Mezzanine Or Equity Financing – Which Is The Best Choice For You?

If you are an owner or a prospective owner of commercial property in need of financing up to 80-90% LTV, it is important to understand the financing options available to you, so that you choose the best option for your project. Mezzanine and Equity financing are two options which will be discussed in this article.

A Mezzanine loan is subordinate to the first mortgage and comes in various forms, and provides financing up to 85-90% of the required capital. The cost of this type of financing fluctuates based upon how high in the capital structure the financing is provided, what kind of asset is being financed, whether it is a stabilized asset or an asset that is being either repositioned (lower) or developed (higher). Mezzanine loans run from 10% for stabilized apartments or stabilized in-fill shopping centers to 18-20% for hotels and value-added plays, condominium conversions and development, and higher for land. The various forms of mezzanine include:

1. Traditional Second Mortgage: This is secured by a second mortgage and is foreclosable. In today’s market this type is rarely done, because most first mortgagees don’t want to deal with a second mortgagee in the even of foreclosure.

2. Second Mortgage With No Rights to Foreclose: Generally these are given to the seller of the real property. They are paid from available cash flow, but in the even of default, they are not foreclosable. The result of the inability to foreclose gave rise the traditional mezzanine loan.

3. Traditional Mezzanine Loans: These are secured by an assignment of the ownership interest of the borrower. In the even of default, the lender forecloses on the ownership of the borrower and becomes the borrower. An intercreditor and subordination agreement with the senior lender is necessary.

4. Preferred Equity: Here the lender becomes a direct partner in the ownership but has a preferred return and if there is a capital even or an even of default, the lender (equity investor) has a liquidation preference. The lender investor only gets the same preferred returns as if he were a mezzanine lender; he does not share in the residual profits, except there might be an exit fee or other “kicker” if the leverage is high.

5. Equity Structured as Dept: Here an equity investor wants the protection offered to a mezzanine investor, i.e. collateral and because of the collateral (especially if it gets a mortgage), better protection in bankruptcy. Also an equity investor can get better protection if there are environmental liabilities as the result of federal legislation in 1997.

The other financing option for those looking for high LTV financing for their commercial property is equity. True equity comes in various forms. The most important characteristic about equity is that it shares in profits and does not have a “guaranteed return” which if not paid triggers a default, with the consequential loss of equity. It generally finances the riskiest part of the capital structure (sometimes as much as 100% of the capital requirements and generally is seeking returns in excess of 20%. It also has more controls over the operations and decision making of the ownership entity. Various forms include:

1. Typical Equity Structure: This is ownership of the entity, which has title to the property. The investor has a certain amount of control from the right to veto or approve all actions to the right to cause any actions. Generally the more money you invest in a project: (a) the greater control you will have over the project, and (b) the better returns or promote to the owner/developer. Many investors today are seeking IRR based returns. They are seeking preferred returns generally in the 1-15% range depending on asset class and how high up in the capital structure the investor is going. However, other investors are looking for the “big hit” and will only do deals where there is a decent chance at significant upside.

2. Equity structured as Debt: See Above.

3. Promote Structure and Waterfall: Generally institutional investors provide capital and then after achieving certain benchmarks, give the developer additional profit incentives which they call the “Promote.” The Promote kicks in after certain specified returns, i.e., after the preference return etc. For example lets say a project will cost $10,000,000 and is projected to earn 15% on cost or $1,200,000,000 upon completion and “rent up”: Let’s further assume, that the developer is able to secure a construction loan of 75% of cost or $7,500,000. The equity requirement is $2,500,000. The developer will put up 10% of the equity. Let’s further assume the project is a project that will be sold at completion. Let’s assume it takes on year to build and it takes on year to rent up. Let’s assume it’s a shopping center and the anchor leases start upon completion and the balance of the leases come in at the end of the second year. Let’s further assume the project will sell at an 8% cap rate on the $1,200,000 or $15,000,000 and the income from the anchors is $1,000,000. The first mortgage will cost 6%.

Here is a comparison the advantages of Mezzanine financing vs. Equity Financing:

Advantages to Equity:

1. You usually need less cash

2. In the even of default, there is less risk, you don’t have a debt forgiveness tax liability

3. Mezzanine is additional leverage with all its risks

4. In the event of a thinner project than projected you can still make money if there is a profit but the profit is less than the required mezzanine return, and in that even you won’t get wiped out.

5. No need for intercreditor and subordination agreement with senior lender.

6. More equity might result in better senior loan terms.

7. Some senior lenders simply don’t like mezzanine loans behind them, or won’t allow an assignment of the partnership interests.

8. No personal guaranties (as there might be with mezzanine).

9. Usually simpler and quicker to document (and less legal fees).

Advantages to Mezzanine:

1. When the returns are larger, it is generally better to put up more capital and keep a larger portion of the profits.

2. Mezzanine doesn’t share in the profits, their return is capped

3. Mezzanine has much less control, of the day-to-day operation; they are a lender with lender controls similar to a first mortgagee (albeit somewhat tighter)

4. The mezzanine investors return requirements are usually less than the equity investor’s requirements, (although Preferred Equity returns are similar to mezzanine).

