Bennett Quillen's Blog

Information and Technology Services Professional

Month: February, 2013

BB Quillen Bio

Bennett Quillen possesses over 30 years of financial institution technology, operations, cash management, and compliance experience. He provides technology advice to senior management at financial institutions. He specializes in systems evaluation, development, conversions and security and compliance management. Bennett has conducted frequent seminars for banking and treasury organizations as well as universities. He has written several articles for business journals on such topics as project management and treasury management applications.

Career Highlights

• Conducts operational and technology audits of back office operations, security administration, identity and access management, information technology, payment card processes and funds management activities for community and regional banks compliance with legal and regulatory issues.

• Directs conversions for community banks core systems for both in-house and outsourced solutions to reduce operating costs. These engagements include establishing and converting data centers, telecommunications and infrastructure systems.

• Managed projects for an overseas investment bank to streamline its procedures and implement control processes for information technology and funds management departments in their Caribbean and UK operations. The projects improved productivity and compliance with SAS70 and Basel II requirements.

• Directed comprehensive information technology assessments and managed over 250 applications systems conversions, including the integration of several different and remote operating platforms for branch and remote image capture and item processing for domestic and overseas banks.

• Managed a SOx compliance engagement with a budget of over $10 million for a large P&C insurer. Responsibilities included development of a comprehensive project plan and management of procedures for remediation and testing to complete remediation tasks on-time and within budget.

• Developed the acquisition strategy for a large international insurance carrier based in the Netherlands and the training program for a large Austrian bank for its operations in Eastern Europe.

Credentials

As Chief Information Officer, Bennett directed all systems development, operations and network support for a leading mutual fund processing firm, based in New York City.

He directed data processing and operations for a large regional commercial bank and trust company, based in the mid west. His responsibilities included the management, evaluation, installation, and support of all loan, deposit, trust and treasury applications.

As a managing director for a consulting firm in Chicago, he directed several operations audits, systems conversions, and corporate planning projects for banks, thrifts and insurance companies, both overseas and in the States.

Bennett started his banking career with a large California-based commercial bank in its controller’s department, managing financial systems and analysis.

He served on the Board of Directors of MAPEX, an item and electronic clearinghouse, in the mid west.

Bennett Quillen holds a BS degree in chemistry and mathematics from The Principia College and a MBA in industrial management and finance from the University of Southern California.

Contact Information

Telephone: 704.907.5235
Email: bquillen@qandans.net

QUILLEN’s MAXIMS for SUCCESS

1. REQUIRE HONESTY IN DEALING WITH CUSTOMERS, SUPPLIERS AND EMPLOYEES

2. FOCUS ON LONG TERM PROFIT RATHER THAN SHORT TERM GAINS

3. MONITOR PROFIT/COST CONTRIBUTION RATHER THAN VOLUME THROUGHPUT

4. BUY RATHER THAN BUILD: IT IS MORE PROFITABLE, UNLESS YOUR FIRM DEVELOPS OR PROVIDES A COMPLETELY UNIQUE PRODUCT

5. MAINTAIN STANDARDS RATHER THAN KEEP MULTIPLE VERSIONS OF SYSTEMS, POLICIES

6. ORGANIZE BY PRODUCT GROUP RATHER THAN TECHNICAL FUNCTION

7. HIRE/TRAIN BUSINESS-ORIENTED PEOPLE WITH I/S SKILLS RATHER THAN FOCUSING SOLELY ON TECHNOLOGY SKILLS

8. KEEP COMPANIES RELATIVELY SMALL, PREFERABLY LESS THAN 750 EMPLOYEES, FOR: GREATER ROI, LESS OPERATIONAL REDUNDANCY, CONSISTENT CUSTOMER SERVICE, MORE KNOWLEDGEABLE STAFF

9. KEEP TITLES SHORT, THREE WORDS OR LESS, THAT DEFINE FUNCTION (FEW OFFICERS AND CORPORATE TITLES); E.G.: USE PERSONNEL DIRECTOR, NOT SVP – HUMAN RESOURCES

10. AVOID GRADUATES OF IVY LEAGUE COLLEGES: THEY CAN TALK THE TALK BUT CANNOT WALK THE WALK

ENGLISH REHABILITATION

Bennett Quillen is the founder and president of the English Rehabilitation Institute (ERI). Its purpose is to stem and reverse the current negative trend in the misuse and abuse of the English language in business. Today’s business is fraught with the contagion of abusive English practices e.g. twisting verbs into nouns and producing meaningless, even potentially damaging, words. ERI rehabilitates its students to become confident, productive users of the English language, thus benefiting themselves, their associates and their employers.

