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Contract whereby a person pays a premium to the insurer, who in return promises to compensate the person for any financial loss suffered.

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Business - project when cash is due, highlight when an overdraft might be required, show investors that the business is properly managed
Household - project income and expenditure, show evidence that the finances are planned, highlight when an overdraft may be required

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Choosing a source of finance:
1. Purpose: the matching principle
2. Amount required
3. Cost: lowest APR/Interest rate
4. Control: loss of control over personal or household assets which have been used
as security, as well as losing voting power by issuing shares
5. Risk: spread repayments over time

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SHORT TERM:
Trade creditors: buying goods and services on credit and paying for them later.
During this period of time, they can use the money owed for other
purposes, such as paying other bills.
Accrued Expenses
Delaying payment of some bills to free up money to be spent on other items.
No interest is paid but discounts may be lost if payment is not
prompt.
Bank Overdraft:
Short term bank loans, giving a current account holder permission to have access to more money than is in their account. Interest is charged on a daily basis on the
amount borrowed, and a fee may be charged for the overdraft facility. Security is not required.
Factoring Debts (Business Only): Factoring means selling your debts to a factoring (debt collecting) Firm. Can be expensive as factoring firm only pay you a percentage of the debt. No loss of control
Invoice Discounting (Business only):
When a business gets a loan from a bank to the value of some % eg80% of the amount owed to the business by its debtors. When the debtors settle their bills, the money is used to repay the bank.

MEDIUM TERM:
Hire Purchase:
Buying an asset and paying for it in instalments over a period of time. Can be used immediately but full ownership only passes to the
purchaser when it is fully paid for.
High interest rates. No security is required for purchasing.
Leasing:
Renting an item for an agreed
number of years. When the lease is up, the item is returned to the lessor. Expensive assets can be acquired quickly for use.
Leasing costs more than a cash purchase but cashflow is improved.
Business can offset leasing costs
against tax.
Term Loans:
A term loan is a medium term loan that is repaid plus interest, which is usually lower than for overdrafts and interest is tax deductible.
Security may be necessary and
failure to repay the loan can damage credit rating.

LONG TERM:
Mortgages:
Loans used to finance the purchase of a house or other property. Interest is charged and the security for a mortgage will usually be the deeds of ownership to a property.
Savings (household) and retained earnings (business):
Household savings in banks - Interest is paid.
RETAINED EARNINGs (reserves) -   profits retained in the business to allow it to expand in the future.
No costs, no loss of control and no risk, but profits must be earned.
Owners capital/Share capital:
Finance brought into a business by the owner eg. personal savings, bringing in a new partner or selling shares in a limited company.
If no profits are made, then no dividend payments have to be made to shareholders. IF the business is successful shareholders are entitled to a share of profits.
Control is shared if new partners or shareholders are brought in.
Venture Capital
Venture capitalists buy shares in
businesses that have strong growth potential. In exchange for their
investment and management expertise, venture capitalist will want a share of the ownership. they will also want to be on the board of directors so they have a say in how the business is run and to protect their investment. The
entrepreneur benefits from a source of finance that does not require repayment
State Grants (Business Only):
Non-repayable amount of money received but conditions are usually attached, eg purpose proof of expenditure.
Enterprise Ireland provide grants.
Strict rules concerning what the money may be spent on.
There is little risk but, if the conditions of the grant are broken, then the grant may be reclaimed.
Debentures (Long term Loans) Business only:
Business must repay the annual interest regardless of profits until a certain date - maturity date. The principal must also be repaid in full at a future date. Fixed
interest amount must be paid annually, but this is a tax allowable business expense. Security is usually required for a debenture loan.
Sale and leaseback (business only):
Sale and leaseback is a
contract to raise cash by selling a piece of property and at the same time leasing it back on a long term lease. This provides an immediate lump sum without any disruption to the business premises.
Cost of the annual lease. Business loses the ownership and ultimate
control of a valuable asset.

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Uses:

1. Withdraw money using cheque books or ATM machines.

2. Paypath system for paying wages into an employees account. It is safer and more convenient than paying by cash.

3. Standing orders are an arrangement with the bank to pay a fixed amount out of your account at regular intervals to someone else's account. eg used for paying bills such as electricity.

4. Direct debits allow the automatic payments of varying amounts at regular intervals to someone else's account.

5. Overdrafts allow current account holders to spend more money than they actually have in their account up to a pre-set limit.

