Best in Class Finance Functions For Police Forces

Background

Police funding has risen by £4.8 billion and 77 per cent (39 per cent in real terms) since 1997. However the days where forces have enjoyed such levels of funding are over.

Chief Constables and senior management recognize that the annual cycle of looking for efficiencies year-on-year is not sustainable, and will not address the cash shortfall in years to come.
Facing slower funding growth and real cash deficits in their budgets, the Police Service must adopt innovative strategies which generate the productivity and efficiency gains needed to deliver high quality policing to the public.

The step-change in performance required to meet this challenge will only be achieved if the police service fully embraces effective resource management and makes efficient and productive use of its technology, partnerships and people.

The finance function has an essential role to play in addressing these challenges and supporting Forces’ objectives economically and efficiently.

Challenge

Police Forces tend to nurture a divisional and departmental culture rather than a corporate one, with individual procurement activities that do not exploit economies of scale. This is in part the result of over a decade of devolving functions from the center to the.divisions.

In order to reduce costs, improve efficiency and mitigate against the threat of “top down” mandatory, centrally-driven initiatives, Police Forces need to set up a corporate back office and induce behavioral change. This change must involve compliance with a corporate culture rather than a series of silos running through the organization.

Developing a Best in Class Finance Function

Traditionally finance functions within Police Forces have focused on transactional processing with only limited support for management information and business decision support. With a renewed focus on efficiencies, there is now a pressing need for finance departments to transform in order to add greater value to the force but with minimal costs.

1) Aligning to Force Strategy

As Police Forces need finance to function, it is imperative that finance and operations are closely aligned. This collaboration can be very powerful and help deliver significant improvements to a Force, but in order to achieve this model, there are many barriers to overcome. Finance Directors must look at whether their Force is ready for this collaboration, but more importantly, they must consider whether the Force itself can survive without it.

Finance requires a clear vision that centers around its role as a balanced business partner. However to achieve this vision a huge effort is required from the bottom up to understand the significant complexity in underlying systems and processes and to devise a way forward that can work for that particular organization.

The success of any change management program is dependent on its execution. Change is difficult and costly to execute correctly, and often, Police Forces lack the relevant experience to achieve such change. Although finance directors are required to hold appropriate professional qualifications (as opposed to being former police officers as was the case a few years ago) many have progressed within the Public Sector with limited opportunities for learning from and interaction with best in class methodologies. In addition cultural issues around self-preservation can present barriers to change.

Whilst it is relatively easy to get the message of finance transformation across, securing commitment to embark on bold change can be tough. Business cases often lack the quality required to drive through change and even where they are of exceptional quality senior police officers often lack the commercial awareness to trust them.

2) Supporting Force Decisions

Many Finance Directors are keen to develop their finance functions. The challenge they face is convincing the rest of the Force that the finance function can add value – by devoting more time and effort to financial analysis and providing senior management with the tools to understand the financial implications of major strategic decisions.

Maintaining Financial Controls and Managing Risk

Sarbanes Oxley, International Financial Reporting Standards (IFRS), Basel II and Individual Capital Assessments (ICA) have all put financial controls and reporting under the spotlight in the private sector. This in turn is increasing the spotlight on financial controls in the public sector.

A ‘Best in Class’ Police Force finance function will not just have the minimum controls to meet the regulatory requirements but will evaluate how the legislation and regulations that the finance function are required to comply with, can be leveraged to provide value to the organization. Providing strategic information that will enable the force to meet its objectives is a key task for a leading finance function.

3) Value to the Force

The drive for development over the last decade or so, has moved decision making to the Divisions and has led to an increase in costs in the finance function. Through utilizing a number of initiatives in a program of transformation, a Force can leverage up to 40% of savings on the cost of finance together with improving the responsiveness of finance teams and the quality of financial information. These initiatives include:

Centralization

By centralizing the finance function, a Police Force can create centers of excellence where industry best practice can be developed and shared. This will not only re-empower the department, creating greater independence and objectivity in assessing projects and performance, but also lead to more consistent management information and a higher degree of control. A Police Force can also develop a business partner group to act as strategic liaisons to departments and divisions. The business partners would, for example, advise on how the departmental and divisional commanders can meet the budget in future months instead of merely advising that the budget has been missed for the previous month.

With the mundane number crunching being performed in a shared service center, finance professionals will find they now have time to act as business partners to divisions and departments and focus on the strategic issues.

The cultural impact on the departments and divisional commanders should not be underestimated. Commanders will be concerned that:

o Their budgets will be centralized
o Workloads would increase
o There will be limited access to finance individuals
o There will not be on site support

However, if the centralized shared service center is designed appropriately none of the above should apply. In fact from centralization under a best practice model, leaders should accrue the following benefits:

o Strategic advice provided by business partners
o Increased flexibility
o Improved management information
o Faster transactions
o Reduced number of unresolved queries
o Greater clarity on service and cost of provision
o Forum for finance to be strategically aligned to the needs of the Force

A Force that moves from a de-centralized to a centralized system should try and ensure that the finance function does not lose touch with the Chief Constable and Divisional Commanders. Forces need to have a robust business case for finance transformation combined with a governance structure that spans operational, tactical and strategic requirements. There is a risk that potential benefits of implementing such a change may not be realized if the program is not carefully managed. Investment is needed to create a successful centralized finance function. Typically the future potential benefits of greater visibility and control, consistent processes, standardized management information, economies of scale, long-term cost savings and an empowered group of proud finance professionals, should outweigh those initial costs.

To reduce the commercial, operational and capability risks, the finance functions can be completely outsourced or partially outsourced to third parties. This will provide guaranteed cost benefits and may provide the opportunity to leverage relationships with vendors that provide best practice processes.

Process Efficiencies

Typically for Police Forces the focus on development has developed a silo based culture with disparate processes. As a result significant opportunities exist for standardization and simplification of processes which provide scalability, reduce manual effort and deliver business benefit. From simply rationalizing processes, a force can typically accrue a 40% reduction in the number of processes. An example of this is the use of electronic bank statements instead of using the manual bank statement for bank reconciliation and accounts receivable processes. This would save considerable effort that is involved in analyzing the data, moving the data onto different spreadsheet and inputting the data into the financial systems.