Bennett possesses over 35 years of broad experience in delivering speeches, conducting seminars and writing proposals and reports for companies, colleges and universities, and not-for-profit institutions. . He held a variety of senior executive and program management roles in operations and information technology. His consulting activities include companies throughout North America, Europe and the Middle East.

One of the keys to his success is the correct application and usage of the English language. His knowledge of the correct application of grammar and vocabulary has earned him the distinctive title of “Grammar Guru”. His success in business is directly dependent upon adopting correct terminology for the task at hand and avoiding sloppy, meaningless clichés.

To this end, Bennett Quillen founded the English Rehabilitation Institute (ERI), LLC. Today’s business is beset by the constant misuse, or downright corruption, of words. When meaningless or mealy mouthed terms are used, people misunderstand and fail to take effective action. The results are wasted time, misused staff, lost revenue and increased costs. If business is to be productive, it must adhere to the basic principles of English grammar and vocabulary. ERI students undergo a rigorous course of instruction that develops and expands their abilities to properly use the English language in all facets of business.

The course has four phases: identify misused and corrupted use of nouns, verbs, and adjectives; provide the tools on when and how to use correct terminology; educate in the correct and appropriate application of grammar; demonstrate how best to use and present terminology for positive results. Courses vary from four to six weeks, depending upon the intensity of course material required for the students.

Credentials

As Chief Information Officer, Bennett directed all systems development, operations and network support for a leading mutual fund processing firm, based in New York City.

He directed information technology, operations, marketing and human resources for a large regional commercial bank and trust company, based in the mid west.

As a managing director for a consulting firm in Chicago, he directed several operations audits, systems conversions, and corporate planning projects for banks, thrifts and insurance companies, both overseas and in the States.

Bennett started his business career with a large California-based commercial bank in its controller’s department, managing financial systems and analysis.

Bennett Quillen has addressed a variety of industry groups e.g. Bank Administration Institute, Treasury Management Association, NACHA conferences, Credit and Lending Association and Washington University in St Louis. He has served on the Board of Directors of MAPEX, an item and electronic clearinghouse, in the mid west.

Bennett Quillen holds a BS degree in chemistry and mathematics from The Principia College and a MBA in industrial management and finance from the University of Southern California.