In Summary, for all the reasons that a borrower may prefer equity vs. mezzanine, the lender may have the same or opposite reasons to desire equity vs. mezzanine. Some lenders will just not do equity. Or, they may not be willing to make a distinction between pure equity and preferred equity (“equity is equity”). Also, lenders often have LTC/LTV limits above which they will stop viewing something as mezzanine and start expecting an equity return (e.g. a lender may decide that anything about 90% requires equity returns). The bottom line is that is has to work for both parties.

Personal Finance Tips – Strategies to Save Money and Plan

Personal debt has been getting out of control for the last ten years or so, and is something that is not going to go way anytime soon. The use of credit cards, store cards and personal loans has become an integral part of society. Lenders are borrowing out more money then what most people can afford (leading to bankrupts) many people were getting more and more credit cards to try to get out of dept with lower interest rates but just getting further in dept due to paying on longer terms and paying more in interest. This is always not the answer; if your pay more than the minimum balances you can possible pay it off faster and pay less.

The first step you need to do is figure out how much your bills are. If you have a lot of credit cards with high interest rates then your best option may be to look in to different kinds of loans to combine all the credit cards together so you have one payment, you could instantly be saving money monthly. Additionally, by putting all your credit card debts into one loan, your monthly new payment could be lower than the total you where paying before. Once you pay off your cards, it is important to close most of them out, try to keep one for emergency only and hide it from yourself so you’re not tempted to use it remember it’s for emergency only. Keeping them is tempting you to use them, therefore putting you further in dept and possible damaging your credit history

Green Rush to Finance Solar

Environmental & Economic Benefits

The “green gold rush” is on. Global investment in renewable energy surged some 60 percent, to $148 billion last year. Investment in clean energy from wind, solar and biofuels rose three times faster in 2007 than predicted by the UN Environmental Program, with wind power attracting $50.2 billion, a third of all clean energy investments. Investment in solar energy soared by 254 percent to $28.6 billion last year. This “green gold rush” is propelled by the soaring fossil-fuel prices, and concerns over carbon dioxide emissions that fuel global warming.

The world is at an undeniable crossroad. Projections show three to four times more electrical power could be required over the next 50 years to support continued growth in population and economic output. Clean, renewable sources are the answer. “Unlike other major energy transitions, such as wood-to-coal and coal-to-oil, moving from oil to alternatives will be forced and rapid,” writes Charles Cresson Wood, President of Post-Petroleum Transportation, a consulting firm.

The Cost of Conventional Energy

In the last six years, uranium prices have moved from $7 a pound to $80 a pound. Coal has moved from $22 a ton delivered at the plant to $55 a ton, and natural gas has gone from $2 per million BTUs to $12 per million BTUs. Oil went from $20 a barrel to $145 a barrel.

As these dirty energy resources become more costly, so follows the delivered price of electricity jumping by 70 percent in the last six years in New Jersey and many other states. All analysts expect continued increases in electricity costs.

Americans Want Solar

94% of Americans say it’s important for the U.S. to develop and use solar energy. 72% favor extension of Federal tax credits for renewable technologies, and 77% of Americans want the government to make solar power development a national priority, according to the independent polling firm, Kelton Research, June 10, 2008. “These results are an undeniable signal to our elected leaders that Americans want job-creating solar power, now,” said Rhone Resch, President of the Solar Energy Industries Association (SEIA).

“Solar development means job growth for Americans, by Americans, in an industry that will benefit America,” said Dr. Gerald Fine, President & CEO of SCHOTT North America. “Rather than rely on foreign sources for fuel, the U.S. can aspire to become the world’s leader in clean energy.”

General Electric, with a goal of investing $6 billion in renewable energy by 2010, already surpassed the $4 billion mark this July. GE says that within two years, renewable energy will make up almost a quarter of its total investments in energy, up from 10% in 2006. Investment banks Morgan Stanley, Merrill Lynch and Goldman Sachs all plan to take advantage of global interest in renewable investments. Meanwhile, NYMEX, the New York-based stock exchange, recently formed a consortium of financial institutions to launch a Green Exchange to trade Renewable Energy Credits.

The Market Speaks: Renewable Energy Finance Forum Wall Street
Over 600 senior executives attended the 5th annual Renewable Energy Finance Forum (REFF) held this June in New York City. “Each year, we have increasingly seen financial leaders on Wall Street recognize renewable energy companies as an important growth sector for the US economy,” said Michael Eckhart, President of the American Council On Renewable Energy (ACORE) who hosted the forum along with Euromoney Energy Events. “This new reality has helped launch renewable energy investing into mainstream financial arenas and continues to drive the momentum of the industry,” said Eckhart.

Top analysts forecasted the industry’s potential in the US, for solar power, wind power and bio-fuels. Speakers also drew attention to wavering political issues threatening the viability of renewable developments as Congress currently debates the extension of critical investment catalysts like the Investment Tax Credit and the Production Tax Credit.

