Category Archives: Finance

How to Finance your Big Sales

It is almost like a dream come true. After working very hard at your business, you get a huge purchase order from one of your best customers. You can almost feel the sweet taste of success. Soon, however, reality sets in. If you are like most small to mid size businesses, you realize that you don’t have enough money to buy supplies because your suppliers are demanding advance payment. You now risk losing the order unless you find a way to finance it.

If your company has been in business for many years, is reasonably big and has a great track record, you will probable be able to get a business line of credit or a similar type of bank financing. If that is the case, you’ll be able to borrow money to pay your suppliers and fulfill the order. But what options do you have if you are a new business owner or if you run a small business that has no bank credit?

There is a little known and seldom used financing product that could help you in this situation. As a matter of fact, it could help you almost any time you have a big sale to a good credit worthy customer. It is called purchase order financing (also known as po funding.

Purchase order funding can provide you with the financing you need to fulfill orders from your large and best credit worthy clients. As opposed to most financial products, the only collateral that purchase order financing requires is the actual purchase order (and associated payments) from your client. The financing company will provide you with the necessary capital to fulfill and deliver the order. They get paid when the client pays for the order. This makes it an ideal product for small and mid size businesses who are growing quickly and need capital to deliver orders to their ever growing client list.

Who qualifies for purchase order funding?

PO financing is ideal for companies that re-sell a finished product at a profit. For example, import-export companies, wholesalers and distributors can certainly use this type of financing. However, if your company buys a product and modifies it before re-selling it, most probably it will not qualify for this type of financing (there are exceptions).

Although purchase order financing can be affordable if your profit margins are right, unfortunately it does not come cheap. This is because most financing companies consider the transaction to be high risk. The total cost of the transaction, from start to finish, can be anywhere between 5% and 15% of the sales price. Because of this, purchase order financing works best with businesses that have profit margins of 25% or more.

Lastly, purchase order funding only works for commercial sales in which the purchasing company has a good commercial credit score (as most large businesses tend to have).

How does the purchase order funding transaction work?

The transaction itself is actually fairly simple. Once you have the purchase order in hand you contact the purchase order funding company to begin the process. The first thing they will do is verify the credit worthiness of your customer. If the credit review is good, the transaction proceeds as follows:

1. The financing company issues a letter of credit in favor of your supplier. The letter of credit states that payment is guaranteed, provided the supplier delivers the product according to the buyer’s specifications. Almost all suppliers accept letters of credit as payment.

2. The supplier manufactures the product and ships it to you, or drop ships to the buyer.

3. The buyer receives the product and accepts it. Your supplier gets paid by cashing the letter of credit.

4. Your customer pays for the order, usually 30 days or so after receipt. The financing company is paid back for its services and all remaining funds are yours.

One of the remarkable features of purchase order funding is that in most cases, the client has few out of pocket expenses. It’s truly a transaction where you can use other people’s money to grow your business.

Lastly, purchase order financing transactions are frequently integrated with invoice factoring financing. This is a widely used trick that can help reduce the cost of financing the transactionScience Articles, thereby increasing your profits.

International Business Finance

Many firms are interested in investing and seeking finance from foreign sources and exporting goods and services to foreign countries. Overseas involvement of firms is increasing, and this trend is expected to continue. This has been stimulated by a variety of forces. First is the change in the international monetary system from a fairly predictable system of exchange to a flexible and volatile system of exchange. Second is, emergence of new institutions and markets, particularly the Eurocurrency markets, and a greater need for international financial intermediation.

In 1971, the US dollar was unlinked from gold or allowed to “float”. This brought about a dramatic change in the international monetary system. The system of fixed exchange rates where devaluations and revaluations occurred only very rarely, gave way to a system of floating exchange rates.The distinguishing characteristics of international business finance are multiple currencies, differential taxation and barriers to financial flows. Of these, the multiple currency factor and the attendant issue of exchange rates has received considerable attention, particularly in recent years. An exchange rate represents the relationship between two currencies.The procedure for evaluating a foreign investment in international business finance consists of identification of cash flows, choice of an appropriate discount rate and determination of net present value. Foreign investments generally involve higher risk, which arises from factor like changes in currency value, discriminatory treatment of a foreign company and threat of expropriation. Risk stemming from fluctuations in exchange rate looms constantly on the horizon of foreign investment. In addition, a foreign investment is subject to discriminatory treatment and selective control in various forms motivated mainly by political considerations. Finally, the threat of expropriation without adequate compensation may exist, particularly in countries where radical nationalistic sentiments are strong. In view of the higher risk associated with foreign investmentBusiness Management Articles, a firm contemplating foreign investment would naturally expect a higher rate of return.