Organizations that possess a silo operating model tend to have significant inefficiencies and duplication in their processes, for example in HR and Payroll. This is largely due to the teams involved meeting their own goals but not aligning to the corporate objectives of an organization. Police Forces have a number of independent teams that are reliant on one another for data with finance in departments, divisions and headquarters sending and receiving information from each other as well as from the rest of the Force. The silo model leads to ineffective data being received by the teams that then have to carry out additional work to obtain the information required.

Whilst the argument for development has been well made in the context of moving decision making closer to operational service delivery, the added cost in terms of resources, duplication and misaligned processes has rarely featured in the debate. In the current financial climate these costs need to be recognized.

Culture

Within transactional processes, a leading finance function will set up targets for staff members on a daily basis. This target setting is an element of the metric based culture that leading finance functions develop. If the appropriate metrics of productivity and quality are applied and when these targets are challenging but not impossible, this is proven to result in improvements to productivity and quality.

A ‘Best in Class’ finance function in Police Forces will have a service focused culture, with the primary objectives of providing a high level of satisfaction for its customers (departments, divisions, employees & suppliers). A ‘Best in Class’ finance function will measure customer satisfaction on a timely basis through a metric based approach. This will be combined with a team wide focus on process improvement, with process owners, that will not necessarily be the team leads, owning force-wide improvement to each of the finance processes.

Organizational Improvements

Organizational structures within Police Forces are typically made up of supervisors leading teams of one to four team members. Through centralizing and consolidating the finance function, an opportunity exists to increase the span of control to best practice levels of 6 to 8 team members to one team lead / supervisor. By adjusting the organizational structure and increasing the span of control, Police Forces can accrue significant cashable benefit from a reduction in the number of team leads and team leads can accrue better management experience from managing larger teams.

Technology Enabled Improvements

There are a significant number of technology improvements that a Police Force could implement to help develop a ‘Best in Class’ finance function.

These include:

A) Scanning and workflow

Through adopting a scanning and workflow solution to replace manual processes, improved visibility, transparency and efficiencies can be reaped.

B) Call logging, tracking and workflow tool

Police Forces generally have a number of individuals responding to internal and supplier queries. These queries are neither logged nor tracked. The consequence of this is dual:

o Queries consume considerable effort within a particular finance team. There is a high risk of duplicated effort from the lack of logging of queries. For example, a query could be responded to for 30 minutes by person A in the finance team. Due to this query not being logged, if the individual that raised the query called up again and spoke to a different person then just for one additional question, this could take up to 20 minutes to ensure that the background was appropriately explained.

o Queries can have numerous interfaces with the business. An unresolved query can be responded against by up to four separate teams with considerable delay in providing a clear answer for the supplier.

The implementation of a call logging, tracking and workflow tool to document, measure and close internal and supplier queries combined with the set up of a central queries team, would significantly reduce the effort involved in responding to queries within the finance departments and divisions, as well as within the actual divisions and departments, and procurement.

C) Database solution

Throughout finance departments there are a significant number of spreadsheets utilized prior to input into the financial system. There is a tendency to transfer information manually from one spreadsheet to another to meet the needs of different teams.

Replacing the spreadsheets with a database solution would rationalize the number of inputs and lead to effort savings for the front line Police Officers as well as Police Staff.

D) Customize reports

In obtaining management information from the financial systems, police staff run a series of reports, import these into excel, use lookups to match the data and implement pivots to illustrate the data as required. There is significant manual effort that is involved in carrying out this work. Through customizing reports the outputs from the financial system can be set up to provide the data in the formats required through the click of a button. This would have the benefit of reduced effort and improved motivation for team members that previously carried out these mundane tasks.

In designing, procuring and implementing new technology enabling tools, a Police Force will face a number of challenges including investment approval; IT capacity; capability; and procurement.

These challenges can be mitigated through partnering with a third party service company with whom the investment can be shared, the skills can be provided and the procurement cycle can be minimized.

Conclusion

It is clear that cultural, process and technology change is required if police forces are to deliver both sustainable efficiencies and high quality services. In an environment where for the first time forces face real cash deficits and face having to reduce police officer and support staff numbers whilst maintaining current performance levels the current finance delivery models requires new thinking.

While there a number of barriers to be overcome in achieving a best in class finance function, it won’t be long before such a decision becomes mandatory. Those who are ahead of the curve will inevitably find themselves in a stronger position.

The 10 Most Influential Internet Marketers (Part 1)