“Wall Street has shown us that the full forces of American innovation are ready to be deployed to meet our energy challenges. If government leaders can provide a stable long-term climate for investment, the renewable energy sector will see unprecedented growth, providing extensive economic opportunities and environmental benefits,” said John Geesman, Co-Chair of the ACORE Board of Directors and former Calif. Secretary of Energy.

GE Financial Services and ACORE released a report at the REFF weighing the long-term economic impact of wind development with the up-front cost of the production tax credit. The report found that the net present value of 2007 US wind development is worth $250 million more than the price tag for the tax credits, which was about $9 billion last year. According to the report, the tax credit pays for itself because of tax revenue received from wind projects, worker wages and other taxes. Once the PTC and ITC issues are behind the industry, the next big battle on Capitol Hill will be over a carbon-weighted policy like cap and trade, according to presenters.

“We simply need more energy. We’re not waiting around for governments to craft the perfect policies,” said Vivienne Cox, Executive Vice President of BP’s alternative energy business. “This is an important market, and we’re going to build a business around it.”
The US is currently the world’s fourth-largest solar power market after Germany, Japan and Spain. Japan is aiming for 30 percent of all its homes to have solar panels installed by 2030, bringing the number of installations to 14 million, according to Kyodo News. Japanese solar panel manufacturers, which include Sharp, account for half of the world output of solar power equipment.

Grid Parity

Grid Parity is the point at which Photovoltaic (PV) electricity costs the same or less than power derived from the electrical grid. PV Grid Parity is expected beginning 2012 in places where sunshine is plentiful, and 2018 in areas of the world with medium sun exposure, according to a study in June from iSupply Corp., an electronics industry analysis company.

Worldwide investments in the production of PV cells will rise to the same level as those for semiconductor manufacturing by 2010, due to booming demand for solar energy. Each PV factory will require an investment of $500 million or more, employ as many as 1,000 workers per site and generate annual revenue of $1 billion per year or more.

By 2010, as many as 400 production lines in the world that can produce at least 1 Megawatt (MW) of PV cells per year, will be in place, representing a four-fold increase in production lines from 2007. Factories capable of 1 Gigawatt (GW) of annual PV production will also be established in the future, to ensure continued strong delivery of PV cells to the market. PV cell production will become cheaper over time, with cell makers Q-Cells, AG, and REC Group expecting a reduction in PV system costs of 40 percent by 2010.

Tom Werner, chief executive of SunPower Corp., the largest North American solar panel manufacturer, sees Grid Parity for solar power in the US and elsewhere happening in about five years, or possibly as soon as 2010. “That’s actually more aggressive than what we would say previously, and that’s because the cost of electricity is going up faster than we had ever modeled,” Werner said at the Reuters Global Energy Summit this past June.

Suntech Power Holdings Co. Ltd., one of the largest of a growing number of Chinese solar companies, sees the same five-year timeline, thanks to increasing supplies of silicon that will help drive down costs.

The end of polysilicon shortages could cause PV costs to drop in half. “It takes about two or three years to add capacity,” says Travis Bradford, an industry analyst for the Prometheus Institute. The shortage has been severe enough to drive up silicon prices to more than 10 times normal levels, to $450 a kilogram, adds Ted Sullivan, an analyst at Lux Research.

The Business Case For Solar Now

Right now, in New Jersey, the average kilowatt of electricity is being sold to residents at the rate of 18 cents kwhr. If you purchase a 5 kw solar PV system for $40,000 that could generate about 8,000 kilowatts a year, and could easily last for 30 years (panels often carry a 25 year manufacturer’s warranty), your system would generate about 192,000 kilowatt hours over the 30 years, after subtracting 20% for rated age. Now, if you take the 192,000 kilowatt hours and divide it by $40,000, then each kilowatt costs you about 15 cents. Would you rather pay for your own clean, renewable energy system, that carries a 25 year warranty, or purchase dirty electricity coming from coal, nuclear or oil sources, at the rate of 18 cents?

I asked energy analyst, Charles Cresson Wood, if he thinks the price of solar electricity is at Grid Parity now with conventional electricity, when analyzed over 25 years, the typical warranty period of today’s solar panels. He replied, “When one realistically considers the trajectory of the costs for fossil fuels, then solar, wind and other renewables are less expensive over a time frame such as that which you mention.” The analysis is based on research done for his book Kicking The Gasoline & Petro-Diesel Habit.

Solar Is A Better Choice

Energy consultant Jim Harding estimates the operating cost per kilowatt-hour for a new nuclear plant will be in the region of 30 cents for its first dozen years, only dropping to 18 cents after construction costs are paid down. With distributed solar at the low end of this bracket and dropping, and with concentrated solar and wind power estimated at 14 cents per kilowatt-hour, energy companies are backing away from their proposals for new nuclear facilities. Of the seventeen currently in the planning stage, Moody’s Investor Service only expects one or two to be on line by 2015.

Cap-And-Trade System

A cap-and-trade provision would make it costlier to emit carbon into the atmosphere and discourage the burning of fossil fuels. The economics of solar and other cleaner energy sources would be even more competitive.

