mestokaplice Finance

What Is The True Meaning Of Finance

The definition of finance is the provision of funds or loan supplied to an individual or company. Often this term is used for the study of economics and how money is controlled. It can be also defined as the management of funds and capital required by a business and private activities. Management of finance has also developed into a specialized branch within the financial sector and is carried out by finance managers.

Managing this involves dealing with the optimization and allocation of funds to various areas either by borrowing or by using those available from internal resources. The word Optimizing may sound strange but it refers to taking measures that minimize the cost of financing while simultaneously attempting to maximize the profits out of the employed finance. Bad debts are poor finance management where rules have not been followed; the result of this is depressed markets, low production and a cash crisis. It is for this very reason that finance managers are very careful with finance they agree too and where it is funded from.

It is not uncommon to hear finance managers referred to as bean counters as they are looking at immediate returns and initial costs against the potential at a later stage. Finance managers are the pessimists whereas sales managers are the optimists who look to the future and not to the past! Often though, problems occur with small businesses who fail to see the distinction between a business loan and a personal one. Most lenders will cancel the loan if they feel they have been deceived this way because they are unsure what the money is to be invested in.

Hopefully by educating the small (and large) business owners of their fiscal responsibilities they may build the basis of an improved company in the future. Small businesses can be very flexible, however, and call upon friends, other businesses, family members, even their own bank for finance.

Finance managers can help improve their company’s profits by using external sources which also lessens the risk on them at the same time. The famous comedian Bob Hope best summed up the subject when he once said; a bank is a place that will lend you money but only if you can prove that you don’t need it.

Housewares Secrets To Better Cash Flow Management By Invoice Factoring

In its classic form, Factoring is a financial transaction in which a company sells the amount of its invoice against its customers on a given date (that is to say, the balances on bills yet due) to a third party (called the factor), which pays that amount by deducting a commission. More factoring companies exist in the major financial centers like Los Angeles. Conventional financial institutions like Banks, having understood that this type of cash flow funding could take their market share away because of the clear benefits it presents. Therefore, factoring services are not only recognized by the larger institutions, but also a powerful means to solve cash flow issues. For example, Housewares can be use this type of financing to increase their business many fold.

Factoring of Housewares activities provide the following benefits:

Through work situation and billing 2 types of billing may be funded by factoring, work situations and interim bills.

1. Using your 30-60 day term invoices as collateral and selling them to a factoring company to provide immediate cash flow;
2. Using this method of financing also does not add any additional debt to your company and allows your company to take on short term advances on work while at the same time knowing that these advances will automatically be paid by your customers invoice payments.

Documents requested by the factoring company

Validation document that invoices are true and payment terms are not altered;
Confirmation of invoice that there are no offsets and payment will be made to a secure lock box provided by factor.

Deadline for submission to the factoring company

The invoices are given to the factor for funding after having been checked and approved by the Housewares or in the first 30 days the invoice is generated.

The advantages and disadvantages of factoring

Companies are increasingly turning to factoring as it allows them to get money quickly instead of waiting times admitted customer payments which are generally between 30 and 60 days after the issuance of the invoice. After sending an invoice to a factoring company, the company can receive the balance of the receivables less the commission of the factor and a security deposit within 48 hours.

Another advantage of factoring is that it is adapted to the current operating business financing. Indeed, factoring is often less expensive to a business than traditional loan from a bank that often limit the amount of sales a company can achieve due to tight restrictions whereas a invoice factoring company can increase limits to allow a much great volume of sales.

The real choice is not made by a lawyer or an accountant, it must be made by a business person that understands the opportunity costs of growing sales or to just grow at an organic rate solely based on internal cash flow growth.

How Much Credit Do I Qualify For

When you qualify for a credit card, your bank will determine your credit limit, based upon a number of factors detailed below.

Credit cards offer individuals greater financial flexibility and improved spending power, by providing access to a line of credit on an ongoing basis. The amount of flexibility will, of course, be determined by your credit limit, which is set by the bank issuing your credit card. Credit limits are regularly reviewed, and can be increased or decreased based upon these reviews.