This article is a subjective list of the ten most influential Internet marketers. I could have easily included more than ten marketers, but I had to draw the line somewhere. So, if you don’t see your favorite Internet marketer on the list, please don’t be offended. I purposely excluded individuals whom are known primarily for one particular talent.For example: copywriting and SEO. I wanted to sing the praises of those individuals whom are known as great marketers – first and foremost. And while this list is subjective, it would be extremely difficult for anyone to argue against any of the selections included on the list, as they are all proven excellent and have stood the proverbial test of time.1. Jay Abraham’s uncanny ability to increase business income, wealth and success by uncovering hidden assets, overlooked opportunities and undervalued possibilities has captured the attention and respect of CEOs, best-selling authors, entrepreneurs and marketing experts. Jay’s clients range from business royalty to small business owners. But they all have one thing in common – virtually all have profited greatly from Jay’s expertise. A number of clients each acknowledge that Jay’s efforts and ideas have lead to a profit increase of millions of dollars. [See our Testimonial pages]Jay has identified the patterns that limit and restrict business growth. He’ s one of only a very few people who realize that most industries only know and use one particular marketing approach – even though there may be dozens of more effective and profitable strategies and options available to them.Jay shows his clients how to take different success concepts from different industries and adopt them to their specific business. This gives Jay’s clients a powerful advantage over their competition.Jay has been acknowledged as a unique and distinctive authority in the field of business performance enhancement – and the maximizing and multiplying of business assets. He’s been featured twice in Investors Business Daily ­ both on the front page and in the Leaders & Success Section – saying Jay, “Knows how to maximize results with minimum effort”. The March 6, 2000 issue of Forbes Magazine listed Jay as one of the top 5 executive coaches in the country saying jay’s specialty is, “Turning corporate underperformers into marketing and sales whizzes.”In addition, Jay has been written up in USA Today, New York Times, Los Angeles Times, Washington Post, San Francisco Chronicle, OTC Stock Journal, National Underwriter, Entrepreneur, Success, and Inc. magazine, and many others. [See our Press articles]He has over 10,000 individual business success stories from around the world. Many of the world’s preeminent trainers and consultants have sought out Jay’s advice and counsel in growing their organizations.As a proven business leader with energy and vision, Jay has demonstrated the critical ability to stimulate true breakthrough thinking and execution throughout organizations, in all 4 vital areas of performance enhancement: strategy, innovation, marketing, and management. He understands how to focus on the upside leverage in an organization, while effectively controlling and minimizing the downside risk. He understands the implications, correlations, applications, opportunities and vulnerabilities in a given situation from a “catscan” perspective that is exceedingly rare.He sees overlooked opportunities, hidden assets (both tangible and intangible), and underperforming areas of a business no one else recognizes. His depth and breadth of empirical experience has facilitated exceptional judgment, communication, and collaboration skills, the vitally essential traits necessary to establish, lead and effectively contribute to any organization. These are the prime abilities required to add new life and strategic vision to a company that is struggling, or one that needs to redefine or better distinguish itself in the marketplace.His forte, which is the ability to think “way outside the box” and prepare for multiple potential scenarios, has enabled him to find and successfully implement creative, preemptive solutions to very complex problems in order to generate high-performance results. He has successfully established beneficial relationships with key strategic partners and developed strategic business plans for companies that have consistently been met or exceeded. He has been instrumental in raising performance even while working with adverse business environments.As the founder and CEO of Abraham Group, Inc. in Los Angeles, California, Jay has spent the last 25 years solving problems and significantly increasing the bottom lines of over 10,000 clients in more than 400 industries worldwide. Jay has seen and dealt with every type of business you can imagine. And he’s studied and solved every kind of business question, problem, challenge and opportunityJay has been extremely successful at what he does for others. He’s produced many thousands of success stories and made Billions for others as well as millions himself. He’s spawned an entire generation of marketing consultants and experts who credit him as their primary mentor as a result of his past Protégé and Consultant Training programs. Nearly 2,000 websites reference his impressive work on the Internet alone.2. Mark Joyner is a #1 best-selling author of over a dozen books translated in almost as many languages. He is widely recognized as one of the early pioneers of e-commerce, responsible for inventing, pioneering, and popularizing many of the technologies we take for granted today (including remotely-hosted ad tracking, electronic books, Integration Marketing, and more …)- One of his books (MindControlMarketing.com) shot to #1 within 36 hours of its release.- One of his websites became the 37th most visited website on the planet within 6 weeks of its release.- His pioneering ebook (Search Engine Tactics) was downloaded over 1,000,000 times years before e-books were common.- He turned a fledgling one-man operation into a multi-million-dollar International corporation with customers in every internet-connected country on the planet in two years time.Other Interesting Facts About Mark JoynerEarned a Bachelor of Science in Psychology through independent study while simultaneously serving in the U.S. Army in the Military Intelligence Corp (he speaks Korean fluently graduating at the top of his class at the Defense Language Institute).Is a cold-war veteran of military intelligence and a former U.S. Army Officer. He held a Top Secret SCI clearance (the highest clearance level in the US) for several years.Was awarded for his military service by the U.S. Army, the Republic of Korea Army, the Korean Consulate General, and the President of the United States.3. Dan Kennedy, a Phoenix-based entrepreneur-extraordinaire has won international recognition as a “millionaire-maker,” helping people in dozens of different businesses turn their ideas into fortunesEntrepreneur Magazine says that Dan Kennedy has “at least 101 moneymaking ideas for any business owner.”Dan Kennedy moves with remarkable ease from one very different field to another, working with clients in 62 different businesses, industries and professions, earning as much as $250,000.00 in a single month providing unusual direct-response advertising and direct marketing advice, strategy, copywriting and marketing materials, video production and infomercials, and profit improvement systems.Kennedy’s clients include everything from sole entrepreneurs to huge corporations. Here are just a few examples – there’s the husband-and-wife couple who came to Dan with an idea, a mountain of debt, and failing advertising. Less than two years later, they have zero debt and a home-based mail-order business generating over $200,000.00 a month at about a 40% profit margin. Or, there’s the now-giant Guthy-Renker Corporation, famous for its celebrity infomercials with Victoria Principal and Vanna White, and its Tony Robbins infomercials. Guthy-Renker is a 200-million dollar+ a year business now, and Dan’s been a key member of their brain trust since their very first infomercial (Think And Grow Rich). Or there’s U.S. Gold, a company that has twice increased its sales by millions with Dan Kennedy provided marketing breakthroughs. And the list goes on and on and on.Kennedy is the “hidden genius” behind full-page magazine advertisements you’ve undoubtedly seen, direct-mail campaigns you’ve received and TV infomercials you’ve seen. In addition to all the advertising and direct-mail Dan prepares for his own products, services and businesses, there are hundreds of clients using marketing materials Dan has prepared for them. His full-page ads have appeared and do appear in magazines like Inc., Success, Entrepreneur, Moneymaking Opportunities, Nations Business, the airline magazines, the tabloids, USA TODAY, The Wall Street Journal, and countless trade magazines. One of his client’s full-page ads is now in its 10th consecutive month, appearing in over a dozen national magazines. In any given month, clients spend over 1/2-million dollars running ads, much more mailing sales letters, and still more airing infomercials that Dan has developed.And, Dan is one of the most popular, in-demand speakers on marketing-related topics. Ironically for a marketing guru, Kennedy gets almost all of his clients with no marketing! Some come to him after hearing him speak – in 1995, he addressed over 200,000 people, including audiences of thousands in many cities, in his 5th year on tour with famous motivationalist ZIG ZIGLAR. Others come after getting and reading one of his books available in bookstores, receiving his newsletter or listening to his cassettes. But most are referred to him.4. Joe Vitale is Founder & President of Hypnotic Marketing, Inc. He has written books for the American Marketing Association and the American Management Association. He wrote the only business book on P.T. Barnum, in There’s A Customer Born Every Minute. He also wrote The AMA Complete Guide to Small Business Advertising for the American Marketing Association. His most recent book, co-authored with Jo Han Mok, is The E-Code: 47 Secrets for Making Money Online Almost Instantly. Be on the lookout for his next book: Meet and Grow Rich!He recently created a software program to help anyone write better sales letters, articles, news releases, speeches and even entire books. It’s called Hypnotic Writing Wizard. He also has a brand-new membership program for those who are serious about learning marketing at HypnoticGold.com.Besides being one of the five top marketing specialists in the world today, and the world’s first hypnotic writer, Joe is also a certified hypnotherapist, a certified metaphysical practitioner, a certified Chi Kung healer, and an ordained minister. He also holds a doctorate degree in Metaphysical Science and another doctorate degree in Marketing.5. Dr. Jeffrey Lant has been a top achiever for a VERY long time. He published his first article at age 5. An afternoon newsboy, he started his own newspaper at age 10, sold stock and, yes, paid dividends! Even then media and communications intrigued him. This has never stopped!
