP cameras that can use existing network infrastructure and off-the-shelf storage systems.
Identify visitors and employees.
Monitor hazardous work areas.
Increase security in and around business premises and parking lots.
Meet insurance requirements.
Remote monitoring capabilities with e-mail and other notifications.
FBI studies report that unprotected buildings / stores are three times more likely to be robbed or vandalized than those protected by electronic security systems.

Benefits of Access Control systems:
Access Control Systems permit authorized employees in and out of designated areas while denying access to unauthorized employees or individuals. Systems can range from a simple keypad to a complete networked system for multiple buildings and locations.

Besides saving space on your keychain or in your purse, electronic access control has other benefits:

Increased security.
Allows entry to only those who are authorized and keeps out unwelcome intruders.
Electronic key cards are nearly impossible to duplicate making your access system much more secure than with physical keys.
Provides an audit trail and a complete history log of who is accessing your facility and when.
Can be integrated with surveillance systems for video retrieval from all access doors.
Can be integrated with parking lots, gates, and time and attendance systems.
Eliminate all the problems associated with mechanical key and lock systems such as replacing all locks and keys if a key is lost or stolen or an employee is terminated.
You only have to remember one key. With electronic access your key code grants you access to every door you are authorized to open.
Electronic access control is completely customizable for every user.

Factors to consider when selecting solutions for security / surveillance and access control:
Video Surveillance
What do you want to monitor? Do you want to see faces, vehicles, merchandise, long distances?
What video quality do you need?
Will you use motion-initiated recording or simply record all video?
If you are recording video, how long do you need to store the recording?
Is your priority to deter potential crimes or catch the perpetrators?
Access Control
How secure does the system need to be? Do you need thumbprint scanning or will a card or key fob do?
Do users need authorization to leave an area as well as enter?
Do you want to integrate with a time tracking system?
Do you need to integrate with a video surveillance system?
How many doors, parking lot gates, etc. do you need to control?

Top 5 Reasons Your Product Will Get Stuck at the Mexico Border

Anyone who has had to deal with Mexican authorities, either on a personal or business basis, will have had experience of how concerned they are with having paperwork in order. Hispanic countries seem to take documentation to whole new level, and Mexico is no different. Each "i" must be dotted, and each "t" crossed.

When you are about to export goods to Mexico, you should prepare for an administrative and logistics minefield. You will need to present comprehensive documentation to support the import of your goods, and the distribution within Mexico's borders. Any discrepancies or deficiencies in the paperwork and your goods will be seized and held until the problem areas are resolved to the satisfaction of the Mexican Importation Laws, which are administered by the General Customs Administration.

Before your product crosses into Mexico, imported goods need to stop and be unloaded at a receiving warehouse on the US side. What I mean is, that your truck can not drive right across the border, deliver the product and drive back over the border. But it's before even loading your goods onto the truck, or into the hold of a ship or plane, that the problems with importation could begin.

The top five reasons your goods might get stuck at the Mexican border range from the temporary to the almost indefinite.

1) Your Goods Are Mis-Classified

All of your goods will need to be classified for import duty payments. The documentation must conform to the Harmonized Tariff Schedule (HTS), and this includes identifying them as NAFTA or non NAFTA imports. Underneath this classification comes a sub-classification by industry. The goods to be imported must be annotated as to the industry for which they are being imported, as this, too, will have an impact on duties payable.

Once at customs for clearing, the professional customs expert can not change the classification details. It is up to the exporter / importer to ensure the classification paperwork is in order, and though this can often be done online, it is a lengthy process.

You will need to provide proof of the payment of any import duties and taxes payable. These might include IVA (VAT), customs processing fees, warehouse fees, and special taxes on production and services.
All goods must be marked with country of origin stamps or stickers, and be imported with a certificate or origin. Imports from NAFTA countries may be free from importation taxes.

2) Your Goods Are Mis-Valued

The valuation you place upon your goods on the importation documentation will determine the duties to be paid (if any). Of course, the country of origin will also impact these duties payable.

If, upon inspection of the paperwork or the goods themselves, the Customs officer believes that the goods have been undervalued (whether deliberately or mistakenly), then the goods will be held whilst checks are made. These checks may include internet searches for similar goods, and phoning the supplier to ensure price charged is the correct valuation.

This is not only on the exporter end, it is also a problem found with importers, where the importer needs to attach valuation paperwork and undervalues ​​for avoidance of tax and duties.

Mexican and American authorities work closely together to ensure that there is a good knowledge of the origin of goods and valuation of goods being imported into Mexico, and have many years' experience that helps them quickly identify mis-valued goods or those with the country of origin mis-stated.

3) Your Goods Have an Incomplete NAFTA Certificate

NAFTA goods are taxed differently to goods from other exporting countries. If the goods you are importing into Mexico are NAFTA originated, then they need the correct certification. The importer of records in Mexico must have the original document, and not a photocopy.