In this article learn more about how credit limits work, and the factors determining how a credit limit is set. This will give you a better idea of how much credit will be extended to you if you qualify for a credit card. Also be sure to explore the range of credit cards available via the Plastiq site.

What is a credit limit?
A credit limit is the maximum amount of money that you have available on yourcredit card account. For example, if your credit card limit is R5,000, you can spend up to R5,000 on credit before you reach the limit set by your bank. When you repay the credit youve used, or a portion thereof, the amount youve settled will be available to you once again.

Thus, if you repay R2,000 of the R5,000 spent, you will have that R2,000 at your disposal once again. If you settle the full amount, youll again have R5,000 worth of credit available to you. This is known as a revolving line of credit.

How will the bank determine my credit limit?
When you qualify for a credit card, your bank will set a specific credit limit for that card. This credit limit is based upon your credit score, which reflects your creditworthiness,the financial risk you pose to the lender, as well as your affordability. Hence, the better your credit score, the more credit youre likely to qualify for.

In order to work out your credit limit, the bank will require access to information pertaining to your income and your expenses. When you submit a credit card application, youll be required to include information relating to your current salary. You may also be asked to detail your monthly expenses.

Can I change my credit limit?
If you wish to reduce your credit limit, simply contact your bank and discuss your requirements with them. If, on the other hand, you wish to increase your credit limit, the bank will need to review your payment behaviour and affordability closely. Credit card holders who settle their balances promptly and maintain a good credit score may have their limits increased at the banks discretion, should they not be over-exposed already. By the same token, credit card users who practice irresponsible spending behaviour may have their limits reduced.

Contact your banks credit card division at any time to discuss your credit limit, or any other questions pertaining your credit card account.

Compare credit cards now and apply today to determine your credit limit.

How Home Insurance Makes An Obligatory Purchase For Every Individual

Home insurance is a necessity for every individual. Perhaps, people are unaware about its benefits and how it is a must buy. Here are some of these major benefits in detail-

#1. Wiser investment-

Home insurance is one such insurance that covers all your assets and other valuable items under one policy. Instead of purchasing different policies for all the assets, it’s wiser to choose a single policy that comes with affordable premiums as well. There are many home insurance providers in the market which operate online and provide all necessary information through their websites. This helps in comparing policies of different insurance providers in the market, and choosing the suitable one.

#2. Lowest premiums policies-

While purchasing a home insurance one should always consider maximum damage coverage and lowest premiums, so the best purchase can be made. However, it is something hard to find. This is where an online insurance provider makes the solution. It delivers a detailed information about each policy online, that gives an easy access to all the consumers and enormous time savings. With a customizable option, it also enables a easy buy as per the requirement and budget. This helps every individual to make an affordable investment, which provides a financial security for their assets in all the circumstances, and keeps them away from an accidental expenditures.

#3. Peace of mind and additional savings-

Home insurance is a financial safeguard in case your house or house hold properties get damage because of fire, theft or any natural disaster. These are unpredictable happenings that require a large amount of expenditure as and when occurred. This is where home insurance makes a shield and keeps you away from such expenses. Also, it gives you additional savings that can be used for better investments for a secured future. Home insurance makes a vital purchase for every individual that not only makes a wiser investment, but also delivers an absolute protection for self and family.

#4. Assured protection for house and household properties-

House makes an absolute protected environment that ensures shelter and safety. Simultaneously, keeping it safe makes an obligation for every individual. This is where buying a home insurance makes the solution. It is not just an insurance but an assurance of a complete financial security, in case your house or other valuable assets get damaged because of various factors (included in the policy). Along with the reinstatement value, these factors may influence the premium value.

#5. Safe future for you and family-

Be it house or any commercial property, both are not easy made, rather require huge investments. The same way if these get damaged, they even require big amount of money for their reconstructions. This is where buying a home insurance keeps your residential property safe and protected. It also gives an absolute protection for the family, even when the policy owner deceases due to an accidental happening. Perhaps, this clause needs to be discussed before purchasing a home insurance, as every insurance provider may not include an accidental death clause in their policies. Therefore, for a secured future of family and self, buying a home insurance makes a must-buy for every individual.