Editor of his high school newspaper, editor of his class book, editor of the literary magazine, he also wrote a weekly column. That continued in college — and so did the awards accumulated along the way.Graduated with highest honors from University High School, Los Angeles, he graduated summa cum laude (one of only 11) from the University of California, Santa Barbara. Along the way, he spent his junior year at the University of St. Andrews, Scotland, where he won the University Prize in Philosophy and became the first American ever elected to the Students Representative Council.At UCSB he became the University’s first-ever Woodrow Wilson Fellow and was actively recruited by over 60 graduate schools, each offering him full doctoral fellowships. He chose Harvard, where he also became a Harvard Traveling Fellow, Harvard Teaching Fellow, and winner of a Master’s Award for special achievement, en route to graduating with both a Master’s and Ph.D.Upon graduation he took a third post-graduate degree, the Certificate of Advanced Graduate Studies in Higher Education Administration at Northeastern University, where he became the first student to cite his own published work (by now very extensive) in footnotes to his class papers.After a stint as Assistant to the President of Radcliffe College, Dr. Lant decided to set off on his own. He set up a consulting practice for non-profit organizations in 1976 and published his third book, Development Today: A Fund Raising Guide For Nonprofit Organizations. (Previous books had dealt with English Court ceremonial in the age of Queen Victoria. Entitled, Insubstantial Pageant: Ceremony and Confusion at Queen Victoria’s Court, Dr. Lant became the first American ever granted access to the Royal Archives at Windsor Castle. Another book, Our Harvard, dealt with the memories of eminent Harvard grads, including Dr. Lant himself.)Development Today launched a busy consultancy, international travel, workshops and direct assistance to hundreds of nonprofit organizations nationwide. It also spawned a series of how-to books that turned Dr. Lant into a millionaire and brought his detailed, hard-hitting, practical advice to people worldwide. (Click here for information about all of Dr. Lant’s books.)Along the way, Dr. Lant developed an internationally syndicated column carried by several hundred publications, a syndicated radio show on the Business Radio Network, and a string of special reports on specialized business- building subjects.So it might have continued but for the creation of the Internet and a series of eye-opening phone calls from George Kosch and Sandi Hunter, two Edmonton-Alberta- based entrepreneurs who were way ahead of their time. They persuaded Dr. Lant to come to Edmonton and see the future — the Internet — for himself.He did. And the rest, as they say, is history.What he saw in Edmonton, back in 1993, was that anyone, anywhere in the world with a computer and access to the Internet could transmit unlimited amounts of information to people worldwide. In a moment, the glimmer of an idea took form that is still being developed right now.This new technology opened the possibility of staying at home and helping people worldwide at little or no expense! As a result of that trip, Worldprofit Inc., a company which has opened the Internet to business people worldwide, people who want to enter and profit from new markets across the universe for their products and services, was born!These days Dr. Lant, still publishing articles just like he’s been doing for over 50 years, helps business people worldwide understand how the Internet can benefit them.6. Marlon Sanders, CEO of Higher Response Marketing, Inc. is a prolific internet marketer, with a dozen internet marketing products and services to his name. He uses his Master’s degree in psychology to great effect by writing great ad copy.Marlon’s products and services include The Amazing Formula That Sells Products Like Crazy, Push Button Sales Letters, Associate Program Marketing Handbook, Gimme My Money Now, Amazing Ad Copy Secrets Revealed, Create Your Own Products In A Flash, How to Automate Your Web Business, The Web Site Power System, Web Business Operations Manual, Secrets of Speed Publicity, The Cash Like Clockwork System, Daily Stats Software, and The Ultimate Beginner’s Guide.Marlon has spoken at over 120, $3,000 one-day marketing seminars and commands $1000 an hour for consulting. His reseller program for The Amazing Formula is one of the top-ranked systems on the Internet.7. Corey Rudl (1970-2005) was an American marketing strategist, and founder and President of the Internet Marketing Center. He was also an author, speaker, and software producer.Rudl started his first online business in 1994, turning it into a multi-million-dollar business based on Internet marketing. In response to the demand for his advice, Corey founded the Internet Marketing Center, where he taught techniques and strategies that stemmed from his own experience. His Internet marketing guide is sometimes described as the “Internet Marketing Bible”.Rudl’s articles appeared in publications such as http://Entrepreneur.com, the U.S. Small Business Administration’s -SCORE.org, the Direct Marketing Association, MarketingProfs, Opportunity World, Money ‘n’ Profits, Dig-IT Now, and Home Business Journal.Before beginning his business career, Rudl was a motocross driver, winning a 2002 Vancouver Molson Indy sports car event.On June 2nd 2005, Rudl was riding in a Porsche Carrera GT driven by Benjamin Miles Keaton, on a track that was also being used by a local Ferrari sports club. Keaton, trying to avoid a queued car, hit a concrete barrier on the passenger side, killing Rudl.8. Joe Robson, owner of “The Newbie Club” is a Brit and lives in the beautiful County of Yorkshire, England.He is responsible for the overall Promotion and Marketing of The Newbie Club, and is deeply involved with his team of Techies, Writers, and Designers on several unique and ground breaking Newbie Club Products and ServicesUntil he went online in 1998, he owned his own Direct Marketing company, and is a professional Advertising Copywriter with 30 years Sales and Marketing experience under his belt. He is widely acknowledged by many Internet Marketers as one of the Internet’s top Sales Copywriters, and his Copywriting Solutions Website is one of the most respected Web Copywriting Tutorial Websites on the Net.One of his strengths is his ability to reduce highly technical marketing copy, into easily understood Plain English. And he is a avid campaigner against the use of Jargon in writing materials. Hence the birth of The Newbie Club.His Copywriting and Internet marketing articles and Tutorials have been widely published across the Web, and he is the author of several books, including the Internet Copywriting blockbuster “Make Your Words SELL!” – MYWS – co-authored with Ken Evoy of MYSS fame.Joe is a Founding Member of iCop – The International Council of Online Professionals, the highly respected organization dedicated to protecting Internet consumers from the dishonest practices of unscrupulous Internet marketers. He is also a Member of the iCop International Advisory Council.9. Dr. Evoy is also the author of a series of widely-acclaimed “best on the Net” e-commerce books and courses for SOHOs (Small Office Home Office) and small businesses (1-10 employees) who sell (or plan to sell) products or services online. The SiteSell product line has empowered hundreds-of-thousands of people and small businesses around the world to succeed on the Web.A successful entrepreneur, Dr. Evoy has designed over 23 products that have sold internationally, generating 100′s of millions of dollars in revenues for various companies. He also developed several software products including one for the stock market sector.Dr. Ken Evoy is also a Canadian physician who formerly taught and practiced emergency medicine at McGill University in Montreal, Canada. He was born in Montreal, Canada and holds degrees in science and medicine from McGill University.Dr. Evoy’s business philosophy is to offer the absolute best tools and information available on the market in the most accessible format and at the most affordable price. He feels strongly that every small business can be empowered to use the Internet to leverage their income-building potential — whether it is to build an e-business, grow an existing offline business, or create a secondary income stream.It is with this in mind that SiteSell has developed its breakthrough Web site-building, hosting, e-marketing solution that delivers real traffic and guaranteed results to novices and savvy pros alike. Some call Site Build It! “The Next Generation of Web Hosting.”Through Dr. Evoy’s spearheading efforts and fanaticism for quality and customer “OVERdelivery,” the SiteSell brand is highly-respected by top influential Internet business personalities around the world.10. Mel Strocen is CEO of the Jayde Online Network of websites. The Jayde Network currently consists of 12 websites, including ExactSeek.com and SiteProNews.com, two of the most popular sites on the Internet.”SiteProNews” an ezine for business owners and site developers containing articles and advice on how to get the most from your website. SiteProNews (SPN) has a subscriber base of over 500,000!”Another of Mel’s sites – GoArticles – is an immensely popular article directory where you can search for free content for your website.In addition to providing a great resource for webmasters looking to find free content the GoArticles site also provides authors with an excellent platform for promoting their articles. You can submit articles for free that will then be read and used by other websites owners.ExactSeek is a fast-growing search engine and directory and alternative advertising platform that receives over 30,000 new submissions daily.