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Factors that the bank will consider:

1. Size and reason for the loan

2. Credit rating

3. Security

4. Ability to repay the loan

5. Business plan

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Having a planned approach to the handling of the risk to which an individual or business is exposed. It involves:

1. Identifying all possible risks facing a business (eg risk of fire)

2. Identifying the cause of the loss (eg personal injury)

3. Measuring the likelihood of the event occurring.

4. Calculating the costs of the methods of protecting the business from loss (eg reduce risks by insurance, training of staff in health and safety.)

Methods of risk reduction:

1. Take out insurance in order to transfer the risk to an insurance company for a premium

2. Train personnel in health and safety and provision of safety equipment and/or protection clothing.

3. Appoint a health and safety representative in the workplace who would report safety issues, provide a health and safety statement, identify hazards and carry out regular safety inspections.

4. Install security systems, alarms, security guards, CCTV

5. Introduce safer production processes to improve employee health and safety.

Relationship between risk and cost:
The relationship between risk and cost is: the higher the risk, the higher the cost.

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Insurance is protection against a risk that may happen while
assurance provides for a risk that will happen.

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Insurable Interest
The policyholder must benefit by the continued existence of the item
and suffer by its loss.

Utmost Good Faith
All material facts must be disclosed, that would influence the insurer into accepting or rejecting the risk or in setting the premium.
All the information that might have a bearing on the decision to enter the contract must be supplied on the proposal form.
The insurer can declare the contract void and claims made by the insurer can be refused if all the facts are not disclosed.

Indemnity
No profit made from insurance.- only recovery of actual
loss/putting the claimant in the same position as was the case prior to the accident or loss.

Subrogation
Having paid compensation to the insured, the insurer takes over the rights of the insured to sue a third party who was responsible for causing the loss.

Contribution
If insured by more than one insurer, then the amount claimed is divided proportionally between them.

UNDERInsurance:
Average Clause
The average clause states that if a partial loss is suffered and the
property is underinsured, then only a proportion of the amount insured
will be paid.
Value Insured X Loss

Proximate cause:
Insurance is only available for insurable perils, eg. fire and theft

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Protection against Risks:
A large claim against the business or loss of property could put the business in severe financial difficulty.
Business Survival:
The business can continue and survive despite unforeseen events. (eg fire)
Improved safety standards:
Insurance companies will insist on improved safety and security standards before granting insurance cover. This should reduce the number of
accidents in the workplace.

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Income tax:
Pay As You Earn(PAYE) - collected by the employer at different rates
Benefit-in-kind - value is added to gross salary before tax

Universal Social Charge(USC)

Pay Related Social Insurance(PRSI) - used to raise money to pay social protection benefits

Corporation tax on company profits

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Motor insurance:
Third party fire and theft insurance:
Compensation is provided to the third parties for damage to them and their property but it does not cover the insured person or their car for damage caused by the
insured. Compensation is paid to the insured only when damage results from a fire or theft of the car.
Comprehensive insurance:
Provides compensation to third parties to both parties against all risks.

House and contents:
Covers buildings and contents against fire, flooding, burglary or accidental damages. It would provide compensation to the owner in the event of loss or damage to the specified items covered by the policy.

Health Insurance:
Covers the cost of Hospital care in the event of accident or illness. Private health care is provided by VHI healthcare, Aviva.

Life assurance:
Compensation on the death of the insured.
Whole life assurance:
Insured pays a premium for the rest of their life and compensation is paid to dependents on the death of the insured.
Endowment life assurance:
Pay the premium, and
compensation is paid either on the insured reaching a certain age or on their death, whichever comes first.

Mortgage Protection:
If the borrower dies before the mortgage is fully paid, the policy will cover the balance due on the mortgage.

Business Insurance:
Motor Vehicle Insurance:
Property insurance: buildings and contents
Public liability insurance:
Protects against claims by members of the public from
injury or loss resulting from an accident on the business premises.
Employers Liability insurance:
Protects employers against claims made by employees as a
result of an accident at work.
Fidelity guarantee insurance:
Protects the against financial losses as a result of theft or fraud by an employee.
Product Liability insurance:
Protects  against claims by members of the public for loss
or damage suffered as a result of a defective product.
Burglary insurance:
Protects against loss/damage caused by theft/break-ins.