According to Amory Lovins, physicist and author, reducing carbon emissions would be cheaper and safer if nuclear was rejected in favor of alternatives that are sustainable. Investing in the nuclear option would suck up capital that would be spent more cost-effectively on renewable energy, efficiency and conservation. In contrast to the vast money pit required by nukes, every dollar invested in energy efficiency programs returns three dollars in electricity savings to utility customers.

While debates on disposal of radioactive waste, vulnerability to terrorist attacks, and large-scale use of fresh water required to run nuclear plants continue, it’s tough to argue with the numbers. If the debate is between a clean, renewable source such as solar, which can reach utility scale in some parts of the country, and a more expensive form of power that Wall Street investors won’t even touch, then the nuclear defenders may be running out of arguments. The bottom line is that nuclear costs two to 10 times more than its clean competitors.

Incentives For Renewables

There is not yet a national program in place, except for a 30% Investment Tax Credit (ITC) limited to a maximum of $2,000 for homeowners, with no limit for business. This applies to both solar PV and domestic solar hot water systems. The ITC will expire at the end of 2008, unless Congress passes an extension, which it is slated to do, by many political analysts.

Currently 25 states offer various incentives for homes and businesses. In New York, a rebate of approximately 50% is available for a solar PV system. New Jersey’s incentive program is going through a transition after offering an average of 60% rebates for the past seven years.

The plan is to move into a performance-based incentive, called the Solar Renewable Energy Certificates (SRECs), which pays the solar PV system owner annually based on the number of kilowatts produced by the system. A residential rebate of $3.00 per watt for solar PV systems, starting in 2009 till 2012 with incremental decreases is planned. That rebate would be close to 40% of the system cost.

For detailed information on specific state rebates, visit the Database of State Incentives for Renewables & Efficiency.

Power Purchase Agreements & Leases

The use of Power Purchase Agreements (PPAs) and similar leasing instruments to finance residential and commercial solar power installations is taking off. The commercial solar PPA market has already been active in California and New Jersey.

The Atlantic City Convention Center has awarded Pepco Energy Services, a 20-year PPA to install one of the largest single roof-mounted solar arrays in the US. Under the 20-year contract, Pepco will build, own, operate and maintain the 2.36-Megawatt solar array for the Convention Center. Construction is planned for completion by December 31, 2008. Jeanne Fox, President of the New Jersey Board of Public Utilities states, “This is an example of the kind of initiatives we hope to see as we transition to the sale or trade of SRECs to pay for solar projects.”

Last year, half of all the commercial solar installs in the US were PPAs, and this year that number is running between 60 and 80 percent, according to Jon Guice, researcher at AltaTerra, in Palo Alto, CA, a green energy consultancy group.

Sun Run, one of the first PPA-based residential distributed power companies in California, offers a standard agreement providing electricity at 13.5 cents per kilowatt-hour (kWh) for 18 years, according to Nat Kreamer, Sun Run’s CEO. “If you do a 30-year look-back, residential electricity rates in California have risen an average of 6.7 percent per year,” he says. They offer various up-front payment options, so that an increased payment would result in delivered electricity decreases.

“We found the sweet spot for customers is up to $10,000 for prepayment, and that they want flexible options for reassigning the contract when they move, and not a big buy-out at the end,” Kreamer says. “At the end of the term, customers can renew their contracts for a year at a time, or buy out the system at a fraction of the installed cost.”

Another form of financing for residential solar systems that requires less or no up-front payments, is leasing. David Arfin, vice president of customer financing at Solar City of Foster City, CA states that, “The big difference is with a lease: there is no money down, and in most cases homeowners are saving money from day one.” Solar City leases typically run for 15 years, after which time homeowners can purchase the system for 20 to 30 percent of the cost of the installed system. Leases can be extended for five-year increments.

“With a PPA, the residential host agrees to pay for certain kWh produced on his or her roof, and they have a variable payment depending on what is produced and used. With our lease, there is a fixed payment every month, but they still get the benefits of whatever excess power is generated,” said Arfin. “It’s sort of like the difference between leasing a car by the mile or by the week,” he adds.

A Home Equity Line of Credit is the most profitable choice for credit-worthy NJ homeowners to finance a solar system. Their monthly loan payment will be comparable to the savings on their current electric bill. After factoring in rising electric rates and the SRECs, the homeowner can get extra income from their solar purchase.

The fact is, unless you own your own electric generating system, or have a set price agreement with a PPA or PPL, you are leasing your power from a utility company with no control over its future cost.

Clean Power Finance has tools and loan products to make the purchase of home solar power systems more affordable. Clean Power Finance tools assist with completing the rebates, and match multiple funding options. Everything is done online.

Kevin Traynor – EDRMS Project Manager – Health Corporate Network, Western Australian Dept of Health

SSON: Kevin, let’s start with a bit of background: can you let our readers know a little about yourself and your role?

