For more than a decade, the term “digital transformation” has been nearly ubiquitous across industries. While it’s taken on different meanings depending on the organization or context, one thing remains constant: it’s not stopping or slowing down anytime soon. The global pandemic made clear that digital’s role in organizations is more important than ever. According to IDC, global spending on digital transformation is expected to reach a staggering $6.8 trillion by 2023.
But not all digital transformations are created equal. Take Levi Strauss & Co. (LS&Co.), for example, where I’m executive vice president and chief financial officer. The iconic retail and apparel company’s more than 168 years of deeply-rooted habits and traditions mean that it faces a particular set of challenges, and that addressing them meant looking for solutions that made sense in our specific context. To emerge from the pandemic stronger as a company, we knew we had to prioritize our digital investments and rethink our normal ways of working. This required new shared alignment across the executive team and new cultural agility across the organization.
A Cultural Transformation
Many have noted the critical role that culture plays in enabling technology projects to succeed. For example, a 2019 survey from the Economist Intelligence Unit identified organizational culture as a key challenge in encouraging widespread technology adoption inside organizations. Our company was no different.
Historically, innovations within LS&Co. would take months and even years to launch. But in today’s fast-paced world, waiting for perfection is a recipe for getting left in the dust. Even before the beginning of the pandemic, we’d been on a long journey to transform our business into a digital-first organization that behaves like a tech company as much as a retail and apparel company. It’s easy to take the phrase “digital first” at face value and to assume that this centers around the commercial technology implementation: upgrading our digital infrastructure, enhancing our mobile app, adding new online capabilities, and so on. And of course, that is part of this journey.
But there is so much more to becoming digital first than enabling transactions and speeding up the supply chain. Technology must extend deep into our ways of working for the organization to realize all the benefits it offers. As an apparel company, we were rooted in a “perfectionist” mindset. Typically, we would take an idea, plan for six months, create the “perfect/best” solution, and then continue to iterate for another six months or more to get it right before bringing it to market. However, a tech-first mindset is anchored around agile ways of working — a “perfect” solution is an evolution. Perfection can be the enemy of quickly connecting with our consumers.
The pivot to remote work in early 2020 underscored this lesson. Not being in an office required employees to adopt an entirely new way of thinking and relating to the company — and to one another. But what we found was a culture that willingly embraced a wide range of technical tools in the spirit of business — and culture — continuity.
Like most companies, we were in a sprint to develop and rollout new capabilities, all from a work-from-home setting. Tech-enabled options like “Buy Online, Pickup In Store,” appointment shopping, curbside pickup, “Ship from Store,” and so on, needed to be deployed in the matter of weeks so product didn’t just sit on the shelves. Even further, we needed to react to new kinds of consumer demand while staying competitive in the market. Rather than slash prices and roll out markdowns broadly like many of our competitors, we enlisted AI to help us preserve margins by recommending smarter discounts and promotions — a first for the company. Technology became even more vital to running our business.
Going through this experience, we discovered that the changes digital transformation spurred in our company culture are just as much of a benefit as the new technical capacities it enabled. Digital transformations are more than turning on new solutions or digitizing platforms and workstreams. They’re about transforming your workforce to think in an agile and digital-first mindset, and encourage the creation and adoption of technology that is new for the team and sometimes new for the industry overall.
Here are four key insights leaders should keep in mind as they continue along their own technology and organizational journeys:
1. Don’t Let the Perfect Be the Enemy of the Good
When going through a major transition, it’s important to constantly remind employees that failure is OK. In fact, it is critical to success, so long as you learn from those lessons to constantly improve. Your employees are only human after all. Don’t let the perfect be the enemy of the good.
While this mindset is popular among digital native and newly emerged businesses, it’s still rarely practiced among legacy organizations. LS&Co. has 168 years of traditions and habits around how work gets done, which made shifting to a “fail fast” mindset a herculean task. At the start of our journey, I knew we had to rethink our transactional ways of building innovation and approach it as an iterative process.
Our “Ship from Store” offering is a prime example. While always on our digital roadmap, the pandemic accelerated our efforts to bring this offering, among others, to market sooner. We didn’t have the luxury of time to perfect the technology or application. Instead, we quickly launched and have continued to adjust as we learn about what’s working and what’s not.