Contact Information

Telephone: 704.907.5235
Email: bquillen@qandans.net

Cash Flow Forecasting

EFFECTIVE CASH
FLOW FORECASTING
TECHNIQUES
There are four steps the cash management
professional needs to apply in developing and
refining periodic cash flow forecasts. This article
outlines the key steps.
Bennett Quillen,
Too often business managers focus on
the means rather than on the ends of
cash flow forecasting. Tomes have been
written on sophisticated cash flow forecasting
techniques and computer models.
Sometimes a treasury professional gets
the impression that by merely applying
these tools, she or he can perform better
cash flow forecasts.
That is not to say that these methods
are unnecessary, but they need to be judiciously
applied in the context of an organization’s
business objectives. The cash
management professional responsible for
developing cash flow forecasts needs to
ask: what is the nature of my business
and what is the business trying to accomplish
with its cash flow?
This article outlines four steps the cash
management professional needs to apply
in developing and refining periodic cash
flow forecasts. The steps are:
1. Define end-user cash requirements.
2. Defino and segment the factors that
influence demand for cash roquiraments
and sources.
3. Apply forecasting tools to the cash requirements
and demand factors.
4. Refine the forecast as appropriate.
Define End-User Cash Requirements
To define end-user cash requirements,
functional and timing objectives need to be
identified. Functional objectives can usually
come straight from the general ledger.
Unfortunately, the typical general ledger is
a poor vehicle from which to make forecasts.
It is simply a tool to identify appropriate
cash flow categories such as:
• Accounts receivable
• Investments
• Trade payables
• Payroll
• Capital expenditures: plant and
equipment
• Tax payments.
Timing will typically fall into weekly,
monthly, and quarterly needs.
To understand the end -ueer cash requirements,
the cash manager should discuss
each of the functional categories (and
their subledger accounts) with the individuals
that make decisions for these accounts.
These individuals will include representatives
from the sales, treasury, purchasing
(including vendors) and accounting
departments.
Cash management professionals should
x x
Figure 2: Industry/Cash Flow Factors
Industry Examples
Cash Flow
Dependent Factors Utility
Grocery
Distributor
Claims
Processor Publisher
Empirical
..,2 years
* 2 months
Geography
Seasonality
Customer Base
product Line
x x
x
X X
X X
X
Segmenting Industry Cash Flow-
Dependent Factors
Consequently, each industry or business
has a unique set of factors that determine
its cash flow. Figure 2 illustrates an example
of industries and the factors that determine
their sources of cash.
then deducts outlays that do not affect
profits (e.g., capital acquisitions and dividend
payments).
Balance Sheet Projections
Both the Balance Sheet Projection and
Working Capital Extrapolation methods
start with the balance sheet.
The Balance Sheet Projection looks at
changes in the balance sheet to determine
cash inflows and outflows. This method is
more applicable to seasonal trends.
Working Capital Extrapolations
Beginning with the balance sheet, this approach
uses anticipated changes to working
capital by assessing each revenue and
expense category as to whether it will be a
source or use of cash. The method is best
applied to long-term forecasting.
Accrual Addback (1)
The Accrual Addback method is somewhat
unique in that it can be prepared relatively
easily with a limited number of data
sources. The approach is similar to the
Adjusted Earnings method, but it finetunes
historical data and the distribution
of non-cash accruals. It is extremely accurate
in the 3- to IS-month timeframe.
Forecasting Tools
After end-user cash requirements and dependent
factors have been specifically defined
for a certain business, the cash manager
may apply one of five prevalent and
well-documented cash flow forecasting
methods. These are:
• Cash receipts and disbursements
• Adjusted earnings
• Balance sheet projections
• Working capital extrapolation
• Accrual addback
Some of the principal features of each of
these methods are outlined as follows:
Cash Receipts and Disbursements
This very straightforward method is frequently
used by smaller corporations. It
does, however, require a very high level of
accuracy on anticipated disbursements
and receipts. Consequently, it may not be
applicable to many companies requiring a
forecast in excess of 60 or 90 days.
Adjusted Earnings
Adjusted Earnings is highly dependent
upon the accuracy of profit projections.
The approach begins with net after-tax
profit and adds expenses that are not actna
1 N~Rh OlJtl:WR (p..P” .. rlenreciatirm t Tt.
Applying Cash Forecasting Methods
All of these methods have common sources
of information: historical and budgeted
balance sheet and/or profit and 1088 data.
Their differences stem largely from fonn
. and time horizon. The key 113 to apply the
selected method consistently over an extended
period.
ensure that the detailed functional categories
account for more than 80 percent of
the company’s cash flow. Once this is determined,
a cash flow requirement decision