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Capital Gains Tax(CGT) - tax on the profit made from selling assets, except the lottery, life assurance and selling your home

Value Added Tax(VAT) - tax on goods and services paid by consumers at 23%

Customs Duties - taxes on imports from outside the EU

Commercial rates - tax on the value of property owned by a buiness

Motor vehicle tax

Deposit Interest Retention Tax(DIRT)

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Form 12a:
Necessary to get a Tax Credit Certificate

Form P45 (Cessation Certificate):
Given to an employee who leaves employment during the tax year

Form P60:
Issued to employees at the end of thee tax year and provides proof of how much tax was deducted

Form 21 (PAYE balancing statement):
Issued by the Revenue Commissioners to the taxpayer on request to show how much tax was paid. Can be used to resolve issues where too much, or too little, tax was paid

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Personal Tax credit (single, married, widowed)
PAYE Tax credit
Age Tax credit

Incapacitated Child
Dependant Relative

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Strategic approach to managing staff and dealing with their concerns to ensure an excellent management-staff relationship

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Assessing future personnel needs
Planning for future requirements
Training and upskilling staff
Update employees' files
Keeping up-to-date with employment trends, national wage levels and employment legislation

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Preparation:
JOB DESCRIPTION:
This includes:
 Job title
 Details/place of work
 Hours of work
 Duties of work
 Promotion prospects
 Responsibilities/duties
PERSON SPECIFICATION:
This includes:
 Age limits
 Educational qualifications
 Skills/experience required
 Essential characteristics
 Interests/attitudes &amp;
ambitions
 Personality traits

Recruitment
A process of attracting people to apply for vacant positions in the firm.
Internal - quicker, cheaper, motivates employees
External - most suitable candidate will be chosen, external candidate can more easily introduce change
JOB ADVERTISEMENT – must be carefully drawn up so that it attracts the attention of the type of person the firm is looking for. The advertisement must be
informative and should contain the following information:
 The job title
 Brief history of the firm
 The job description
 The person specification
 Location of the job
 Salary/benefits being offered
 The procedure for applying

Selection/screening
Most suitable people for the job are picked from the list of applicants.
Most job applicants will be asked to submit either a curriculum vitae or a completed application form. The most common selection technique is the interview. It allows
the employer to acquire information about the candidates and assess their suitability for the job.
Checking of references is undertaken to confirm the information already obtained. Once the most suitable person is selected, an offer of the job is made in writing. A contract of employment is drawn up, signed by both parties, and given to the new employee.

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Planned acquisition and improvement of knowledge, skills and ability required to enable employees to perform effectively
Induction - introductory training for new employees - helps to ensure they do their job well
On the job – takes place within the organisation and may be
carried out by existing employees.
Off the job– which takes place outside the workplace and is provided by outside agencies and colleges.

Benefits of training:
Reduced wastage
More competitive service offered
Boosted morale
Improvement in productivity
Attract good employees to the organisation.

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Regular evaluation of how well employees are performing that aims to show employees the areas where improvement can be
made, while rewarding them for their work.

Stages in performance appraisal:
Interview once or twice a year
Comparison between goals for the
achievements during the last period
Goals and targets for the next period will be set
Training and other personal development needs will be identified
Areas of difficulty are identified by the employee and corrective action can to be taken

Benefits of performance appraisal:
Helps employees who are not realising their potential
Identifies employees who should be rewarded with either promotion or bonus
Employees will work hard to fulfil their targets and the overall
productivity of the company will improve
Fewer industrial relations problems as P.A is geared towards quick resolution of the problems.
Helps management to decide wage levels, promotions and extensions of contracts

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Monetary -
Wages(Time and piece rates)
Commission
Bonus
Profit-Sharing
Performance-related pay

Non-Monetary -
Employee share ownership
Holidays
Fringe benefits(BIK)

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Shop steward - represents union members and gives them information, recruits new members and ensure that union dues are paid

Trade unions - information, protection, all employees have a legal right to join, funded by union dues

Collective bargaining - voluntary negotiations between employers and employees that are not legally binding

Centralised wage agreements - drawn up by social partners(CIF, ICTU, IFA, IBEC and Government) and cover issues like wages, taxation, primary and rural development and developing small businesses
Benefits:
Less uncertainty - wages are agreed
Industrial problems are reduced
Easier for government to plan the economy

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Teams are set up to achieve a particular purpose.