Kevin Traynor: I am project manager for Health Corporate Network (HCN) required to manage the development and implementation of an end-to-end Electronic Document & Records Management System (EDRMS) for shared services within the Western Australian Department of Health. This system requires three core systems including: scanning solutions to capture physical and electronic documents using Kofax Ascent Capture; Document and Records Management solutions for storage of electronic documents using Objective; Workflow Management solution for the dissemination of electronic work to staff using Objective. I have been employed on this project since 2005; it finishes at the end of this calendar year. My previous background includes senior roles in business and systems analysis, implementation management, and project and business management where I contributed to the development of major internal and online computer systems for other government departments.

SSON: What were the key challenges in implementing the HCN, and transitioning the HR, Supply and Finance services?

KT: My principal role in this project relates to the delivery of EDRMS services within HCN. Health is a very large business concern and HCN naturally faced many challenges from the inception of shared service initiatives. In such a large business endeavour HCN was first challenged to attract the best people in order for HCN to form quickly and move forward. At times the pace to meet shared service expectations has been very challenging.

Health is a diverse organization with many site-by-site differences that evolved over time. HCN devoted significant effort into identifying all HR, Finance and Supply shared service responsibilities. It is very time-consuming identifying business practices, processes, systems, applications and software in use, but a greater challenge stemmed from the consolidation of those services, and the identification of business practices and process improvements through stakeholder consultation. These were paramount milestones and the extent of this work was enormous but necessary to identify benefits and savings capable of delivery through shared service developments.

SSON: Could you explain what the drivers were for implementing the Kofax scanning solution; how did you go about doing that, and what led you to doing so?

KT: The prime driver was a government initiative to centralize common services throughout the West Australian public service: in particular, Finance, Human Resource and Supply services. The aim was to improve services and reduce costs. HCN use of a scanning solution was driven by the same need. Scanning would first help HCN to move towards a paperless office and reduce processing costs. Scanning electronically married well with HCN needs to develop an end-to-end system that would further deliver additional business process efficiencies through improved storage, retrieval and reporting. The end-to-end solution is also to provide benefits and savings to HCN customers.

It is important to note with regards to what HCN has developed to date, that this is still an ongoing solution that will evolve. Whilst our shared service initiative started in 2004, the HCN solution will continue to be enhanced. The project I manage you could class virtually as Phase One. There are other intended directions HCN want to develop to build on and diversify this foundation. HCN is currently implementing an online solution for select HR services. HCN has been considering alternative customer service delivery mechanisms like Kiosk arrangements for customers out on the sites. HCN also wishes to implement an E-forms solution. It is early days for HCN, and as the solution evolves HCN’s reliance on scanning will reduce.

SSON: Was scanning something that you could implement from the beginning of the HCN implementation, or did you have to standardize some processes before you could introduce the scanning system by Kofax?

KT: HCN was newly formed as a shared service within health and scanning is one part of the end-to-end solution HCN implemented. This project adopted a phased implementation of select business areas and for each implementation the project analyzed and determined all shared service processing needs from scanning, document management, records management and workflow management.

SSON: Is the system something that can work for both HR, Finance and Supply – and could you explain if there is a difference in how they operate for each function?

KT: I suppose the best way to describe this is that Kofax provides common scanning functionality that can be utilized and customized. The scanning process is very much a defined function and small processing variations or decisions apply relevant to a business area or document. Each business area implementation required HCN to model scanning solutions to meet the differing expectations and processing needs of a business area or document.

There was a basic underlying expectation that scanning would cover all input sources including hard copy mail, faxes and emails. Scanning differences come about more in relation to the unique requirements of a business area or document. For example, workflow management may use different metadata to deliver a particular task to alternative electronic locations for different business areas or persons. The scanning needs of one business area or document may vary in relation to another. These decisions will affect how work is prepared, what is scanned, how it is scanned and what outputs are necessary to be captured to deliver different types of work to different locations or people to process.

Many of these variances are simply catered to with the development and configuration of business or document specific scan batches to process different categories of work. Kofax is customizable to meet this need.

SSON: Why did you decide to use Kofax scanning solutions instead of another vendor? What made it a more appealing option?

KT: The WA government uses an I-Procurement model which provides recommended providers, products and solutions available in the market place. We adopt a very thorough tendering process which strictly encapsulate expectations to be assessed for suitability. The prime considerations we look for include pricing, value for money, supply and installation, licensing, interoperability with other applications, ability to upgrade, high availability, warranty, training, local capacity, local content and technical support.

HCN reviewed a number of scanning solutions and tender submissions. Sigma Data, a local WA company, was recommended to provide HCN with the Kofax scanning solution.

SSON: What were the main challenges in implementing the solution?

KT: Initially there were technical challenges to overcome. For example, HCN had to determine how to best deal with faxes and email inputs and understand what customizations if any needed to be considered for a HCN end-to-end solution.

Whilst product training was provided there was still a big learning curve for people to navigate to develop scanning solutions and undertake application and infrastructure administration and support.

HCN took a phased implementation approach to each business area. A Pilot release to the Executive Branch preceded Supply, and then Finance and then HR. Additional implementations are still planned. This was preferred to lessen the overall change impact upon business.