matrix should be completed, based on
detailed functional sources and uses of
cash and timing needs.
Figure 1 illustrates an example of a
functional/timing matrix. Estimated dollar
amounts would be inserted into the appropriate
matrix celL Of course, the categories
and timing vary by industry and
business.
Factors Influencing Cash Demands
For the individual responsible for cash
flow forecasting, the identification and
definition of the factors influencing cash
demand (sources and uses) constitute the
most important step. This step involves a
thorough knowledge of both the company
and the industry in which it operates. Understanding
the factors of demand is crucial
to the success of any forecast.
Cash flow requirements are affected
both by macroeconomic factors and by industry-
specific developments. Consequently,
interviews with cash managers representing
utility, grocery distributors, health
claims processors and publishing companies
indicate that there is no unique set of
factors and methods for predicting cash
flow requirements.
Examples of Industry-Dependent
Factors
• Utility
For an electric utility, the two most influential
factors are seasonality and
geography. One might assume the mix
of business and residential users in
the market served by the utility would
have the most significant effect on utility
demand and, thus, cash flow.With
a given mix of commercial and residential
users, however, cash sources and
applications remain relatively stable.
Utilities have found that residential
customers nearly always pay five to
seven days in advance of the due date.
The typical utility’s cash forecasting
horizon is 60 to 90 days.
Figure 1: Functional/Timing Matrix
1—- Timing
Functional Categories Weekly Monthly Quarterly
Cosh Sources
AIR X
Investments X X
Cosh Uses
AlP X
Payroll X X
Capital Expenditures X
Tax Payments X
• Grocery Distributor
The grocery distribution business is an
example of the combination of empirical
data and seasonality. Forecasting
and managing cash flow for grocery
distributors require a cash manager to
constantly monitor vendor payments
in order to capitalize on payment
terms. The day of the week is also a
predictive element in forecasting; on
Monday, for example, the company
would experience a heavy cash inflow
while the inflow on Tuesday is usually
very low.
In this case, the forecasting horizon
is more critical in the short term;
so, the cash manager requires weekly,
monthly and quarterly forecasts.
• Health Claims Processor
Cash flow for health claims processing
is almost entirely dependent upon the
recipient base and its mandated coverage
options.
Once a health claims processor
knows the number of its recipients and
the extent of coverage options that are
allowed by the state, the company has
sufficient data to estimate its cash
flow on a monthly and quarterly basis.
The number of claims per recipient
within a state provides the processor
with quantified results on the expected
number and dollar amounts of claims.
Monthly dollar amounts vary, depending
upon the number of Fridays and
holidays within the month.
The accuracy of cash flow forecasting
can be improved by using some basic projection
techniques. These include moving
averages, least squares, or exponential
equations.
Prelection Techniques
• Moving Averages
This technique simply smooths the data.
It produces consecutive chronological
projected data for a selected period.
• Least Squares
This technique is one of the most widely
used. It produces an equation and a
line that bears a definite and easily
understandable relationship to the actual
data points. Least Squares may
be used to fit a straight line or a
curved line. Generally, the most complicated
curved line is a quadratic or
second degree equation.
• Exponential Equations
This technique is useful in projecting
geometric progressions. The progressions
vary according to a multiplier factor
determined from observation and
experience with the historical data.
These techniques may be applied to one
or more of the factors affecting the cash
flow forecast. The accuracy of a particular
technique can be closely monitored by
evaluating its relative error for an actual
versus forecast.
Refine the Forecast
Circumstances change over time. Even if
the underlying factors of a business do not
alter, actual cash flow experience will
change.
For example, a company may change its
lockbox, controlled disbursement operations
or billing procedures. These conditions
need to be factored into the analysis
of a cash flow experience. They may suggest
one forecasting technique iristead of
another or, more likely, a modification in
the mathematical projection technique
used.
To improve the accuracy of cash flow
forecasts, cash managers will need to periodically
review their results and margins
of error. Acceptable margins of error depend
upon the magnitude of the dollars
involved and the time horizon of the forecast.
Of course, uncertainties will always
remain. If cash managers base their cash
forecasts on the underlying end-user requirements
and factors that influence demand
for cash, however, they stand a better
chance for accuracy. •
(1) The technique was developed by Alan Cunningham
of Cash Forecasting Associates in Berthoud,
Colorado.