Finance, Credit, Investments – Economical Categories

Scientific works in the theories of finances and credit, according to the specification of the research object, are characterized to be many-sided and many-leveled.

The definition of totality of the economical relations formed in the process of formation, distribution and usage of finances, as money sources is widely spread. For example, in “the general theory of finances” there are two definitions of finances:

1) “…Finances reflect economical relations, formation of the funds of money sources, in the process of distribution and redistribution of national receipts according to the distribution and usage”. This definition is given relatively to the conditions of Capitalism, when cash-commodity relations gain universal character;

2) “Finances represent the formation of centralized ad decentralized money sources, economical relations relatively with the distribution and usage, which serve for fulfillment of the state functions and obligations and also provision of the conditions of the widened further production”. This definition is brought without showing the environment of its action. We share partly such explanation of finances and think expedient to make some specification.

First, finances overcome the bounds of distribution and redistribution service of the national income, though it is a basic foundation of finances. Also, formation and usage of the depreciation fund which is the part of financial domain, belongs not to the distribution and redistribution of the national income (of newly formed value during a year), but to the distribution of already developed value.

This latest first appears to be a part of value of main industrial funds, later it is moved to the cost price of a ready product (that is to the value too) and after its realization, and it is set the depression fund. Its source is taken into account before hand as a depression kind in the consistence of the ready products cost price.

Second, main goal of finances is much wider then “fulfillment of the state functions and obligations and provision of conditions for the widened further production”. Finances exist on the state level and also on the manufactures and branches’ level too, and in such conditions, when the most part of the manufactures are not state.

V. M. Rodionova has a different position about this subject: “real formation of the financial resources begins on the stage of distribution, when the value is realized and concrete economical forms of the realized value are separated from the consistence of the profit”. V. M. Rodionova makes an accent of finances, as distributing relations, when D. S. Moliakov underlines industrial foundation of finances. Though both of them give quite substantiate discussion of finances, as a system of formation, distribution and usage of the funds of money sources, that comes out of the following definition of the finances: “financial cash relations, which forms in the process of distribution and redistribution of the partial value of the national wealth and total social product, is related with the subjects of the economy and formation and usage of the state cash incomes and savings in the widened further production, in the material stimulation of the workers for satisfaction of the society social and other requests”.

In the manuals of the political economy we meet with the following definitions of finances:
“Finances of the socialistic state represent economical (cash) relations, with the help of which, in the way of planned distribution of the incomes and savings the funds of money sources of the state and socialistic manufactures are formed for guaranteeing the growth of the production, rising the material and cultural level of the people and for satisfying other general society requests”.
“The system of creation and usage of necessary funds of cash resources for guarantying socialistic widened further production represent exactly the finances of the socialistic society. And the totality of economical relations arisen between state, manufactures and organizations, branches, regions and separate citizen according to the movement of cash funds make financial relations”.
As we’ve seen, definitions of finances made by financiers and political economists do not differ greatly.
In every discussed position there are:

1) expression of essence and phenomenon in the definition of finances;

2) the definition of finances, as the system of the creation and usage of funds of cash sources on the level of phenomenon.

3) Distribution of finances as social product and the value of national income, definition of the distributions planned character, main goals of the economy and economical relations, for servicing of which it is used.