Tips Car Finance

Plan to buy car and take it on finance. Buying a car involves comparing new car prices, features, reviews n hot discounts as offer on it. Similar is car finance which involves more than 70% of the component of car to work upon the interest rates, pre payment clause, charges, turn around time for approval and disbursement and most important the lowest deal.

Car finance in India is offered by more than 25 leading banks and Non Banking Finance companies which controls 90% of market share of the auto finance market. Start on the finance, by making a comparison on primarily 4 factors – turn around time for approval and disbursal of loan, interest rates, documentation and hidden charges like pre payment charges, loan processing fees.

The best way is to inquire online or send an offline enquiry to couple of leading banks, you will soon be flooded with there offers and deals. Ensure to read the fine points in terms of other charges so as to able to make apt comparison. If you have a descent repayment track record with good CIBIL score, chances are that you may tend to bargain for a better interest rate with the respective financier.

If you are a corporate, then may also think of leasing option which can prove economical to you keeping tax benefits vis a vis car finance. Moreover, maintenance of car would also be hassle free as the leasing company takes care of same for the lease tenor.

Car finance, should not be ignored as a part of research while planning to buy a car. A car like Honda City, having interest rate difference of 50 bps – 100 bps can cost you over Rs. 15,000 for a 5 year tenor in terms of extra interest outflow. The deal and negotiation and research been involved in buying a car, similar effort to be put in getting the best deal on car finance. Remember, car finance is part of service sector and been the number of financing institutions are so high, they all want there piece of pie in terms of higher volumes. Be aware that negotiation is a part in car finance and a deal can be customized basis requirement of customer

Second hand cars has higher interest rate as compared to new car finance and also has lower funding amount due to risk nature of lower resale value in India. AlsoFree Web Content, one can determine loan eligibility and emi through car loan emi calculator available online.

IT Support Helping Finance

How do you think about working in a finance team with no computer? You’ve got multiple duplications of digits to work on like company budgets and expenses, fiscal reports and income statements. There is several correspondence and circular to write and you’ve got thousands of documents to archive and save and much more. Without the support of computers, there’s a chance you’re working even on the weekends as it requires expanded time and energy to accomplish all the stuff.

This plainly implies that technology is very important in our everyday activity. In spite of the perception that it formed people truly dependent on technology, it can make how we live much easier specially in the daily course of business dealings. Computers become key equipment in any type of workplaces simply because can execute information with a snap of moment. They are able to store data not requiring huge file cabinets and thousands of rims of bond paper and folders. And retrieval is merely few typing the keyboard or drag of the computer mouse.

Yet, owning computers at the office does not ensure the work to be efficient. There must be networking, storage space, internet access, software program and many others. When all these are actually set, they’re going to require repairs and maintenance and replacement simply because technologies have depreciation in the process. They must be given protection since computers could be inflicted with viruses that will corrupt information and cyber-terrorist may intrude the system and gain access to sensitive data. Certain data information must be safeguarded and be accessed exclusively by exclusive people only. They require upgrading obviously because technologies are constantly evolving. The concept of latest technology is because its usability, speed and added capabilities.

When the finances are restricted or merely planned to save some money, IT support will be the ultimate remedy. Why? IT support provides all the information technology solutions necessary to establish, maintain and safeguard data files in the finance department and the business in general. IT support possesses the expertise precisely because they are concentrating on this arena.

IT support can be classified into three concerns. The first is support for software programs. This relates to the maintenance as well as updates of applications as it gets obsolete sooner or later. IT support can provide expert consultancy on how to pick correct software, updates and anti-virus. Second is support for the equipment. IT support can actually support in the setting up of computer devices like memory and networks. The physical components of computer units have charge lifespan too. Like machines, they will malfunction. Hence, they need maintenance and repair. Third is cybercrime avoidance ideas. Cyberpunks are everywhere. They spy to company data steal them, alter or obliterate the complete system hitting the organization. IT support can easily tackle this issue via data protection applying security passwords and file encryption.