Contract Negotiation

Evaluating and Negotiating
a Softvvare Contract
by Bennett B. Quillen
Bennett B. Quillen
o you are about to
sign a software contract.
Do you know
what to request
from your proposed
vendor and what to look for
in the contract? Do you
know which clauses in the
contract bear the closest
scrutiny?
Undoubtedly, you have already
done your homework
on the software itself: thoroughly
reviewed the current
and future capabilities of
the system (or systems) to meet your
needs; determined that the functions
you need-routine reports, accounting
controls, and testing procedures-are
in place; performed due diligence on
the depth and knowledge of the firm
and its staff; checked references (including
recent conversions or installations);
and assessed the firm’s financial
stability.
Without question, the amount of
time you invest on software assessment
affects the scope, impact, and relative
difficulty of converting to and installing
the new system.
Caveat Emptor
Now you are in the throes of signing
the contract. Do not minimize the importance
of this step. It could ultimately
mean the future profitability of your
bank and even your job.
You may implicitly trust the software
firm you have chosen and you will no
doubt seek legal assistance, preferably
from attorneys familiar with computer
software contracts. Still, you must reread
the contract to be sure you understand
all of its clauses. Is the contract
relatively straightforward and easy to
understand? Does it include all of the
negotiated or agreed-upon issues?
All software contracts have several
provisions, whether licensed solely for
inhouse or via third-party processing.
All of these provisions must be reviewed
by one or more of your executives.
Depending upon the vendor and
software, the following topics may be
grouped in different ways.Nonetheless,
some of the more important provisions
in any software contract must include
details on:
• Terms and conditions
• Warranties/maintenance liability
• ‘Iraining and education
• Acceptance testing
Terms and Conditions
Customers usually pay most attention
to this section of the contract. The
questions to ask are: Are the terms and
conditions currently accurate? Are the
definitions and descriptions correct
and satisfactory to you?
Payments and Term
The schedule of payments and the term
of the contract are dependent upon
each other. You can negotiate for a
lump-sum payment or an installment
schedule. The amount you wish to pay
depends upon your cash flow needs
(with appropriate present value analysis)
and the term of the contract.
If you select a longer term contract
(more than the standard 4 or 5 years),
you can and should expect substantially
lower annual software purchase
payments.
It is important that the contract distinguishes
between payments to purSOFTVVARECONTRACT
chase the software and payments to
maintain the software. Some firms will
aggregate the purchase and maintenance
amounts. However, for you to
properly evaluate the cost of the software
and its future maintenance compared
with similar software, the contract
must spell out these two components.
Whether you purchase the software
in a lump sum or with an installment
plan, the contract will require an upfront
payment upon signing, usually
one-half of the first year’s payment.
The other half will usually be due 30 or
60 days after the contract is signed.
This is an important point to resolve
with the vendor: The balance of the upfront
payment, whether on a lump-sum
or an installment basis, should not be
due until after acceptance testing is
completed. More on this later.
Licensed Machines
Make sure that you may operate the
software on more than one machine.
Perhaps you have little intention of expanding
your centralized mainframe
processing. Nonetheless, you may have
future needs for remote or even correspondent
processing. Either of these
circumstances could require multiple
versions of the software.
If the vendor will not provide this
flexibility at the same cost, ask for a
compromise. Include a clause that provides
the vendor with an equitable percentage
of the proceeds, above some
threshold amount, received from processing
for external customers.
Price Escalator
Many of today’s contracts include a
price escalator clause which permits
the vendor to increase the annual purchase
installment (another factor to be
considered in a lump-sum versus an installment
payment) and maintenance
amounts. The escalator is usually based
on some well-known index, such as the
consumer price index.
If you feel your costs more appropriately
reflect another index, such as the
GNP deflator, discuss it with the vendor.
In any case, compute a trend over
the last 12 to 20 quarters of the proposed
indices to determine which
might be the least costly to you.
Discounts
Often software buyers receive “discounts”
from the “list” price of the
software (sounds like buying a car,
doesn’t it?), provided they purchase
several applications concurrently or
within a limited period of time.
Obviously, check that these discounts
are true reductions in the cost of the
software and not just a means of striking
parity with the vendor’s competition.
Also, do the discounts apply only to
the purchase of the software? This can
be another point of negotiation, particularly
if your bank is acquiring several
applications. Request that the discount
apply to maintenance of the system as
well. Furthermore, does the maintenance
percentage of the current purchase price
(usually between 15% and 20%) apply to
its “list” or “discounted” price?
Identifying Applications
Be certain the contract specifically
identifies the application or applications
you are acquiring. Be sure that
the modules or other interfaces. which
you may assume are part of the application,
are indeed listed or described in
the text or as an appendix to the
contract.
Bank Reorganization
What happens to the bank’s obligations
if it is required to reorganize and be acquired
under a supervisory agreement?
Your bank may want to include wording
in the contract that terminates or reduces
any further obligations, should
this occur.
Legal Expenses
Who incurs legal expenses in the event
of a dispute? Are they borne separately?
Is the software firm limited only
to the amount of its out-of-pocket legal
costs and revenues received from your