Big implementation challenges related to analyzing and identifying document types and processing needs for a business area. Whilst HCN scans approximately 6,000 documents a day, the scanning solution deals with a significant variety of document types which when capable of being classified and recognized by scanning provide added value. HCN therefore embarked on a significant exercise to revise and redevelop structured forms and templates which bear their own maintenance overheads.

HCN developed many templates to recognize and process Supply invoices. That work was time-consuming. We elected to identify our top 100 suppliers by volume representing approximately 90% of invoices received. For these we developed scanning templates in order to recognize and process capture metadata from invoices. Template development is part of the Kofax solution.

SSON: Can you specify what some of the limitations are, Kevin?

KT: Whilst Kofax is very good at recognising printed text, it is not so flash on handwriting. Of course that being the case, handwriting does involve a lot of manpower in order to correct and validate the information that scanning cannot accurately identify.

Overall, Kofax services to scan, quality assure, correct, validate and release documents require a level of manual interaction commensurate to ensure the accuracy of the data within document, records and workflow management systems. The manpower required to attend to these services can be large and whilst these tasks can be transitioned as a business area responsibility, HCN reduced the impact of this limitation somewhat by using interfaces during validation to pull data from external databases.

Whilst Kofax scanning can process emails, it cannot open documents attached to emails and scan them.

SSON: And of course you are probably dealing with documents that are very old as well, that have been there for years, not just recent ones?

KT: At this time HCN has adopted a business position [that] only documents received since the inception of HCN from May 2007 would be scan processed. Mind you, having said that, with a phased implementation of business, old document scanning still could not be avoided. For HCN, this involved the development of a dedicated document back-scanning solution. To implement this also required the pre-preparation of old documents by business. This process currently continues.

All new documents are scan processed and workflow management tasks are delivered within 24 hours of receipt by HCN.

SSON: From conversations recently that we have been having with other organizations, many believe that fifty percent of the issues are also change management issues. Have you had to deal with any of those upon implementation?

KT: Change management demands a high priority and cannot be over-estimated. For the HCN end-to-end solution it was a challenge to actually convert business to make change and adopt a different way of doing work. Prior to implementation, Supply could take anywhere up to 30 days to process invoices. Immediately after implementation Supply were not in favour of change, had previously not fully embraced change management or recognised their shifting process needs. Backlogs built along with staff dissatisfaction. In time, Supply made business process changes and can now process invoices within three days. If you now ask Supply staff what they think, the position is totally reversed….they refuse to go back to their old ways.

SSON: Did your organization consider outsourcing any other transactional activities, or is that something that may be further down the line?

KT: This project investigated outsourcing scanning prior to the tendering process. At the time, HCN did not consider this to be a viable option for a number of reasons. Costs were considered excessive. Outsourcing could not add value to the process. Internal expertise could not be easily transitioned to resolve issues without access to other source business applications and databases only available internally. Also, at the time HCN had defined goals. Even at that early stage HCN recognised that, over time, the preferred path would eventually see a reduction to reliance upon scanning services. Scanning will always be required – but as previously mentioned, HCN is currently delivering online HR services, plans are in place to develop E-Form solutions, HCN has considered external kiosk arrangements and online I-Procurement services are being rolled out to Suppliers. Nothing stands still for long.

Dept Of Defense Travel System

In 2004 The Deputy of Defense authorized the development of a defense travel system for Army, Marine, Navy and Air-force travelers. In partnership with industry and other federal agencies, the Defense Travel System (DTS) is a centralized system for commercial travel that is not unlike civilian travel systems however it offers discounted and allocated air, bus and other transportation systems that saves money, creates support mechanisms for the traveler, reduces errors and has an end-to-end process in place that allows for multiple destination travel, short-notice changes and immediate reimbursement of expenses. This travel system uses The City Pair Program (CPPS) which is an airline program that provides airline transportation to the Department of Defense for its registered travelers that is fully integrated, automatic, electronic and end-to-end transportation using airlines at discounted rates and last-minute availability. The cost savings is significant, there are fewer errors, and the non-civilian traveler has services available that suit their special requirements; easy access to information; and reliable reservations for travel plans that may be subject to change in route and destination.

The Defense Travel System (DTA) can be user-only-supportive and assist with defining problems encountered, answering questions and defining entitlements, it is may be other-supportive, using help desks or Organizational Defence Travel Agents (ODTA)’s for assistance. A software package is used. There with common access cards that are used and individual PIN login allow access to individual accounts and troubleshooting information. Most errors with the system are due to incorrect initial set-up information or erroneous log-ins. It is advised that the traveler check into the system initially to check for factual errors and to check for long-in errors inn the event of the rejection of a request. Electronic reimbursements of expenses is convenient in that it is done in one place. If the voucher is lost, its status can be tracked and signature checked electronically. The authorized user can also request partial payment on vouchers and can add receipts to the voucher at any time.