Moreover, aside from the support IT support can bring, there are still two points that could immediately or not directly perk any company: expenses and focusing on the enterprise. Technology is pricey specifically when the corporation is definitely trying to keep updated on the latest innovation. Investment in It is actually a need yet It support can at any rate lessen your expenses. By allowing IT support address your requirements, it is possible to focus on the main function of the business enterprise. HenceFeature Articles, additional time and energy for company works that will soon bring about progress.

Understanding UK Bridging Finance

Bridging finance, also referred to as “bridge loans” and “bridging loans”, have nothing at all to do with re-constructing the London Bridge. Bridging finance is typically a short-term loan that a business uses to supply cash for a real estate transaction until permanent financing can be arranged. The word “bridge” conveys the fact that the loan is designed to get you over a temporary obstacle. A typical use for a bridge loan is to cover situations such as when a company needs to close on a new office building before having sold their old one. They would use the proceeds of the bridge loan to continue making payments on the old building until it is sold.

Bridging finance almost always requires that you pledge some sort of collateral as security against the loan. You could offer up commercial or private real estate that you own,or are in the process of buying, machinery and office equipment or even existing inventory. If you have outstanding business and personal credit, as well as an outstanding relationship with your lender, you might be able to secure your bridge loans on just a signature.

Because the need for bridging finance sometimes arises suddenly and without warning, it is a good idea to establish a relationship with a lender before the actual need arises. When you do this you can arrange to be pre-approved for a specified loan limit. Later, when the need suddenly arises, you won’t have to wade through all of the red tape. The typical term for a bridge loan runs from a fortnight to as long as two years. Of course, any terms can be negotiated and a motivated lender will work hard to match your needs.

Since bridging finance usually lasts for a relatively short period you may find that the interest rate you are being asked to pay is slightly higher than a more conventional type of loan. Lenders make their profit by charging interest across the life of the loan. The shorter the loan period the less interest they earn. As a result many lenders will often boost the rate by a 1/2 point or more. In general, the length of the loan, the amount of risk that is present for the lenderArticle Search, the quality of your credit history and the liquidity and value of your collateral all are used to help determine the interest rate.

Your best bet for securing a bridge loan at the most favourable rates and terms is to work with a qualified UK Commercial Mortgage Broker who understands the ins and outs of bridge loans. That way you can get your application in front of as many lenders as possible and end up with several who are willing to compete for your business.

Ways to Measure your Finance

There are several ways to measure finance. This is done to ensure that the business is doing right and is meeting its financial targets. Sometimes, this is measured in a monthly basis. In some companies, there is a quarterly business review in which the gains and losses are measured and from these data, action plans can be formulated that will specifically target pain area in the company that significantly impacts the financial aspect of the business.In many cases, corporate leaders measure their financial status by also measuring their company’s net worth.  This is a data driven approach that helps them drive the business and forecast how the rest of the fiscal year will be. The first thing to do here is to list all the largest asserts of the company. It is important in this part that the estimation of the assets’ worth is close to reality.  After this, the liquid assets are added. These assets include the cash available in bank accounts, whether they are savings or checking. Once all these are added, you now have the total assets.What needs to be done next is to calculate the liabilities of the company. Of course, this includes outstanding loans and leases. This may include mortgages if the company has not fully paid for its infrastructure.

Add to these the direct debts of the company if there is any. Once this is done, the total liabilities of the company is identified. The liabilities should be subtracted from the assets to calculate the net worth of the business. If this hits negative, this means that the company is not in a smooth sailing status.Another approach to measuring financial growth is through the calculation of investment performance. This can be done to manage assets and make a financial forecast based on historical data and financial analysis. The first thing to do here is to set a timeline. Many companies do not measure financial strength on a monthly basis. What they do is to measure it quarterly but some may do it annually. For small scale businesses, a monthly assessment may be done to manage the business better. This is especially applicable to startup businesses.Records of the findings should also be kept. This is because financial analysis is not as simple as subtracting the difference between two figures.