Adding a new capability like this one requires more than just installing a new button at checkout. This feature increased the workload for store managers and stylists, and it depended on real-time inventory access – aspects that we didn’t necessarily have ready to instantly integrate and were working on simultaneously. We knew this was not something we could or should immediately rollout on a large scale. It needed to be an evolution where we could test in select stores, collect feedback from both employees and customers, and improve the technology while adding more stores along the way. While this iterative approach is second nature to technology companies, for us it represented a shift in our development approach and required our teams to get comfortable changing and improving the solution as we scaled it across the company.
The encouragement and support of leadership to enable this cultural agility and build an environment where ‘good’ is okay is critical to our journey. Our IT team, led by CIO Chris Clark, has been instrumental in leading this shift, and he constantly reminds our team that this is a journey.
2. Leapfrog Over the Competition
When feeling “behind,” it’s easy to let panic set in. This is when a lot of organizations go wrong — they focus on building new tools to catch up to the competition versus building new tools to get ahead. The first question I always ask our employees is, “what is our competition not doing?” and use that as a starting point.
For example, as the retail industry grapples with how to appeal to the Gen Z buyer, we’ve taken a close look at their shopping behavior and preferences. From being among the first retailers to accept PayPal and Venmo in stores to engaging on Instagram, TikTok, and Snap in new and creative ways, we’ve made a concerted effort to be on the platforms Gen Z prefer while staying ahead of our competition.
Since these offerings are digital in nature, the journey is just as beneficial as the outcome. While it’s great to sell more product, the discovery process gives us an opportunity to deepen our connections with our customers and followers, and to better understand their behaviors. Sales are not always a leading indicator of success. Instead, we should ask our teams, “what did you learn?” “Are you done learning?” And, “are your results conclusive?” These questions reshape how the teams measure success and can teach them where to go next.
3. Everyone Should be Data-Driven
One of the main benefits of going digital is that organizations can now collect — with consumer consent and appropriate governance, of course — enormous amounts of data that were previously not possible, enabling businesses to understand the consumer in new and novel ways. Data is key, but never lose sight of the human element.
To do this, internal teams need ways to receive and digest the information being collected, or it will do no good. Moreover, companies should provide the means and incentives for each function to think critically about what to do with all this new information. What can be done to enable even deeper consumer connections? How can the organization reimagine itself to become more relevant? These are big questions, and they can be answered only when real humans apply their unique lenses to the wide arrays of data that are now available.
To that end, instead of hiring outside tech talent to fuel our digital transformation, we launched a Machine Learning Bootcamp in 2021 to upskill our employees. Employees from across the globe and from any part of our business (including retail stores, distribution centers, and corporate functions like finance, HR, marketing, and so on) were invited to apply to participate in an immersive eight-week, paid, full-time training where they learned coding, Python programming language, statistics, and more. Some graduates of the program have the option of joining the AI & Strategy team led by my colleague Dr. Katia Wash, while most of the employees return to their previous role to put their learnings into practice.
In our inaugural year, we trained more than 100 employees from more than 20 locations spanning North America, Europe, and Asia Pacific. The program underscores our belief in our people and their power to drive change. When given the opportunity, they can unlock new ways of leveraging AI and machine learning to reimagine work and processes across the company.
4. Allow Time for Tech Savviness to Grow
For many teams, adjusting to new ways of working and understanding new is familiar territory; for others it can be a huge paradigm shift. Recognize that people are being asked to make a behavior change and approach it as a process rather than forcing change overnight.
As part of our digital transformation journey, we are upgrading our enterprise resource planning to a standardized on-the-cloud solution that is well integrated with all systems in the organization. The benefits of the upgrade mean we can make better data-driven decisions with access to real-time data. To realize the full potential of the data, employees must embrace new tools and develop data savviness. We don’t expect that to happen overnight, given employees are comfortable using systems that have worked for them for years. We realize with training and a clear picture of how the systems simplify and supercharge their work flows we’re creating an innovative and responsive culture around data savviness.
One example of how our culture has evolved to embrace a new technology initiative is the use of Robotic Process Automation (RPA). After 4 years, we now have our own, internal RPA Center of Excellence (COE) team seeking out ways to streamline processes and create bots to automate tedious, manual work. It took time to test, educate and demonstrate the benefits of RPA across the organization, and it’s now gaining immense traction. It’s exciting to see our organization embrace RPA with open arms, but it’s been a long road of continuous education and encouragement from the RPA COE team. We had to demystify concerns around “automation” and explain the immense value it can bring.
. . .