Thus we conclude, home insurance provides a total protection for house and house hold contents in any circumstances. Therefore, in order to stay protected, home insurance makes a vital and obligatory purchase for every individual.

Are You Saving Enough Using Units Trusts And Retirement Policies

From unit trusts to savings accounts and endowment policies, South Africans have a myriad of savings vehicles to choose from and yet the harsh reality is that we do not save enough. According to the South African Savings Institute (SASI) ‘when compared to its peers, South Africa’s national savings rate is still dismal.’ SASI goes on to say that ‘the World Economic Forums 2011/12 Global Competitiveness Report ranks South Africa 72nd in the world for its gross national savings rate equivalent to 20% of GDP. This is well behind BRICS country peers like China, ranked 2nd with savings equal to 54% of GDP, India at 15th with 34.7%, and Russia at 44th with 24.7%.’ How do you know if you are saving enough? Grab a piece of paper, a quiet moment away from the family and consider a few what-if scenarios.

What-if scenarios will help you work out if your finances will stand up to the worst case financial scenarios that life could throw your way. For example, consider the following:

How long would you and your family be able to survive if you or your partner/spouse were retrenched?
Would you be able to pay for major repairs to your car without reaching for your credit card?
If a family member fell ill, would your savings be able to pay any medical expenses not covered by your medical aid?
Can you afford to send your children to university or college?
Would you be able to afford the insurance excess if your car was damaged or stolen?
If one of the family pets fell ill, would you be able to pay the vet’s bills out of your savings?

Your answers to the above questions should give you some idea of whether you are saving enough money each month and if you have enough money put away for emergencies.

There is no golden rule for how much you should be saving every month. It depends on your age, your financial obligations and your income. Experts recommend that you save at least 10% of your monthly income but we recommend that you speak to a financial advisor to calculate your own personal savings requirements.

No matter what your age or income, you should be savings towards:

An emergency fund: 3  6 months worth of living expenses to cover unexpected costs like car and household repairs, medical bills and retrenchment. Remember to top up your fund as soon as possible if you are forced to take money out of it. Speak to your financial advisor about how best to invest your emergency fund. Unit trusts are a good option as you can withdraw money at any time without incurring any penalties.
Your retirement: Once you have accumulated an emergency fund you need to turn your attention to your retirement savings. Again we recommend that you speak to your financial advisor about how much you should be saving and what investment vehicles you should be using, for example a retirement annuity or provident fund.
Savings goals: set savings goals and save towards them every month, for example a new lounge suite, a holiday overseas or university tuition fees.

What were the results of your what-if scenario? Are you saving enough every month? If not, speak to your financial advisor today and start planning for your financial future.

Business Credit Line Funding On Remote Control Asset Based Lending And Funding Delivers

Business credit line funding needs can be achieved in more ways than one. The concept of having your funding needs on a ‘ remote control ‘ should be very appealing to most business owners / financial managers. Asset based lending via ‘ ABL ‘ credit lines is one way to put your company on cash flow auto pilot. Here’s how. Let’s dig in.

Businesses requiring SME COMMERCIAL FINANCE funding for cash flow are always challenged by the requirements of our somewhat monopolistic banking system in Canada. The strength, market dominance, and the regulated nature of our banks make it often difficult for companies who are even doing quite well to achieve some or all of the financing they need. Simply speaking they fall ‘ outside the box ‘ when it comes to requirements that include profits, cash flows, clean balance sheets, etc.

The banks requirement of covenants in cash flow, debt, profits, equity simply can sometimes not be always met, and these are typically a written part of your bank arrangements. Firms who fall ‘ out of covenant ‘ with their bank often find themselves feeling not so ‘ special ‘ when they are placed in Special Loans Default dept’s at the bank .

By utilizing your firms current and fixed assets asset based lines of credit allow you to leave your business on a kind of ‘ auto pilot ‘ for cash flow financing. That’s because the combination of accounts receivable, inventory and fixed assets allow you to monetize those assets into one single borrowing base that revolves and can be drawn down according to your cash flow needs.