When in business, there will be a definite series of cash flow that will happen. This may be about taking funds out or putting funds in. either way, this will impact how the earnings are interpreted. In a simple scenario, let us say that $1000 was placed as a capital in an investment. After two months, the total asset has ballooned to $5000. However, on the second month, $3000 was added to the original investment. The question here is, did the company earn $1000 form the original investment or when the $3000 was added?OverallFree Reprint Articles, to measure finance is to measure the business. Whatever comes out on the measurement is where the ultimate decision will be based. Directions will be taken and new approaches will be tried.

Trade Finance Alternatives for Export Companies

Are you selling goods or services to companies in other countries? Although expanding your company beyond your national borders is very exciting and profitable, it will also subject you to the payment habits of your foreign customers. Many times, customers can take as long as 60 days to pay for their goods. Although large export companies can wait that long to get paid, most small and medium sized businesses can’t. This creates a cash flow problem. Of course, you can always ask your customers to pay you immediately by bank wire as soon as the invoice is presented. However, few customers will abide by that request and you risk loosing business to the competition.
Going to the bank to get a business loan or bridge financing may help, if your business is established, can provide three years of financial statements and if your personal credit is stellar. But, what if you don’t meet banking criteria? Or are a startup? Then you should consider trade finance.

Trade financing enables you to finance your local and foreign sales and can provide the working capital that your company needs. Accounts receivable factoring, a popular trade finance tool among exporters, allows you get paid for your export invoices in as little as two days. It eliminates the 60 day payment wait and enables you to get your paid immediately. This provides you with working capital to pay suppliers and employees. Export factoring is relatively simple to use and integrates well with most companies. It works as follows:
1. You deliver the goods or services to your foreign client and send an invoice

2. You send a copy of the invoice to the factoring company

3. The factoring company advances you up to 85% of your invoice as a first installment

4. One your invoice is paid, the factoring company will rebate you the remaining 15% as a second installment, less their fee
No two factoring companies will price an opportunity the same way, however most factoring rates go from 1.5% to 3.0% per month. Rates vary based on the commercial credit quality of your clients, your industry and the amount of financing that you need. As opposed to most trade finance solutions, factoring is easy to obtain and can be setup in a few days. This makes it an ideal solution for small and midsize companies.

Business Finance through invoice discounting and factoring

Business Finance through invoice discounting and factoring.

In the current economic downturn with many banks’ unwillingness to lend, businesses are finding it difficult to raise money to finance their activities using traditional sources such as an overdraft, credit card or loan facilities. Faced with this situation, many companies are turning to sources of income such as factoring and invoice discounting.

With factoring and invoice discounting, cash flow is improved by borrowing against invoices. Using this facility the company is usually able to access 80% of the invoice value immediately without having to wait for the normal payment period. There are three main ways to do this:

  • Invoice Factoring– The process of invoice factoring generally involves a bank (normally known as the Factoring company) taking over a company’s invoicing and credit control function. The factoring company makes credit available on raising the invoice. The name of the factoring company is stated on the invoice and the payment of the invoice is made directly to the factoring company. The factoring company will often manage payment collection and credit control.
  • CHOCCs Factoring– CHOCCs stands for Client Handles Own Credit Control. This type of factoring is similar to full factoring except that the client maintains responsibility for collecting payment of the invoices. It has the advantages that it will normally be a cheaper service and more control is maintained over the payment relationship with the company’s clients.
  • Invoice Discounting– Invoice discounting is similar to factoring in the sense that a factoring company will make credit available to the business as soon as an invoice is issued. But in this case the service is much more discreet. The company sends out invoices and collects payment in the normal way, but the factoring company’s name does not appear anywhere and debtors will therefore be unaware of their involvement.

Which factoring option should you use?

This depends on the nature of your business. For example, where it is important to ensure that the involvement of a factor is not disclosed, invoice discounting may be a more appropriate method. Where this does not matter or in fact where it is seen as an advantage to involve a third party to help in the collection of debts, then full factoring may be the correct solution.

Of course, for invoice discounting to be made available, the factoring company must have the confidence that the business it is lending to will be able to tightly manage its debt collection processes. For a full invoice factoring solution, up to 80% of the value of an invoice may be made available on the day it is raised. However, as invoice discounting is perceived as a greater risk to the factoring company as they have less control, smaller amounts may be made available using this solution.

Invoice factoring or discounting is an ideal way to improve cash flow based on business already happening, and for it to work the business has to be raising invoices. However it can also be an ideal solution to help improve the cash flow position of a new business such as a Phoenix company. Here invoices will start to be raised almost immediately and so a factoring facility could be used.