Success doesn’t always look like what you initially thought. I’ve seen this throughout my life both professionally and personally, and this is especially true in business. The place we end up is different from what we set out to be, and often, the journey becomes even more valuable than the actual outcome.
We’ve seen this play out a lot over the last year-and-a-half. Covid uprooted industries across the board, and for retail, created an even larger divide between the leaders and laggards. Every company fast-tracked their digital roadmaps to respond to the shifts of the pandemic, keep their business afloat, and stay connected to their consumer. But this wouldn’t have been possible, especially for us, if we hadn’t shifted our ways of thinking.
As the pandemic continues to sweep our world and impact our industry, it’s time to evaluate our digital strategies and think about what success looks like for both our employees and our companies.
Accepting Bitcoin at Your Business: Pros, Cons and How to Get Started
The allure of overnight riches can outshine the fact that Bitcoin was first used in an everyday transaction — to buy a pizza. Today, even the tastiest slice won’t come close to the 10,000 Bitcoins that order cost in 2010 — an amount now worth more than half a billion dollars.
Accepting cryptocurrency at a business has become easier and more widespread in the decade since. But it’s still more complicated than simply acquiring it as an individual. The checklist to get started includes finding a payments partner (probably), working through integration questions and thinking about your cash-conversion strategy.
Who accepts Bitcoin and crypto?
The first high-profile businesses to accept crypto payments reflected its inception in the world of tech: Companies like Microsoft and PayPal have been accepting it to some extent for years. Shopping website Overstock took adoption a step further, funding new blockchain projects in addition to allowing customers to buy a new side table, a juicer or whatever else using Bitcoin. In recent years, less techy companies have started coming online: Whole Foods, Home Depot and the NBA, to name a few.
Global companies like these can make headlines if they start accepting crypto, but thousands of small businesses dotted across the world also take payments, capturing some of the more than $1 billion worth of daily transactions in Bitcoin alone.
Why accept Bitcoin or crypto payments
Quicker, cheaper payments can be an attractive proposition for existing businesses. Crypto payments also might unlock new business models, similar to how the rise of card payments enabled the growth of online shopping.
“What we see in this space historically is that once you bring the cost of access down, you might see some new and interesting businesses you haven’t seen before,” says Roy Zhang, group product manager at Coinbase, a crypto exchange platform.
What to consider before accepting Bitcoin and crypto
Go it alone or with a payments tool?
Peer-to-peer transactions are an integral part of cryptocurrencies. In other words, you don’t need a third-party processor. This is the cheapest route to go — Bitcoin, for example, is free to receive and can be free to send.
However, building a payment workflow is a time-consuming job that demands technological expertise. Third-party payment tools address this need by giving businesses a way to quickly start accepting crypto payments. You’ll likely need to submit information about your business in an application, and more information might be needed if you plan to convert crypto to cash through the service provider.
These services are not payment processor replacements, as they do not process card payments. If you want to accept card payments and cryptocurrency, you’ll need both.
Which cryptocurrencies will you accept?
There are thousands of cryptocurrencies, but not every one is accepted on every service. The most popular, Bitcoin, is generally supported everywhere. But if you’re interested in accepting Mooncoin or Alice, for example, you might need to search harder.
What are the tax and accounting issues?
It’s a good idea to talk to your accountant or bookkeeper if you are thinking about accepting crypto.
First, you should be aware of the tax implications, especially if you plan on holding on to any crypto you receive.
Second, think through how information from your point-of-sale system gets to your accountant. For example, if you rely on a cloud-based system like QuickBooks or Xero, you’ll want to know if your crypto payments tool integrates with it.
Converting to cash — if, when and how?
This can have huge implications on your business, as big price swings mean the value of your crypto could rise — or fall — in a short amount of time. Will you hold on to whatever crypto you receive indefinitely? Will you convert to cash immediately? Will you convert it on a scheduled basis?
If you rely on consistent cash flow for your operations, these questions are all the more important. And once you have a plan, make sure your preferred crypto payments service can actually implement it.
Other operational questions
The services provided by crypto payments companies can help smooth out implementation issues, like monitoring price volatility and setting up a modern user interface. However, a company will have operational questions to figure out.
When accepting crypto, there’s no direct cost to you, says Don Apgar, director of the merchant services advisory service at Mercator Advisory Group, a payments industry firm. “But you have incurred a cost: to reformat a report; to train customer service; what happens if someone wants to return; what about disputes?” And time is a limited resource. “Everything you do means something else waits,” he adds.