When properly managed and utilized (and structured in advance!) this type of cash flow funding allows you to”

Finance operations

Engage larger clients/ larger orders/contracts

Finance inventory which in many bank circumstances is sometimes not achievable

Typically you would never use your revolving asset based credit line as a mechanism to acquire new assets – this is typically done via equipment leases or bridge loans that sometimes are more applicable when a firm is in a financing transition.

By the way, in a merger and acquisition scenario the Asset Based Credit Line is an excellent way to successfully acquire a target company.

How does the ongoing access to liquidity work in Asset based lending? A/R is often financed at 90%, and inventory borrowing margins, while depending on the type of inventory class (raw materials, work in process, finished goods) can range from 25-75% borrowing power. Should a business choose to monetize fixed assets as part of their revolving credit facility typically a third party appraisal/valuation is required.

It should be noted that ongoing reporting requirements are typical of an asset based line of credit – in some cases owners/managers might find rigorous monthly ( sometimes weekly ) reporting as a ‘ downside ‘ of ABL cash flow financing . While 99% of the time pricing on these facilities is higher than bank credit the alternative is a liquidity crisis for ongoing operations of growth.

We’ve shown how not all business credit lines are not created equal. If you’re prepared to investigate the applicability of asset based lending to your business seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your funding needs.

Stan Prokop

How To Successfully Gain Credit Card Debt Forgiveness

It is possible for you to gain credit card debt forgiveness in the present financial system. Debt forgiveness is a much more viable option to declaring bankruptcy. A lot of people with over $10000 in card debt have been able to get off up to 60% of their debts. If you are seeking debt relief, debt settlement and consolidation are the most popular options open to you. Read on to learn more on how you can get rid of credit card debt.

There is a proposed program in place in the financial industry that gives credit card companies the ability to write off debts for certain categories of customers. As the government grant the institutions relief, consumers should also benefit from debt forgiveness. You might qualify if you are enrolled with a debt management plan. Up to 40% of debts can be forgiven. Banks and the credit card companies don’t want pardon programs to be known to customers.

The credit card company can also wipe off what you owe if it falls under bad debt. Writing off bad credit card debt helps companies clear up their books. This makes them financially healthier. According the Nilson Report, financial institutions are expected to write off over 390 billion dollars over the next five years.

You can contact the company directly or through a debt settlement agent to negotiate a reduction in your debt. Negotiation can bring down your debt down by as much as 50% depending on your negotiation skills. When your debt is settled you are required by the IRS to report the write off amount as income on your tax forms.

Debt consolidation involves signing up with a company that negotiates your loans and consolidates them into one convenient monthly payment. It usually comes with less interest. Check the internet for a list of accredited DMPs.

These are the various options available for you to get rid of your credit card debt. However, when debt is written off your credit score could be reduced by as much as 60-130 points. This makes it a bit difficult for you to get credit at favorable interest in the next few years.

Rental Industry Promising For Great Return On Investment

There are many things to learn about rental management before you actually start to make money and make right. Above all you must be an individual worker to be successful in the industry. Rental industry is a very promising one, with the great return on investment and opportunities to grow, but idleness makes companies fall behind the competition and eventually fail. The first and the foremost thing is how to automate the rental business because today there is no scope for manually done business for that the use of the rental software is a point of thought which is today easily available in the market.

If you are starting or you are in the business of property /real estate then you need to have some sort of rental property management software for real estate business, because accounting is everything in the business of real estate. It is even more important to have an accounting procedure in place where you will be able to track your income and expenses and thus save them so you do not work any problems with the IRS. Most businesses outsource their real estate part of the accounting business or hire someone to do the accounting. The person will need to ensure that financial records and are kept up to date, and they are correct.

Property rental software is the one which fulfills all the needs of accounting software in the real estate business. It solves all the accounting related problems and the business does not need to outsource their accounting business or hire someone else to maintain the accountings. It helps to keep the financial records up to date.