Benefits of teamwork:
Wider range of talents
Motivation
Easier to find solutions to any
difficult problems

Drawbacks of teamwork
Slow decision-making
Some people may dominate discussions
Some members may lack the skills necessary for effective teamwork

Stages in teamwork
Forming: team formed for the first time
Storming: argue with each other trying to establish themselves within the group
Norming: rules are developed for the team and they must be accepted by all team members
Performing: successfully perform
their tasks
Transforming: team may be dismantled, or given a new task

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Benefits of good industrial relations:
Co-operation
Boosted morale
Reduced absenteeism and low staff turnover

Drawbacks of poor industrial relations:
Lack of co-operation
Low morale
Risk of industrial relations dispute

Role of HR manager:
-Deal with any employees grievances
-Ensure open communication
-Agreed procedures and standard
practices for dealing with issues
-Employees are fully involved in decision making
-Employees are trained

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Technological developments - must keep up to date with changes

Global competition - SEM and WTO - eliminate trade barriers - forces management to improve quality

Mergers & Takeovers - bigger firms change structure of management - more delegation

Industrial Democracy - workers have representatives on BOD - forces management to respond to workers’ issues

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Efficient managers must:

Have the skills necessary to enable employees to become more efficient & co-operative and to support change

Create a climate of trust in the workplace. Employees will then contribute to the changes required so that the business can become more competitive

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Management must be fully committed

Management must consult with trade unions about the need for change

In the case of new technology - proper training must be provided

Proper and ongoing communication - clarify issues to ensure a smooth implementation of changes

If changes lead to economic gain - employees must be promised extra money

Employees should be asked for their suggestions

Management shouldn’t criticise employees who resist change

Adequate funding should be provided

Existence of an ongoing review process - highlight problems

An agreed timeframe should exist

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Employees - important assets

Many employees - frontline - dealing with customers

Important - employees - trained to deal with customer issues

Empowerment of workers -  decision making authority the hands of employees that deal directly with customers

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Improved service provided - increased sales and profits

Committed to job - reduced wastage - control costs

Improved staff morale and loyalty

Employees are more open to change - easier to gain support for change

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Good employer-employee relationship

Employees must have necessary skills to recognise problems and react with solutions

Managers should empower workers to carry out their everyday tasks

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Inform employees of reasons for change

Promise that training will be provided

Inform workers that additional wages/bonus will be gained from introducing change

Clarify each employee’s role and responsibility - steps to take when they are unable to solve a problem

Assure all employees know that top management support the changes

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Enabling - finance and training required should be provided

Facilitating - all obstacles should be removed

Consulting - regular discussions between management and staff - consider employees’ suggestions

Mentoring - influence, advise and encourage workers

Collaborating - employees should be seen as equal stakeholders - improve motivation

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Approach to management that aims to maximise quality by getting all staff involved in continuously looking for ways to improve the quality of the product/service.
Its core principles are:
-Empowerment
-Teamwork
-Commitment to quality among staff

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Recruiting and training conscientious, quality-focused employees

Facilitator management style

Empower and motivate employees to look for ways to improve customer satisfaction

Facilitate teamwork, eg quality circles

Adopt strict quality control

Quality assurance system - aim for ISO and Q Mark

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Better quality

Better reputation - attracts customers

Increased brand loyalty

Higher prices can be charged

Reduced wastage

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Implementation can be slow

Stress on staff

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Positive changes:

New products

New services

Improved speed, accuracy and reliability of information

Enables management to respond to issues

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Reduced number of employees

New high-tech jobs created

Management require high-tech skills

Linking with foreign companies - video-conferencing - quicker decisions

Teleworking

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Buying and installing computers - high capital cost

Industrial relations problems - union resistance and redundancies

Redundancy payments - must be paid before new tech is installed

Training costs necessary to ensure tech is used effectively

Reductions - less employees

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Standardisation of production - reduces unit costs

Link with foreign firms - quicker decisions - reduced travel costs

Reduced wage costs

Wider span of control

Reduced micro-managing

Websites - market worldwide - increased sales and profits

Improved communication

Increased productivity, reduced costs, resist competition, increase profits

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Foreign companies set up in Ireland - eg. Intel

Irish software companies export their products

Internet - marketing - new services - eg. airline booking

Improved communication with customer - increased sales and profits

Production technology - standardisation - reduced unit costs - lower selling prices