Operational questions you might want to think through include:
What training will staff need?
Will you be prepared to answer customer questions?
Are there elements of customer service — like issuing refunds — that need to be rethought?
How will your crypto payments tool work with your current inventory or reporting practices?
At a glance: accepting Bitcoin vs. credit cards
Cryptocurrency is fundamentally different from credit cards. However, they share similarities that are important to businesses. Specifically, they both provide a way for customers to pay electronically, which is convenient for in-person transactions and a necessity for online sales.
A side-by-side comparison illustrates where key differences lie.
Payments not required to run through a payment tool.
Payments must run through a payment processor.
Cryptocurrency: A cryptocurrency payment tool provides a user interface that makes transacting in crypto easier for the merchant and the customer. These tools can also help ease issues related to price fluctuation and often provide a built-in way to convert crypto to dollars. Crypto transactions aren’t required to be routed through payment tools — instead, they are a value-add service.
Credit cards: A credit card processor communicates with card networks and banks to verify customer identities, confirm that customers have sufficient funds or credit and initiate the movement of money from the acquiring bank to the merchant’s account. It’s impossible to accept a card payment without a payment processor.
Bottom line: You don’t need a payment service to accept crypto like you do with card payments, but replicating the user interfaces and tools they can provide would take some serious time and technical know-how.
0% if done directly with customer. Can be 1% or so using a payment tool.
Standard flat rate is 2.9% plus 30 cents per transaction, but varies by processor.
Cryptocurrency: The cost of a crypto transaction is zero if completed with customers directly. Payment tools that streamline the transaction process typically charge 1% of each transaction. Unlike card transactions, crypto transactions don’t rely on identity verification or funds verification. As a result, there are no fees associated with compliance or chargebacks.
Credit cards: Fees can vary. A standard flat rate is 2.9% plus 30 cents per transaction. A large business that uses interchange pricing might pay less, while a high-risk business will likely pay more. You also might encounter additional stand-alone fees, like payment card industry, or PCI, compliance fees.
Bottom line: Not only is accepting crypto much cheaper than accepting card payments, you’re likely to encounter simpler pricing structures.
Safety and security
Little to no responsibility for compliance or fraud.
Responsibility for compliance and (via fees) for fraud.
Cryptocurrency: Crypto can only be used if you know the password, and the password is only ever entered on the customer’s device. As a result, there are no compliance requirements surrounding crypto payments because secure customer data does not travel through a business’s systems. If a customer loses their password or has it compromised in any other way, the responsibility lies completely with them — not a merchant.
Credit cards: When paying with a card, a customer authorizes the merchant to use the information on the card to, with the help of a payment processor, instruct the customer’s bank to move money. Because anyone — not just merchants — can initiate a transaction if they have card information, fraudulent charges can and do take place. Card networks do use advanced techniques to spot and halt fraudulent transactions before they go through, and PCI compliance helps strengthen the security at each business, but the threat of fraud can’t be completely extinguished. The risk of fraud is a cost of using cards, a cost that is ultimately passed on to the merchant in the form of fees.
Bottom line: With crypto, you’re not on the hook for fraud, and you can say goodbye to PCI compliance.
Resolving customer issues
No legal protections or chargebacks to manage, but you’ll likely need to make clear your own policies.
Decisions often in the hands of card networks, and they often favor the customer.
Cryptocurrency: Cryptocurrency transactions are irreversible. There are no chargebacks. This removes a pain point for merchants, but it can open the door to dealing directly with unhappy customers if any issues do arise. Merchants should also think about making sure return policies address cryptocurrency-specific issues. For example, as the price of cryptocurrency fluctuates relative to the dollar, there should be a clearly stated process for how and when you’ll calculate and send cryptocurrency to a customer making a return.
Credit cards: If a customer has a return, the merchant can refund the sale amount to the customer’s account. In addition, a card user can claim that a card transaction was unauthorized, which can occur if card information is lost or stolen. This claim initiates a chargeback, a process in which the merchant must return the funds, and often a fee to go with it. There is an appeals process if the merchant wants to contest the claim. However, the decision is ultimately in the hands of the card network, and they often rule in favor of the customer.
Bottom line: The good news is that you won’t see expensive chargebacks or bureaucratic appeals processes if a customer pays with crypto. The bad news is that, from a customer-service perspective, you’ll probably need to build out and administer a new return and complaint policy of your own.