We all know the historical pattern of renting videos from local video rental store but it now belongs in the past because the Internet has completely remodeled the business of renting videos. The video rental has gone online and with the advent of the Internet, there is little limit to what you can get. Now, you can rent a video without having to leave the comfort of your home, just register in some of the Web site of the video rental. Thousands of people are signing up to rent movies online daily.

As the online mode of the video rental came it took a very short time to make the video rental software for offline video rental stores and with the video rental software the number of video rental businesses to enter into the one with having the software increased at a very faster rate which resulted in increase of the competition in the rental business.

With the fees for using this type of rental business software is set to feature a price for whatever it costs if you use one function or all functions that the software is available to you. The software comes with a comprehensive and easy to follow training that you can be in service within about an hour and a half. Just makes sense that you should use this type of software today in this time and age where everything is basically operates on the Internet.

Five Steps To Planning A Successful Business Exit

A business owners exit is a once-in-a-lifetime transformation. Were not talking about selling a house or a car. This is a complex process that requires the technical expertise of a team of trusted advisors. The key to any successful business exit is planning. It must begin with personal reflection on the part of the owner regarding what he or she wants out of the business exit. Only then can the owner, along with his advisors, design an appropriate exit strategy. The five (5) planning steps outlined in this article are designed to help business owners define their personal goals, understand all the transfer options and work with an advisory team to execute a successful business exit plan.

Step 1: Define the Personal Goals of the Owner

Since personal goals intertwine so closely with the daily existence of a private business owner, it only makes sense to begin with the basic albeit crucial question, What do I want to accomplish with my business exit? The answer seems obvious–make the most money after taxes and fees. Often, however, it isnt this simple. Owners have nourished and raised their businesses from infancy; they typically care a lot about who will take the reigns. Family members might also be involved in the business. Their fate will also be dependent upon what the business owner ultimately decides.

Aside from money, other motives for a business exit can include transfers to family, transfers to employees, transfers to co-owners, partial transfers to gain some liquidity today but still run the companys day-to-day business, or an initial public offering. The decision often comes down to a question of liquidity. A substantial source of liquidity outside the business makes for a much easier choice.

However, more often than not an owners wealth is tied up in the business. The owner must therefore balance his financial and interpersonal goals in order to find the best possible exit strategy. Therefore, an assessment of the range of values for the business is the crucial next step.

Step 2: Understand that a Range of Values Exist for the Business

The value of a privately-held business depends largely upon who buys it. Its not as simple as watching the ticker tape for todays stock price. The type of buyer can impact both the price placed on the shares (or assets) of the business and the tax consequences to the selling owner. Value (net transfer price) is therefore a range concept.

Internal transfers to employees, family, and co-owners provide fewer dollars up front, but allow for greater control of the business, continued income, and flexible timing and tax characterization of payments to the exiting business owner. By contrast, External transfers to other industry players, financial groups, or by initial public offering command more liquidity up front while the owner relinquishes more control over the Company and the timing and tax characterization of payments. A closer examination of the transfer options can help an exiting business owner determine the right balance of money and control over the future of the business.

Step 3: Examine the Options Available for the Transfer of Shares

There are seven (7) primary purchasers of privately-held business stock (or assets). Below are listed the Parties to the Transaction and Types of Transactions Available (samples; not a complete list)

Internal Parties:

Employees – Employee Stock Ownership Plan (ESOP)
Charity – Charitable Remainder Trust
Family- Gifting Program
Co-owners – Leveraged Buyout

External Parties:
Financial Groups – Recapitalization
Industry Buyers – Acquisition (at Synergy Value)
Initial Public Offerings – IPO (at Public Market Value)

Based on the primary goals defined in step one (1), an exiting business owner chooses the party to whom the business will be transferred. That designee, once chosen, will determine the limits or expansion of the Value. At the end of this phase, the process comes full circle as the Value (after taxes and fees) is matched against the owners goals. If the two meet as one, congratulations! A successful business exit strategy has been devised. Now its time to execute.