bank?
These are issues you will need to resolve
within your bank and with your
prospective vendor.
Warranties /Maintenance
Liability
What warranties or maintenance guaranties
are expressed or implied in the
contract? Be certain that these are
clearly defined.
Regulatory Changes
The contract should explicitly state that
the software firm is responsible for all
regulatory compliance within the scope
of its application.
Remember that regulatory compliance
includes state as well as federal
regulations. Often a software house
may not have previously sold its applications
in your state. This is of particular
importance with certain applications,
such as payroll, credit card, and
consumer-loan processing.
Computational Errors
The contract should specify responsibility
for computational errors (not
input errors), for example, incorrect
rounding. The contract needs to define
computational errors, how soon they
need to be identified by the bank, and
the extent of financial damages if software
computational errors occur.
Ownership of Code
Another issue is the ownership of the
source code for the application. Does
the vendor supply you with only the object
code? If so, what is your position of
ownership if the company defaults?
Without a doubt, you need to make
sure that your bank retains complete
rights to the source code in the event of
a vendor bankruptcy or reor.ganization.
Software Interfaces
The contract should clarify the effect, if
any, of other software interfaces on the
vendor’s system. For example, your
bank may wish to develop, internally or
through a contract programming firm,
its own interfaces to other applications,
such as general ledger and customer information
systems.
Nonvendor interfaces may nullify
parts of the warranty, particularly responsibility
for computational errors.
Vendor Releases
Does the vendor specify the number of
releases during a period of time? This is
usually not necessary, so long as the upgrading
is provided on a timely basis.
However, it is wise to include a proviSOFTVVARECONTRACT
sion that releases will be provided to
meet regulatory (federal and state)
changes and to keep current with market
conditions.
Who is responsible for installing the
releases? This issue is particularly important
if your bank intends to develop
interfaces or modifications to the system.
The last thing you want is your version
to be “out of sync” with the
vendor’s standard.
How will the vendor support installation
of a new release? Will there be onsite
support or only telephone
communication? What additional costs
are incurred for on-site vendor support?
Obviously, the extent of vendor
support is a combination of your bank’s
data processing resources and the complexity
of the release. Nonetheless, it is
good to defme in the contract the type
and extent of vendor support. In fact,
for a major application, the vendor
should be willing to commit to a specific
number of qualified people to
maintain the system. For any large (e.g.,
demand deposit accounts) application,
at least 10 people should be required.
Training and Education
Ask for contract provisions from the
vendor to schedule and coordinate periodic
user meetings or workshops.
These events will help ensure that your
maintenance payments go toward a system
that is up-to-date.
Training Time
The contract should specify the amount
of training time the vendor will provide
to your bank. The amount of training
will depend upon the size and number
of applications that your bank acquires.
Training and education should be
quantified for both users-non-data
processing personnel or data processing
customer service staff-and technical
or systems personnel. Training can
be conducted at the vendor’s site, at
your bank, or via the telephone. The
amount, type, and location of the training
should be specified in the contract.
The size and complexity of the application
installation and conversion will
determine the best mix of training and
educational needs. Most vendors will
provide a fairly substantial amount- of
education at the vendor location at no
charge, provided the bank sends limited
numbers of people at anyone time.
A problem may arise when the bank
needs substantial training at its loca-
. tion. Who will pay for it?
As the customer, you can request as
much training as needed at no charge.
You also may request that much of the
user training be conducted on your
bank’s premises. All training involving
an instructor should have an associated
cost. (Training via telephone should be
at no charge.) If your bank exceeds the
contractually allotted training time, the
bank would incur a charge. In addition,
you should ask that any “unused” training
during a specific period (usually a
year), be credited to your training
needs in the forthcoming period or
used to offset the bank’s maintenance
fee.
Acceptance Testing
Most software contracts do not provide
a sufficiently complete definition of
when a system or application is actually
“accepted” by the financial institution.
Before a bank accepts a system, it must
conduct an “acceptance test.”
The acceptance. test involves processing.
actual bank production data, not
just vendor data. Selected conversion
programs use the. production data to
produce reports of summarized accruals
and balancing totals, based on daily
and month-end runs. Only after the
bank has validated these reports should
the bank actually accept the system.
Acceptance testing occurs long before
the actual conversion takes place,
but after the physical delivery of the
system. Depending upon the
application’s complexity and the scope
of the conversion, a proper acceptance
test can require 30 to 60 days.
It is vital that the contract define “acceptance
testing” in terms comparable
to those described above. Clearly, the
contract payment schedule-indeed
the entire contract-depends upon a
successful acceptance test. Consequently,
if the application fails the
“test,” the vendor must refund all monies
to the bank.
Conclusion
The signing of the contract is not
merely a perfunctory act which occurs
at the end of software analysis. Instead,
it is a vital step for the well-being of the
bank. Furthermore, there is only one
way for an individual to ensure that he
or she understands the contract and all
its ramifications: Read it!