If refuse the preposition “socialistic” in the definition of finances, we may say, that it still keeps actuality. We meet with such traditional definitions of finances, without an adjective “socialistic”, in the modern economical literature. We may give such an elucidation: “finances represent cash resources of production and usage, also cash relations appeared in the process of distributing values of formed economical product and national wealth for formation and further production of the cash incomes and savings of the economical subjects and state, rewarding of the workers and satisfaction of the social requests”. in this elucidation of finances like D. S. Moliakov and V. M. Rodionov’s definitions, following the traditional inheritance, we meet with the widening of the financial foundation. They concern “distribution and redistribution of the value of created economical product, also the partial distribution of the value of national wealth”. This latest is very actual, relatively to the process of privatization and the transition to privacy and is periodically used in practice in different countries, for example, Great Britain and France.

“Finances – are cash sources, financial resources, their creation and movement, distribution and redistribution, usage, also economical relations, which are conditioned by intercalculations between the economical subjects, movement of cash sources, money circulation and usage”.
“Finances are the system of economical relations, which are connected with firm creation, distribution and usage of financial resources”.

We meet with absolutely innovational definitions of finances in Z. Body and R. Merton’s basis manuals. “Finance – it is the science about how the people lead spending `the deficit cash resources and incomes in the definite period of time. The financial decisions are characterized by the expenses and incomes which are 1) separated in time, and 2) as a rule, it is impossible to take them into account beforehand neither by those who get decisions nor any other person” . “Financial theory consists of numbers of the conceptions… which learns systematically the subjects of distribution of the cash resources relatively to the time factor; it also considers quantitative models, with the help of which the estimation, putting into practice and realization of the alternative variants of every financial decisions take place” .

These basic conceptions and quantitative models are used at every level of getting financial decisions, but in the latest definition of finances, we meet with the following doctrine of the financial foundation: main function of the finances is in the satisfaction of the people’s requests; the subjects of economical activities of any kind (firms, also state organs of every level) are directed towards fulfilling this basic function.

For the goals of our monograph, it is important to compare well-known definitions about finances, credit and investment, to decide how and how much it is possible to integrate the finances, investments and credit into the one total part.

Some researcher thing that credit is the consisting part of finances, if it is discussed from the position of essence and category. The other, more numerous group proves, that an economical category of credit exists parallel to the economical category of finances, by which it underlines impossibility of the credit’s existence in the consistence of finances.

N. K. Kuchukova underlined the independence of the category of credit and notes that it is only its “characteristic feature the turned movement of the value, which is not related with transmission of the loan opportunities together with the owners’ rights”.

N. D. Barkovski replies that functioning of money created an economical basis for apportioning finances and credit as an independent category and gave rise to the credit and financial relations. He noticed the Gnoseological roots of science in money and credit, as the science about finances has business with the research of such economical relations, which lean upon cash flow and credit.
Let’s discuss the most spread definitions of credit. in the modern publications credit appeared to be “luckier”, then finances. For example, we meet with the following definition of credit in the finance-economical dictionary: “credit is the loan in the form of cash and commodity with the conditions of returning, usually, by paying percent. Credit represents a form of movement of the loan capital and expresses economical relations between the creditor and borrower”.

This is the traditional definition of credit. In the earlier dictionary of the economy we read: “credit is the system of economical relations, which is formed while the transmission of cash and material means into the temporal usage, as a rule under the conditions of returning and paying percent”.
In the manual of the political economy published under reduction of V. A. Medvedev the following definition is given: “credit, as an economical category, expresses the created relations between the society, labour collective and workers during formation and usage of the loan funds, under the terms of paying present and returning, during transmission of sources for the temporal usage and accumulation”.

Credit is discussed in the following way in the earlier education-methodological manuals of political economy: “credit is the system of money relations, which is created in the process of using and mobilization of temporarily free cash means of the state budget, unions, manufactures, organizations and population. Credit has an objective character. It is used for providing widened further production of the state and other needs. Credit differs from finances by the returning character, while financing of manufactures and organizations by the state is fulfilled without this condition”.

We meet with the following definition if “the course of economy”: “credit is an economical category, which represents relations, while the separate industrial organizations or persons transmit money means to each-other for temporal usage under the conditions of returning. Creation of credit is conditioned by a historical process of fulfilling the economical and money relations, the form of which is the money relation”.

Following scientists give slightly different definitions of credit:
“Credit – is a loan in the form of money or commodity, which is given to the borrower by a creditor under the conditions of returning and paying the percentage rate by the borrower”.
Credit is giving the temporally free money sources or commodity as a debt for the defined terms by the price of fixed percentage. Thus, a credit is the loan in the form of money or commodity. In the process of this loan’s movement, a definite relations are formed between a creditor (the loan is given by a juridical of physical person, who gives certain cash as a debt) and the debtor.
Combining every definition named above, we come to an idea, that credit is giving money capital of commodity as a debt, for certain terms and material provision under the price of firm percentage rate. It expresses definite economical relations between the participants of the process of capital formation. Necessity of the credit relations is conditioned, from one side, by gathering solid quantity of temporarily free money sources, and from the second side, existence of requests of them.

Though, at the same time we must distinguish two resembling concepts: loan and credit. Loan is characterized by:

o Here, the discussion may touch upon transmission of money and also things form one side (loaner) to another (borrower): a)under the owning of the borrower and, at the same time, b) under the conditions of returning same amount or same quantity and quality of the things;

o The loaning of money may bear no interest;

o Any person may take part in it.
With the difference with loan, credit, which is somehow a private occasion of the loan, represents:

o One side (loaner) gives to the second one (borrower) only money, and _ for temporal usage;

o It may not bear no interest (if the assignment doesn’t foresee something);

o In it creditor is not any person, but a credit organization (at the first place, banks).
So, a credit is the bank credit. To our mind, it is not correct to use “credit” and “loan” as the synonyms.
Banking crediting is the union of relations between bank (as a creditor) and its borrower. These relations touch upon:

a) Giving a certain amount of money to the borrower for definite purpose (though, we meet with the so-called free credits, aims and objects of crediting are not appointed in the assignment);

b) Its opportune returning;