Because Invoice factoring or discounting focus on cash flow improvement, they are not generally regarded as appropriate methods of raising a lump sum for a specific business project. If this is your requirement and a bank loan is not available, then a more suitable option may be asset refinance.

So what is the cost of Invoice Financing or Discounting?

Normally both options involve a service charge (which may be between 0.5% and 1% of the sum lent) and a rate of interest. However, where a business is looking to improve cash flow and more tradition methods of achieving this such as bank overdrafts and credit cards are being withdrawnArticle Submission, invoice financing and discounting is often an extremely useful solution.

Tip For Duty As A Perfect Financial Management

Assignments have always known to give tensions to the students. The students are under heavy burden of handling various subjects of Management at the same time to fulfil the basic requirements of the course. Moreover, the assignments in each of these subjects coupled with the pressure to perform well in the assessments of these subjects can cause huge burdens on the students. In order to solve this problem of the students, professional agencies have come up to handle the assignments of the students professionally. These agencies further employ expert professionals from the fields to give the professional touch to the assignments.

Here are ten things to be looked into while writing the assignments of Finance Management:

  1. Following Assignment Instructions: Each assignment that is given usually has predefined set of instructions to complete it. It is very important to carefully understand the instructions and follow them strictly while writing the assignment.
  1. Understanding the Assignment Problems: Finance Management is a tricky subject. Most of the problems of this subject have multiple answers and best possible scenarios. So it becomes even more.
  1. Using the Right Source: Assignments are given with the sole idea that the knowledge of the students would be further enriched. Thus, apart from consulting the course textbooks, the students also need to research the external sources of information such as books, internet, and any other such person or resource related to the topic. The student merely needs to ensure that the source has credibility and the information is right.
  1. Referencing the Sources of Information: A student needs to provide the reference of the source consulted to gather the information presented in the assignment. Such referencing should follow the citation style mentioned in the assignment guidelines. They should also remember to provide in text citation wherever required.
  1. Try Discussing with other Students and Concerned Person: Sometimes, discussions can give fresh perspectives and insights into the problem. Thus students can also try discussing the assignment problems with their fellow classmates, seniors, or any other concerned person.
  1. Presenting the Right Way: A student might have clear understanding of the problem and its solution but unless the presentation of facts and solutions are correctly done according to the standards mentioned by the instructor, the assignment would not be appealing.
  1. Maintaining Flow and Consistency while Presenting: While presenting the assignment, the idea should flow through the text consistently. Maintain the grammar and writing style throughout the text.
  1. Avoid Plagiarism: The assignment text should be in the language of the student and not copied from any source. Even if the information needs to be quoted as it isHealth Fitness Articles, the students should quote the text within quotations and reference it properly.
  1. Maintaining a Backup of the Assignment: Always remember to maintain a backup of the assignment (preferably electronic) for any emergency situation.
  1. Submitting the Assignment on Time: Time of submission is important and thus plan the assignment such that it can be submitted timely.

Very Important Financial Certificates

ACCA has recently emerged as one of the most recognized degree around the globe. Those who are interested in finance education, mostly tend to go for MBA. Many students have desire to do CA but it’s very difficult and needs full time study normally. But now ACCA is famous and students prefer ACCA over CA and sometimes over MBA due to its highly professional nature. ACCA is very famous in Middle-east and Europe and there are many job opportunities for ACCAs.

If you continue your MBA and at the same time you start your preparation for ACCA, its not impossible. MBA can easily be done along with ACCA as long as you are ready for that. All that needs to be done is to get registered with ACCA, start preparing at home and appear in the exams.

But one can do and achieve much more than that and can successfully secure their future. A very few students are doing ACCA along with MBA. Most of them out there think that it’s impossible but they don’t know that all that is needed to be done is to select your courses wisely and it becomes unbelievably easy. It is easy because you can register for ACCA from internet, collect your study material including ACCA past papers from internet as well and only appear in the exams. If you are an ACCA as well as an MBAArticle Submission, you have successfully beaten thousands of potential competitors in the job market. You’ve gained a great competitive advantage. So choose your career wisely. I’m not telling to make it a burden on you but this is just a good advice and I’ve an experience.