Defense Travel Systems (DTS) travel policies and classes are available on-line in an online classroom called E-Collab Online. This classroom provides 1) Travel classes; 2) How to Access Approval to take Official Classes; DTA classes; and several Finance Classes, including debt management. The travel classes include the following:

– Orientation
– Document Processing
– Travel Planning
– Cancellation Processes
– Itinerary Adjustments
– Routing

Detractors have stated that the system is not up to speed despite the fact that defence spent $30 million on the project. Development and testing is not are track and use is lower than expected. Now under the management of the Business Transformation Agency, DTS devotes a small percentage of effort and expenditure on travel and more on accounting systems and services that allow for data collection to negotiate hotel, rental, car and other services to accommodate the activities of government workers through this changing medium of travel for the armed service and other related government personnel.

Answering Hard Questions of Finance and Credit #4 – Correcting a Mistake

We ask questions so we do not make a mistake, but sometimes we ask questions so we can fix a mistake we have already made. A lot of people made the mistake of getting a mortgage when they were not prepared, either by having a poor credit score or not putting enough money in on the down payment. This makes your monthly bill extremely high and very difficult to pay if you are having financial troubles. Very often people who get a loan with a bad score end up overpaying by $300-$400 a month.

That means you can overpay by as much as $100,000 during the life of the deal, what a waste of money. To make matters worse as cost of living goes up; gas prices, insurance, taxes and much more, people feel the gap between paying bills on time and certain dept shortening. That is why so many people have had to look into foreclosure, not because they have lost their jobs but because they got a bad deal to begin with and everything else is more expensive now.

If you are feeling the financial burden of your mortgage you need to modify your loan so that you have the opportunity to pay your bills on time. Many people are worried about a modification because it can damage your credit score but experts say that is much better than actually having to go through foreclosure. Many banks and lenders are now open to the idea of adjusting your deal if it will keep you from losing your home and keep them from losing all of their profit. If the hit to your score really does scare you, you can simply get credit repair. Credit repair will fix your score in a matter of weeks regardless of why it was lowered in the first place.

Cheap Car Loans From a Car Finance Broker

When we are looking for a car loan we generally head straight to the bank or and car financing company. Have you ever considered visiting a car finance broker?

A car finance broker can give you a detailed and well thought advice on which financial option is best suited for you. He can also give you the time and effort to research on you requirements keeping all your parameters in mind. These are specialized people who deal with only one type of financial product.

Hence they acquire an in-depth knowledge and understanding of these products. They will consider all the requirements of the client and only then advice which option is best suited for the client. It is all about the piece of mind that one gets by depending upon a specialist.

Car finance is a competitive arena. There are various players and multiple products to choose from. Negotiation is also very important. A broker with his knowledge and in-dept understanding of the market can help us with his negotiation skills.

We always look for cheap car loan and that is even more the reason to consult these professionals. They have the insider knowledge of the industry and can even advise you on the best possible deals that are available in the market. Being an outsider to this industry you can never dream of getting to know who the best financiers are or what rates can be best negotiated from them. So, the help of an insider of the industry comes very handy to secure a cheap car loan.

Brokers have a tool called Car loan Calculator. They use it to advice the clients on the various short and long term effects of the loan, be it short or long term. This tool will also help you to decide on the loan after being fully aware of its various financial implications.

Car finance like all other finance needs various paper works. You will also have to show your income and other personal details. Now a day we hardly have time for ourselves or our family. Running around people to meet those obligations and formalities is the last thing in the world that we would like to do. A broker can help us in fulfilling those formalities to secure the loan.

Consult a broker, is not just about getting a cheap car loan it is also about getting an informed advice on the options available with us and getting the best possible deal. Think of your broker as a friend who can help you with his information of the best possible financiers and then further negotiate on your behalf. He can also guide you through the formalities and paper work. It is not being cheap it is being intelligent.

Powerful Personal Finance Software

There are several personal finance software I know but here is a list of factors I have discovered that make the GPS personal finance software the most outstanding one. This software offers four modules that basically answers the major areas that influence your personal finance status.

“THE BIG PICTURE”. This module answers questions such as:

* How much long your money will last?
* Will you run out of money before running out of life?
* Can you really afford to retire?

All these questions and more are professionally answered for you before you can make your decision on personal finance.

“THE GAP ANALYSIS” is the second powerful module that helps you understand your spending habits so you can put your retirement plan in place by closing your financial gap and moving closer to security.

“REPORTS” is the third module to help you point in the right direction. I really benefited from this because I could keep track of my records. This personal finance software keeps daily transactions, reconciliations, etc., in one place. I have found this personal finance software user friendly since anyone can manage it without any special experience required.

“DEPT MANAGER” is another useful tactic that gives you the ability to prioritize debt and establish pay off tactics. In addition, you will be able to identify any surplus dollars in your budget that are available.

I recommend this Personal Finance software because it can work with any financial situation that you may have.The simple set up will allow you to categorize and track expenses, organize debt, build budgets, identify net worth, create a retirement savings plan, etc. Whether you are just getting started on your career path or are close to retirement, Financial GPS is made for you!