Commonly this documentation is supplied with incorrect importer and exporter details attached (for example a wrong address, or ZIP, even a mis-spelt company name or poorly numbered tax code). This certificate must also be produced with a detailed description of the goods to which it pertains. The NAFTA certificate must be supplied at the time of import: it can not be given in retrospect for goods already imported into the country.

4) Your Goods Are Accompanied by Poor Documentation

All goods imported into Mexico must be accompanied by full and correct documentation, but all too often the necessary documentation is either poorly completed, or missing altogether. If Customs can not read the commercial invoice, for example, your goods will be held for paperwork to be fully supplied. Other common mistakes with documentation include incomplete product descriptions – often only the part number is supplied – and late arrival of documentation.

Many of these problems could be avoided by advancing the documentation to the customs broker ahead of the goods. The goods may take several days to ship to the border, and if the customs broker has the paperwork in advance – perhaps at the same time it is sent to the importer – then he will be able to check and ensure it meets the required standard.

Both the packing list and the commercial invoice needs to be readable, with full product descriptions and parts numbers, as well as quantities and measurements clearly stated and defined. It needs to be translated into Spanish, and do not forget the unit price and valuation.

The first and most fatal mistake made is for your client (the importer) to not be properly registered as an importer of goods to Mexico. Registration is by application to the Importers Roster at the Tax Administration Services, and to qualify they must have all documentation in order as to compliance with Mexico's fiscal obligations. This includes having a Federal Tax ID Number (RFC), which needs to be applied for wherever they will be doing business in Mexico at the local Secretaria de Hacienda y Credito. The Hacienda, as it is commonly referred to, is the Mexican equivalent of the Internal Revenue Service in the United States.

5) Your Power of Attorney and Export Declaration Is Incorrect

Exports into Mexico must also be warranted by a Shipper Export Declaration. Often this will be executed by the exporter himself, but when goods are sent by a courier, for example, this responsibility falls upon the courier.

The professional customs expert needs a Power of Attorney (POA) to be able to complete the importation process. Without it, he is unable to gain release of goods from the warehouse to cross the border and forward to the importer.

As much as 50% of goods held up at the border are done so because there is no valid POA in place. The POA also allows the professional customs expert to file the proper Shipper Exportation documentation.

Here's a Bonus Mistake that is often made:

Your Imported Packages Do not Match the Paperwork

Part of the paperwork will be the Packaging List. This list will detail the number of packages, and must include metric weights, sizes and volumes of all the packages. Each package must be numbered and the Packaging List must a detailed list of all the merchandise held within each package: this includes parts numbers and detailed descriptions. A simple mistake in the packaging or paperwork will delay the import of your goods into Mexico. If your packages weights are stated as 1kg, they will be held for further inspection and delayed form importation if they weigh more or less than this.

Packaging, too, has to conform to certain standards. Pallets must be fumigated and officially stamped before crossing the border.

Make Sure You Follow All of the Rules

Because of the complexity of the laws and the pitfalls possible many exporters to Mexico will employ the services of a professional customs expert, who is permitted to prepare and present all the documentation on the behalf of the exporter. This will include providing the importer with copies of all paperwork needed to complete the exportation process.

A professional customs expert will understand all of the paperwork necessary, and work to high standards on your behalf. He will provide you with the following services:

• Processing of all permits and authorizations;
• Reviewing of all documentation and preparation of the import duties declaration;
• Review of shipments at the border, ensuring they correspond to invoices and packaging lists;
• Clearance of goods through customs;
• Provision of guidance on letters of credit, taxes, insurance, warehousing, etc .;
• Shipment of the import from point of entry to final destination.

How you work with your professional customs expert will also help your exportation process. There are some simple things that you can do to aid him and the smooth passage of your goods into Mexico:

• Know your client in Mexico;
• Ask your professional customs expert for confirmation of the HTS number;
• Send pictures, web links, etc. to the professional customs expert to aid with the classification process;
• Establish responsibilities between you and your client (eg who pays the freight, condition, INCOTERMS);
• Send the NAFTA certificate to the importer for validation;
• Ensure that your exports are accompanied by copy of all required documents;
• Send all the documentation to your professional customs expert before your products arrive at the border;
• Ensure all your packages are labeled correctly with NOM labeling requirements.

Using a professional customs expert will allow you to work safe in the knowledge that your importation will be managed professionally and in good time. Having goods held up at the border is not only time consuming and embarrassing, but derogatory to your business reputation. It could cause a loss of business, a hit on your profits, and a tax on your time.

The paperwork minefield is not easy to navigate, but with a professional customs expert at your side you'll come out the other side unscathed, as will your importation.