c) Getting percentage rate from the borrower for using the sources under his/her disposal.
The essential foundation of the credit essence and its important element is existence of trust between the two sides (in Latin “credo”, from which comes the word “credit”, means “trust”).
From the position of circulation of money forms (in the abstraction, historical process of formation economical relations and social budget and banking systems expressed by them) comparing different definitions of finances and credit, the paradox conclusion appears: credit is the private occasion of finances. And truly, from the position of movement of the money forms, finances represent the process of formation and usage of the funds of cash means. Very often such movements are fulfilled without returning, but sometimes, it is possible to give loans from the budget for the investment projects of other needs. Also, when a manufacture or corporations use their cash funds and we mean the finances of industrial subject, such usage may be realized as inside the manufacture or corporation (there is no subject about returning or not returning of the usage), so gratis under conditions of returning. This latest is called commercial form because of transmitting the sources to others, but even in this occasion, it is the element of financial system of the manufacture and corporation.

From the point of cash means movement, main character of credit is the process of formation and usage of the funds of cash means under the conditions of returning and, as a rule, taking the value-percentage. If gating the credit value doesn’t take place (even in the exceptional occasions), according to the movement form, credit becomes a private occasion of finances, as from the net financial funds (consequently from the state budget) the loans which bear no interests may be used. If gating credit value takes place, by the appearance form, credit is discussed to be financial modification.

From the historical point of view, finances (especially in the sort of the state budget) and credit (beginning with usury, later commercial and banking) were developing differently for considering credit to be the part of finances. Though, from the genetic-historical point of view, previous loaners, before giving loan, needed gathering the permanent capital not returning, that is the net financial foundation. The banks analogously needed concentration of the important own capital for influxing the consumers’ means and for getting higher percentage rate under the conditions of returning. Herewith, exactly on the financial basis, in the sort of financial fund (which later partially becomes loan fund) part of the bank capital appears to be the reservation (insurance) part of the fund, which by nature is financial and not loan. So notwithstanding the essential distinctions between finances and credit form the genetic-historical point of view, credit appears to be formed from finances and represent their modification.

From the essential position of expressing economical relations of finances and credit, we meet with cardinal distinctions between these two categories. Which mostly expressed by the distinction of the movement forms notwithstanding they are returnable or not. Finances express relations in the aspects of distribution and redistribution of social product and part of the national wealth. Credit expresses distribution of the appropriate value only in the section of percentage given for loan, while according to the loan itself, a only a temporal distribution of money sources takes place.
Herewith, there is a lot of common between the finances and credit as from the essential point of view, so according to the form of movement. At the same time, there is a significant distinction between finances and credit as in the essence, so in the form too. According to this, there must be a kind of generally economical category, which will consider finances and credit as a total unity, and in the bounds of this category itself, the separation of the specific essence of the finances and credit would take place.

Funding of the cash means is common to the researched economical categories. It takes place in any separate system of finances and credit, which have been touched upon during the analyses of defining finances and credit. Word combination “funding of the cash sources (fund formation)” reflects and defines exactly essence and form of economical category of more general character, those of finances and credit categories. Though in the in economical texts and practice, it is very uncomfortable to use a termini, which consists of three words. Also, “unloading” with an information hardens greatly its influxing into the circulation even in the conditions of its strict substantiation and thoroughness.
In the discussing context we consider:

1) wide and narrow understanding of economical category of the finances;

2) discussing finances in narrow understanding under general traditional meaning;

3) discussing finances, as funding of the cash means, in wide understanding, which concerns finances – in narrow meaning and credit – in complete meaning.
Termini “funding” and its equivalent “fund formation” are used by us as the purposeful structuring of cash means, which is based on two poles – accumulation of money sources (gathering) and its usage for definite purpose in the way of financing and crediting.
We have established a new termini – “finance-investment sphere” (FIS). Analyses about interrelation of finances and credit made by us give us an opportunity of proving, that in the given termini, the word “financial” is used with the meaning of funding cash sources, its purposeful structuring. In this process we consider at the same time financial, credit and investments’ economical categories.

Let’s sum up middle results of discussing new concept – “finance-investment sphere” and discuss its investment consisting parts.

The concept “investments” was brought into the native economical science from the West. In the Soviet economical science they for a long time used in the place “investments” the termini “capital placement”, which expressed the usage of the industrial factors in the sphere of real industrial activities during realization of capital projects. From one glance, this termini in its concept is identical to the “investments”, consequently it is possible to use them as synonyms. Though the termini “investments” and “investing” have the advantage towards the termini “capital placement” from linguistic and philological points of view, because they are expressed with one word. This is not only economical and comfortable in the process of working with the termini “investment” itself, but also it gives an opportunity of termini formation. More concretely: “investment process”, “investment domain”, “finance-investment sphere” – all these termini are much more acceptable.
Changing native economical termini with foreign ones is purposeful, if it really matters (by keeping parallel usage of the native termini for the inheritance). Though we must not change native economical termini into foreign ones all together, when by ordinal traditional language easy to explain private and narrow concrete processes and elements get their own termini. The “movement” of these termini is approved in the narrow professional bounds, but their “spitting out” into the economical science may turn economical language into the tangled slang.

Let’s discuss termini – “investment” and “capital placement’s” usage in the economical literature.
Investments are placement of funds into the main and circulation capital for the purpose of getting profit. “Investments in material assets – are the placements of funds into the mobile and real estate (land, buildings, furniture and so on). Investments in financial assets are the placements of funds into the securities bank accounts and other financial instruments”.

We don’t meet with the termini “investments” in the earlier economical dictionary, but we meet the combined termini “investment policy” – the union of the industrial decisions, which guarantee main directions of the capital investments, the activities of their concentration in the determinant suburbs, on which the reaching of planned rates of development of the society production is depended, balancing and effectiveness, getting more and more production and profit of the national income for every lost Ruble”. For today, in the most actual definitions, the capital investments are bounded only by financial means, when not only financial, but also the investment of natural, material-technical and informational resources takes place. Labour resources take an actual place in the investment process. They themselves fulfill this or that investment process.