This Personal finance Software comes with extra FREE Bonuses such as

* FREE Customer Support
* FREE LIVE Classroom Training
* FREE Video Tutorial Training
* FREE Subscription to “Your Future” Newsletter
* FREE Exclusive E-Book Entitled “Principles for Prosperity” (This e-book is jam packed with topics such as various Beliefs on Money, Financial Tracking, Net Worth, Cash Flow Management, Budgets, Debt Assessment, Debt Reduction, and more! )

I have also included information on system requirements for this software below:

System Requirements:

– Microsoft Windows 2000 with Service Pack4
– Microsoft Windows 2003 Server
– Microsoft Windows XP with Service Pack 2
– Microsoft Windows Vista

Minimum Hardware Requirements:
– CPU: Pentium II or Higher
– RAM: 128 MB
– Hard Disk Free Space: 450 MB

Visit the site below to start

Canadian Film Tax Credit Financing

Film Tax credit financing for film, animation, and digital media productions continues to be a sought after financing by Canadian entrepreneurs.

Canadian entrepreneurs are fortunate in that a number of recent changes have been made to enhance the overall viability of Film and Television credits in Canada.

Using Ontario as an example in March 2010 the government enacted legislation that increased Ontario Computer Animation credits. Therefore financing of such projects simply brings in additional capital. As an example labour expenditures which are qualified and vetted increase to 100% for arms length employees who don’t have incorporation status – for example ‘freelancers’.

In the animation and visual effects area there was a government focus to remove the requirement that effects had to ‘ primarily ‘ be completed with digital technologies.

How can these film tax, TV, and digital media credits be financed. Financing these tax credits is a very boutique business in Canada. Entrepreneurs and their advisors are cautioned and advised to work with credible, experienced specialists in this niche financing area.

The film tax credit financing (as well as animation, TV, etc) is essentially a bridge loan when your production entity has a financing need.. The amount financed can be a combination of federal and provincial claims, and it generally recommended that the total value of our claim be in the 200, 00.00$ range, which would be a combination of both the federal and provincial portions of your credit.

We meet with many firms who also have needs for other types of financing, which would include separate SR ED (SR&ED) credits, equipment financing, etc. It would sometime make prudent sense to consider a financing that satisfied the complete needs of the company or production.

The hottest new sectors of financing in this area are the popular animation, virtual reality and of course gaming areas of consumer entertainment.

Naturally to be able to finance a claim it must be reviewed and processed by the appropriate tax credit office, for example the Ontario ‘ OMDC ‘ tax credits & Financing Programs Dept ‘.

In our work with clients we advise that it typically takes 2-3 weeks, sometimes longer to finance a tax credit. This process should not be daunting for the entrepreneur or your production company, as it mirrors any other financing business might undertake- for example an application form, due diligence, legal documentation of the financing, etc.

We would point out though that the main emphasis on the financeability of your claim is the actual tax credit itself, as in many cases the product has not ‘gone to market ‘so to speak.

Financing your film, multimedia, and TV tax credits is a great way to access bridge capital and allow our entity to immediately access funds, as opposed to waiting for funds until post production and commercialization.

Talk to a film tax credit financing expert and you are on the way to a unique method of financing your productions.

VA Mortgage Loans – 100% Home Financing Options For Veterans

Veterans can obtain cost-effective home financing with VA mortgage loans that enable purchasing and refinancing up to 100% loan to value. In order for veterans to qualify and benefit from VA home loans it is important to understand the loan eligibility requirements, the VA entitlement and various loan types allowed with VA mortgages. Clearly, military veterans should understand the differences, advantages and disadvantges when comparing VA mortgage loans to conforming home loans.

First and foremost, VA is not a mortgage lender. The Department of Veterans Affairs does not make loans, but VA does guaranty the VA mortgage loans that traditional lenders make. The Veteran Administration does provide any lending services but they do guarantee that the qualified vets repay of the loan or they will pay the insurance portion of the mortgage that poses the most significant risk for mortgage lenders. Because of the government guarantee reduces the risk of payment default, vets can benefit from low interest rates whether they are buying or refinancing a home.

When applying for a VA loan you must have your certificate of eligibility and the VA mortgage lender will likely access your credit report and request income documentation like pay-stubs and W2’s.

There is an automated certificate of eligibility that enables borrowers or lenders to access when submitting a VA mortgage Loan into process. The Veterans Affairs Dept. recommends working with a credit counselor in an effort to repair your credit if needed. Like FHA loans, VA mortgage loans are more flexible and understanding with credit. Credit scores are not the driving factor for VA qualifications, but income and debt to income ratios are important factors for getting a VA loan approved. The VA guaranty is only available if your income and monthly expenses suggest that you can afford a new home loan.

The most obvious advantage with VA mortgage loans is that they are offered up to 100% loan to value for buying or refinancing. That means you will not be required to put money down in a purchase transaction or need any equity to refinance for a better mortgage payment. Again, No down payments are needed if you can get approved for a VA mortgage loan. Since there is a government guarantee to the mortgage lender provided by the VA, additional private mortgage insurance is not required. The VA mortgage rates are low with 30-year fixed interest rates and the VA funding fee is only.5%.