Flexible and fast, but also can be volatile.
Slower, but likely more stable.
Cryptocurrency: Crypto funds are accessible about 10 minutes after a transaction. Some merchants choose to keep the crypto itself while others choose to convert it to U.S. dollars or another currency. Converting funds can take place immediately or at a later time. The price volatility of many cryptocurrencies brings risk to conversion, though some merchants help alleviate this risk by only accepting stablecoins, which are typically less volatile.
Credit cards: Credit cards don’t have the volatility crypto does — merchants are paid in U.S. dollars — but it can take a few business days or more for that cash to be available to the merchant.
Bottom line: Crypto is flexible, but it’s also volatile. If cash flow is important, you’ll need to be scrupulous about finding a payment partner who offers tools to help, including automatic conversions and volatility-limiting measures. If you wish to keep some of your funds in crypto, monitoring it becomes another task on your to-do list. Cards might be slow and clunky in comparison, but they excel at predictability.
Not much now, for better or worse, but stay tuned.
Stable and uniform, and comes with lots of compliance effort.
Cryptocurrency: The regulatory paper trail of crypto is much thinner than card payments, which has been around for a lot longer. However, the future remains a question mark. There’s no shortage of proposed regulation at the state, federal and department level. One thing is already clear — accepting and holding crypto and later selling it is akin to buying and selling stocks, so you’ll have extra work come tax time.
Credit cards: The existing payment system has decades of oversight under its belt. One upside to this is a stable, relatively uniform system that has widespread adoption and consumer awareness. One downside is that adhering to regulation on every level, whether administered by the government or by the payments industry, comes at a cost of time and money: PCI compliance and consumer protection laws are a few examples.
Bottom line: Compared to card payments, crypto payments are barely regulated. That makes them better, right? On the one hand, it can help reduce indirect compliance costs and responsibilities. On the other hand, government involvement can provide clarity to murky questions as well as establish a baseline of safety and confidence to the system. For example, your savings account is likely FDIC-insured, but your Bitcoin isn’t. Finally, just because regulations are currently scant doesn’t mean they will always be.
Transactions are comparatively fast, but there are some learning curves.
Transactions are quick and how-to is well known, but underlying processes can be hairier.
Cryptocurrency: Relative to credit cards, crypto payments excel at speed and security. Using crypto can also eliminate or reduce some administrative tasks. On the other hand, as a new technology, there might be a learning curve for employees and customers who use it, and integrating it with other aspects of running a business, like inventory management or bookkeeping, could be difficult.
Credit cards: A relatively mature technology, card payments have widespread familiarity among users. The online shopping experience is made easier with autofill or keeping card information on file with companies or platforms. Mobile payments have given consumers another option at in-person checkouts. However, the payments process is complex and can be difficult to understand, which can make comparing options and deciding on a payments partner an opaque process for some.
Bottom line: From start to finish, a typical crypto transaction is a breeze compared to a card payment. But transactions don’t take place in a vacuum — each one is nested in a particular business, which has its own customer service policies, bookkeeping needs, employee awareness and other operational realities. Realistically, crypto is more convenient in some domains but could be bumpier in others.
How to start accepting Bitcoin and crypto payments
A typical peer-to-peer crypto transaction might look like:
A customer choosing to pay with crypto is presented with a QR code.
That QR code tells the customer’s crypto wallet or app where to send the crypto, a destination known as an address. This is similar to an email address, however it’s typically generated and used just once.
To verify the transaction is legitimate, the customer enters their password, called a private key.
Before the transaction is complete, it must be verified and added to the public ledger, a process completed by users around the world running special computer programs. This process can take time — about 10 minutes for Bitcoin.
A business that accepts crypto payments using a payments firm might have a few differences, such as faster completion times and a window during which the rate is locked to limit volatility.
The companies below offer tools that allow customers to pay with cryptocurrency:
Price per transaction: 1% of each transaction for most businesses.
When a customer initiates a payment, Bitpay compares rates on multiple exchanges, uses the most competitive rate and does not charge a markup. The exchange rate presented to the customer is guaranteed for 15 minutes.
If a merchant chooses settlement in the cryptocurrency used for the transaction, the actual amount received is equal to the amount the customer paid as denominated in that cryptocurrency, even if the exchange rate changes later in the day. If settlement occurs in U.S. dollars (or other currency), the amount a merchant receives equals the original price stated in dollars — a $98 jacket will result in a $98 deposit, less the 1% fee, even if the exchange rate of the crypto used changes throughout the day.