A positive side of the discussed definitions is that they connect investment policy and capital placements (investments):

- economical development according to the key directions to the concentration;

- providing high rates of economical growth;

- raising an economical effectiveness, which is expressed:

a) by growing the throw off of the production and national income for every lost Ruble;

b) by fulfilling the branch structure of the investments;

c) by improving their technological structure;

d) by optimization of their further production structure.

Compared with such definition of the investments (capital placement) the definition of investments in the dictionary attaching the “Economics” seems to be unimproved: “investments – the expenses of gathering production and industrial means and increasing material reserve”. In this definition current expenses (production expenses) are mixed with the investment (capital) expense. Also, not the investment expenses but (though the investments are followed by the appropriate expenses) exactly advancing. It differs from the expenses by that the means (means) are put by returning the advanced values, also, under the conditions of growth, to which the concept-advanced capital is corresponding. the advancing may be realized in the money, natural-material and informational forms.

Except the termini “investments”, there are two more termini related with the investment. They are shown below.

“Human capital investment” – any activity provided for rising the workers labour productivity (in the way of growing their qualification and developing their abilities); at the expenses of improving the workers’ education, health and raising the mobility of the working forces”. It is very useful to use the mentioned termini, though it needs one correction: the human capital investments do not concern only workers, but also the servants, representatives of every kind of labour.
“Investment commodity, capital goods – a capital.”

In the official manuals of political economy of the reformation time the capital investments are discussed as “expenses for creating new main funds and widening, reconstruction and renewing the active ones”. In this definition the investments (capital placements) during separation of the forms (types) of further production of the main funds are bounded only by main funds (without increases of the circulation funds and insurance reserves):

a) creating new ones;

b) widening;

c) reconstruction;

d) renewing.

Also, the concept of the industrial gathering appears, at the expenses of widening of basic, circulation funds and also insurance reserves takes place”.

You’ll meet below the definitions of investments from “the course of economy”: the investments are called “placements of fund into the basic capital (basic means of production), reserves, also other economical objects and processes, which request long-termed influxing of material and cash means. “According to the division of capital into physical and money forms, the investments too must be divided into material and cash investments”.

They apportion investment commodity, to which belong industrial and nonindustrial building objects, vehicles purposed for changing or widened technical park and the furniture, increasing reserves and others.

“They call the total investments of production an investment product, which is directed towards keeping and increasing the basic capital (basic means) and reserve. Total investments consist of two parts. One of them is called the depreciation; it represents important investment resources for compensation of renewal till the level of before industrial usage, wearing out and repairing of the basic means. Second consisting part of the total investments is represented by net investments – capital investments for the purpose of increasing basic means”. Depreciation is not a compensation resource of wearing the basic funds out, but it is the purposeful financial source of such resources.
Human capital investment is “a specific kind of investments, mostly in education and health protection”.

“Real investments are the investments in the economical branches and also, they are kinds of economical activities, which provide influxing the increases of real capital, that is increasing material values of the industrial means”. We can agree with such definition with one specification that material and nonmaterial values too belong to the real capital (wealth), consequently science-researching experimental-construction results, various information, education of he workers and others. Such service as organization of the excitable games, also the service of redistribution social wealth from one private person to another (except charity).

“Financial investments represent placement of funds into the shares, obligations, promissory notes, other securities and instruments. Such investments, of course, do not give increases of the real material capital, but they help getting profit, consequently at the expenses of changing the course of the securities in the time of speculation, or distinguishing the course in different places of sell and purchasing”. We share wholly such definition, hence it follows that financial investments (if it is not followed by real investments as a result) do not increase real material wealth and real nonmaterial wealth. According to this context, the expression below is very important: “we must distinguish financial investments, which represent placement of the funds in the ways of selling and purchasing the securities for the purpose of getting profit and financial investments, which become cash and real, moved to real physical capital.”

In the “economical course” quoted before long and short-termed investments are separated. Recognizing the existence of the bounds between them, the authors ascribe short-termed investments to “one month or more” investments. If we get such conditioned criteria, that we can call the investments which overcome the terms of some months, long-termed ones, which is very doubtful and we don’t agree with it. A long-termed character of the fund placement is a significant feature of the investments (short-term doesn’t combine with the concept of investments). Principally, it would be better to point out quick compensative, middle termed compensative and long-termed compensative investments:

- less then 6 months – quick compensative;

- from 6 months up to the year and a half – middle termed compensative;

- more then the year and a half – long termed compensative.

We stopped at the definition of the investments in the capital work “economical course” for the special purpose, as, in it the author tried to discuss the concept of investments systemically and quite completely, herewith the book is published just now.

We’ll return to the discussion the definition economical category of “investments” in different publications in the following chapter. The definitions given here are quite enough for having a notion of the level of lighting up the given category in the economical literature.
What conclusions may be made according the definition of the mentioned economical category in the published works, except the made notions and specifications?

There is quite deeply, concretely and thoroughly defined the concept of “investments”, different definitions in the economical literature; but mostly in every works about the investments discussed by us until now, there is not opened the essence of investments as an economical category. In every monograph , even if it has a title investment, as an economical category , there is given only the definition, concept of investments. But, as the Academician Vasil Chantladze explains, “a concept is a discussion, which proves something about the distinguishing feature of the researched object. A concept out of much essential characteristic features represents only one, and essential in it is only – definition”.

But the categories are much wider; it is “a key, the most fundamental concept of every science”. Economical categories theoretically represent real, objectively existed productive relations. A category is the defining of occasions of existed characters, connections, relations of the objective world. Generally, any educational process is fulfilled by the categories, which give opportunities for dividing the processes and occasions semantically, for expressing the definitions of a subject and realize their specific peculiarities and economical relations of a material world.
Our goal is exactly to substantiate investments – as an economical category and also, as a financial category in the narrow understanding.

Here we apply for another manual thesis made by the academician Vasil Chantladze: “every financial relation is an economical one and every financial category is and economical one, but not every economical relation and economical category is financial relation and financial category”.
In the process of defining the investments, it is important to take in mind the sides of resources, expenses and incomes, because investment, from one side, is the result of the manufacture’s activity, and, from another one, – a part of income, which, in this case, is not used for usage.
Another occasion: it is advisable to discuss investments in two aspects: as a category of reserve and flow, which will reflect exactly the connection between “placement of funds” and “investments”.