Step 4: Provide Full Financial Disclosure to the Buyer

This step isnt going to be easy on the business owner. Assembling financial records and presenting them to a buyer/successor is a very time consuming, very personal survey of how the business is run. It can be huge psychological block for many exiting owners. Remember, any savvy buyer (or successor) to a business will need to understand the financial condition of the Company. When an owner fesses up to any creative accounting they may have employed over the years to help build wealth and reduce tax bills, the process goes smoother. Full disclosure is the best path to a seamless process. There is an old saying – if the truth will kill a deal, then there is no deal.

Not only that, but it may reward the owner in the end. Full disclosure is not about passing judgment, but instead affords the buyer (or successor) an opportunity to assess the businesss true profit potential. The astute exiting business owner will recognize this in advance. Why? Because most creative accounting practices depress the profitability of a business. Clear those away and the Buyer will recognize a higher earning power and in turn a higher Value for the Company.

Step 5: Assembling the Advisory Team  No One Should Go It Alone

Planning and executing a successful business exit strategy is a complex process that requires the technical expertise of a team of trusted advisors. Its not the time to take short cuts or pinch pennies. Time and money should be invested in assembling the right team of advisors; a successful business exit is more than worth it. It should be viewed as an investment in success.

We must understand that business owners are independent self-starters. If they werent, their businesses wouldnt be so successful and we wouldnt be talking to them. But some of their strengths and characteristics can lead many business owners to attempt the do-it-yourself business exit strategy. This can create an unnecessary drain of time and money on both the business owner and their business.

A business owners exit is a once-in-a-lifetime transformation. It is an important milestone that is sure to provide any business owner with one of the most challenging yet satisfying sense of accomplishments.

So remember, planning is the key to any successful business exit because a proactive approach to an Exit Strategy is the only approach to a successful Exit Strategy. If youve come to the end of this discussion, youre already ahead of the game.

John M. Leonetti

Scope Of Mergers And Acquisitions

Mergers & Acquisition have gained popularity throughout the world in the recent times. They have become popular due to globalization, liberalization, technological developments & intensely competitive business environment. Mergers and acquisition are a big part of the corporate finance world. This process is extensively used for restructuring the business organization. In India, the concept of mergers and acquisition was initiated by the government bodies. The Indian economic reform since 1991 has opened up a whole lot of challenges both in the domestic and international spheres. The increased competition in the global market has prompted the Indian companies to go for mergers and acquisitions as an important strategic choice.

The trends of mergers and acquisitions in India have changed over the years. The immediate effects of the mergers and acquisitions have also been diverse across the various sectors of the Indian economy. Mergers and Acquisitions (M&A) have been around for a long time and has experienced waves of popularity during these times and they are very much an important part of todays business world. They have also become increasingly international which can be due to the rising global competition. The popularity of cross-border M&As makes it important to look at them from an international perspective

As a subject in PGDM one studies the aspect of valuation in Mergers i.e. how a company decides about the amount that has to be paid for acquiring. Basically M&A emerged as a strategic issue but now a days, valuation aspect has gained more popularity.There are thousands of investment bankers who are daily engaged in valuations and in the coming years this trend is expected more in Banking sector as well as other sectors too. So one should study this subject in PGDM as well as PGDM (BFS).One will find this subject very interesting as it involves knowledge from every field.

They are suitable for those studying advanced undergraduate and MBA courses in top MBA colleges, industrial organizations, finance, business strategy, and corporate governance, as well as those preparing for exams set by professional bodies. Mergers & Acquisitions focuses on how to value and analyze opportunities in this market; how to design and value consideration and deal protection measures; how to initiate and defend against hostile bids; and how to integrate businesses after a deal is struck.

The recent acquisition of Zain by Bharti airtel is a well known example of this subject as once you start reading about the deal your interest keeps on increasing about the day to day news because people attached with this field have a zeal to know what will happen next, whether this deal will show positive signs or negative signs for the stock market. Mergers & Acquisitions teaches both qualitative and quantitative analysis: most cases require a balance of financial techniques and business judgment grounded in institutional facts. The course seeks to promote good judgment in the evaluation, structuring and management of mergers and acquisitions.

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