Payment options: BitPay supports 11 currencies.
Notable feature: BitPay has a partnership with Verifone to make in-person payments with cryptocurrency easier. While most payment tools enable merchants to accept in-person cryptocurrency payments through a QR code displayed on a mobile device, this partnership allows the QR code to be displayed on the same card reader the point-of-sale system uses to accept cards. This simplifies the checkout process and makes it more familiar for customers.
Price per transaction: 1%.
Volatility management: The exchange rate locks the moment a customer starts the checkout process, and the merchant can adjust the amount of time the price is locked.
Payment options: Coinbase accepts seven cryptocurrencies.
Notable feature: Coinbase offers two account types. The pricing is the same, but there are differences in the level of hands-on control a user experiences:
You can set up an account in minutes.
Cryptocurrency payments go directly to your wallet for you to manage directly.
To convert to U.S. dollars, you’ll need to create a Coinbase Exchange account, transfer your crypto there and sell on the exchange.
Requires a compliance review that can take up to a month.
Transferring money to a bank account is made easier.
Coinbase manages your wallet and private keys.
Some or all of the cryptocurrency payment can automatically be converted to U.S. dollars or other currencies.
It’s worth noting that PayPal allows shoppers to pay using cryptocurrency. What makes PayPal different from other services is that merchants neither choose to allow this option, nor do they have the option to be paid in crypto. Instead, a PayPal user who holds cryptocurrency in their PayPal account can choose to pay with it. PayPal credits the merchant’s account with U.S. dollars.
While this option provides no functional direct exposure to crypto transactions to the merchant, you are giving some customers the option to pay in this way.
Outsourcing to the Philippines: 4 Reasons why it’s a Smart Choice for Bootstrapping Entrepreneurs
For bootstrapping entrepreneurs, balancing the need to fill different roles along with containing costs can be an enormous challenge. Whether it’s customer experience, HR, IT, marketing, sales, R&D, or accounting and payroll, the many business processes needed to launch and grow an organization can quickly eat up even the largest rounds of funding. For cost-conscious, but growth-oriented founders, the best solution is outsourcing BPO services to the Philippines.
“The most obvious benefit is the potential for savings on staffing costs. From call centers to back-office support and more, the Philippines has built a world-class workforce, with an average hourly rate for a premium BPO agent being US$12-14/hour. When compared to US$24-28/hour for a similar role in the U.S., a savvy entrepreneur can realize an immediate 50% savings by partnering overseas with the same kinds of premium vendors that multi-national corporations such as Facebook, Google, Alibaba, Slack, and GitHub work with,” says Ralf Ellspermann, CEO of PITON-Global, an award-winning contact center in the Philippines.
And if you’re not sure what service or role you need to be covered, outsourcing allows business owners to test different business models before committing resources. Now consider the benefits of working with a single outside provider rather than hiring multiple contractors domestically or hiring full-time employees in various geographies or time zones. Having one relationship mitigates risk and ensures there’s no possibility for uncoordinated efforts – a common problem when working with multiple vendors.
“Many businesses begin to consider outsourcing as an option after they’ve reached a certain level of growth and/or to handle an overflow of work. A better model is to partner with a business outsourcing service early and hand specific work over to a specialist.
The Philippines boasts an impressive workforce of 1.2 million agents working in a variety of specialized roles. And these are not just entry-level positions either; thousands of these support specialists receive specialized training and education in their chosen field, whether that be IT, accounting, digital marketing, or research and development,” says Ellspermann.
Additionally, consider the flexibility that’s associated with using an outsourced BPO in the Philippines. For example, as your business grows and you begin to develop new offerings, there could be a need to hire salespeople at each new office location. Depending on the city, those roles could be quite expensive.
At the same time, your global operations will need to scale to keep up with demand. And that often means hiring C-level roles like controllers, managers, and support staff across multiple departments. While you can handle these roles internally by bringing on additional permanent staff or through remote workers in other countries, there are tremendous benefits associated with flexibility.
Outsourcing allows you to keep costs low by paying only for the services needed today while enabling growth through a provider that can scale up or down as needed. This is especially true if you need specific skills or expertise that you don’t have on your team.
“In a digital and tech-driven world, many businesses require specialized technology that’s necessary to support everything from minute financial transactions to data compilations. While an in-house IT department is well-positioned to handle these kinds of highly technical projects, it means working with multiple vendors and trying to manage their interactions,” explains Ellspermann.
A business outsourcing partner has the resources and infrastructure to provide access to global services no matter where your business is located. And because they serve multiple industries, it means you never have to worry about if the technology will meet your needs.
Whether you need communications software for customer service reps, data mining services to compile demographic information, or special skills staffing to handle highly technical functions, there’s a company in the Philippines that can meet your needs. And in many cases, they’ll do so without requiring you to build out an entire IT department just for these services.
Partnering with an experienced outsourcing provider such as PITON-Global in the Philippines means getting experienced, knowledgeable professionals at a fraction of the cost and with the ability to grow with your organization as it does.
Roth IRA Contributions – What You Should Know
For nearly everyone, the Roth IRA is the ideal place to start the journey to building a retirement fund. While most people have heard of them, they are still a bit misunderstood. That could mostly be because many people find it difficult to even begin investing due to the complexity.
However, just know that if you are still a bit unsure about the idea of opening a Roth IRA, you’re not alone. This article will provide you with foundational knowledge to have an educated conversation with your financial advisor as to whether a Roth IRA is right for you.
Roth IRA – What Is It?
A Roth IRA is a type of tax-advantaged retirement account that anyone in the U.S. can open who meets a few minimum requirements, which we’ll get into later. The Roth IRA allows one to deposit money regularly, or all at once, up to certain annual maximum limits.
Most major investment firms offer investors the option to open a Roth IRA, and the funds you deposit would be held separately from your regular brokerage funds, if any. This is because of the tax advantages offered to Roth IRA funds.
The most important benefit of a Roth IRA is that all profits enjoyed over the life of the account are tax exempt.
Requirements to Open a Roth IRA
The Roth IRA was created in 1997 as a way for middle-income Americans to enjoy some tax benefits not afforded to those of wealthier status. The first requirement to open a Roth IRA is that your income falls below certain maximum limits. For single filers, your gross income should be below $140,000, and for married filers, your gross income should fall below $208,000.1
It’s important to note that there is a bit of a workaround to these income limits. While the standard requirements are fairly straightforward, you should consider consulting with a financial advisor and perhaps a tax professional as well. You might be able to contribute to a Roth IRA account if you make more than the incomes limits via “backdoor” Roth IRA contributions.
Another requirement to open a Roth IRA is that you have what is known as “earned income.” This means that you earned taxable compensation for work performed which can be reported on a W2, 1099, or other similar IRS form for income.
Benefits of a Roth IRA
As we mentioned earlier, the most important benefit to a Roth IRA is the tax-exempt status of the returns on your investments.
Another little-known benefit of a Roth IRA is that it can act as an emergency fund. A 401(k), for example, comes with restrictions to almost all withdrawals. While you can technically withdraw funds from a 401(k), these distributions could – and most likely will – be subject to heavy tax penalties for early withdrawal.
In the case of the Roth IRA, you can withdraw all funds you’ve deposited, also known as principle, without any penalties. While you can withdraw principal investments at any time, any withdrawal of profits prior to age 59 ½ will generally be subject to heavy tax penalties like those of early withdrawal from a 401(k) or Traditional IRA.
Drawbacks of a Roth IRA
Returning to the 401(k) example, the maximum contribution limit for 2021 is $19,500.2 This brings us to the major drawback of the Roth IRA, which is that the maximum contribution per year is $6,000 for those below age 50. Those older than 50 are able to contribute up to $7,000 per year.
Consider maximizing both your company-sponsored retirement plan contribution and the Roth IRA contribution if you have the means.
What’s Next: What You Should Know About Roth IRAs
The Roth IRA is often said to be funded by “after-tax” income. This means that all money that goes into a Roth IRA has already been taxed via your regular income tax rate. While there are a few requirements you must meet prior to opening a Roth IRA, they are available to nearly anyone who can show earned income, and they have many tax advantages that, over time, could provide enormous benefits to those building up their retirement accounts.
If you still have more questions about Roth IRA contributions, check out this article from Pittsburgh financial advisors, Fragasso Financial Advisors, for some more insights. You should always consult with a financial and tax professional before making any decisions.
Investment Advice offered by Investment Advisor Representatives through Fragasso Financial Advisors, a registered investment advisor.
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