Category Archives

Archive of posts published in the category: finance
Feb
29

Turnaround Finance – Solution by Vultures or Angels?

An injection of turnaround finance involves saving a potentially insolvent company from irreversible insolvency and returning the company to a stable financial and operational position. The objective is to achieve this whilst maximizing creditors' interests and the interests of employees, managers and shareholders. Popularized by such media productions as Dragon's Den (starting in Japan, now exported to the USA and UK), private wealth may be granted where the investor believes there is a future for the business. This article deals with turnaround finance for both under-performing businesses and businesses that are either insolvent or potentially insolvent.

The Progress Path

Turnarounds are achieved by a combination of financial, crisis management, restructuring and insolvency skills. The first step is to determine why the company is in the state it is. Realistically, there is anything that can be done to reverse the trend. Analysis is the key to really get into the problem. The analysis will resemble the three legged stool approach. The 'legs' vary, but essentially the analysis will get into these three areas: possibilities for structure, liability and management

Restructure

Even a formal structure involving insolvency does not have to conclude the company. Many companies have found that this experience has forced a re-think of the company mission and a focus of action. But the majority of turnaround finance initiatives result in informal restructuring which is generally better for creditors, customers, employees, banks and shareholders. The structure may necessitate job loss and lean arrangements with creditors. It may involve closing some facilities to reduce overhead or consolidating partitions to eliminate duplicate administrative functions. It may be necessary to sell off underperforming divisions of the company and outsource some functions to other parts of the world with less expensive labor rates. Viability This is the 'leg' that varies, sometimes it's in the guise of the finance package. But whatever finance is required, whatever the state of the company and it's creditors – is the company viable? Does it have a sustainable market? Does it have a future for it's goods or services? If it's a new business in something like internet technology, the answer to this question may not be straightforward and need significant analysis and business instinct. For older industries the past history of similar ideas will help greatly.

Management

Of all issues involved in the turnaround, the most difficult is getting the company to recognize deficiencies in management. Weaker members of the management team need to be replaced and this is very difficult for the board to be objective about. The management of any company does not want to know that their company is struggling because of the obvious implication of where decisions are made resulting in the problem. Many management teams will not accept that they need help until the last moment – but the best help is the help administrated early. The resulting action may have to be decent and definite, aka brutal. Conclusion The most famous example of a turnaround success is Canary Wharf in London that …

Feb
24

How to Define Personal Finance

In the modern world, personal finance is more important than ever. A person’s entire life revolves around the decisions they make about their money. The media would have one believe that big banks are what make the economy function or fail, but the truth is that individuals should be much more concerned about what they can control, namely their personal finances.

For many people, personal finance simply means keeping their checkbook balanced and having enough money in the account to pay the monthly bills. This is a great start, but only a start. Other important decisions affect a person’s financial well-being. Everyone eventually have to rely on the decisions they made in the past to provide them with suitable income in their golden years. Decisions like this are just as important as keeping the checkbook organized.

The old-fashioned bank is the financial institution most likely to play the greatest role in a person’s daily personal finance strategy. Banks offer a variety of ways to help one manage their money. Most people need only concern themselves with four main types of financial accounts. The first two account types, checking and savings, shouldn’t be anything new to the average person living in the modern world. Checking accounts offer the most convenience and easiest access to your money.

Savings account also allow you access, but are designed with long term savings in mind. These accounts pay interest, but it’s usually very low and shouldn’t be viewed as an investment. Money market accounts are similar to savings accounts but have a few restrictions. In return for a higher interest rate, banks usually require a minimum deposit to open one of these accounts and the number of transactions that can be made on the account per month is limited. Though not actually an account, certificates of deposit (CDs) offer some of the best returns on one’s money. The longer one invests the money in the CD, the greater the return on one’s capital.

Before knowing the best account type or types to use in a personal finance strategy, a person first must analyze his or her own financial situation. It is important to consider one’s sources of income as well as one’s personal liabilities such as mortgage, car payment, credit card bills, daily living expenses, etc. Once all this information is gathered, a plan can be formulated. If one discovers a budget surplus, this money can be invested in money market or CDs. However, if the bills are barely being paid, it makes no sense to put money into a savings account just to have to remove it the following month.

The goal of all this information is not only to stay out of the red in your personal finances, but to also accrue a sizable savings surplus. By examining one’s daily spending habits, extraneous expenses can be removed and more money can be saved. The savings can then be put into money market or CD accounts and earn interest. The old saying that a …

Dec
27

How to Increase Your Chance of Business Loan Approval

Lending companies are willing to extend loans to businesses but they need a guarantee that the loan will be promptly repaid. Established businesses that are doing very well in the market have a great chance of approval. On the contrary, if you own a new business or a start-up business, applying for a loan the first time can prove to be a challenging task.

After the challenge, it does not mean you should not try to apply for a business loan at all. In this article, let us discuss the strategies you can do to increase your chance of getting an approval.

Know the Prerequisites of the Business Loan

Generally, lenders will require the submission of your financial records for the past two years or if you're a new business, since the time you started. You must also prepare proofs that you are running a legitimate company such as permits and licenses.

For new and start-up businesses, a sound business plan will be expected. Your business plan must present a clear explanation of the type of business you are running and must include monthly cash flow projections since you started your operations.

For established businesses, make sure that balance sheets are accurate as any discrepancy in the details may cause an alarm. Business lines of credit you have previously agreed will also be evaluated. Yes, your business credit history will be closely reviewed.

But what if you have yet to build up your corporate credit history? In this case, your personal credit history as the owner of the business will be taken into consideration. How you manage your personal accounts such as loans, mortgage, and credit card debts will show a potential lender your ability to manage a business loan.

This is why it is recommended that you obtain a copy of your personal credit report prior to submitting your loan application. In this way, you can still correct errors or inaccuracies that may be included in your report which could have been pulling down your score.

Needless to say, the same advice is also applicable even to owners of established businesses. Check both your corporate credit and personal credit history to make sure that both your personal and business credit profiles are in good standing.

Preparation Is Vital

Indeed, preparation is very important when applying for a business loan. Financial experts recommend making investments in assets that generate income such as inventory or equipment. You should also avoid major changes in the structure of your business a few months before submitting your loan application. Remember that you need to show a potential lender that your company is in a stable state.

Aside from bigger banks, it is also worth the effort to check out what business loan programs that are available from your local bank. Smaller banks may be more inclined to finance a new business, especially if the owner has been a long time customer with an existing personal account with the company.

Do not submit different applications …

Nov
26

Why Do You Need to Have an Adequate Car Insurance Coverage?

Nowadays, when you buy a car, you must also carry adequate insurance. You may be wondering why do you have to cover the extra cost of the insurance. Actually, the premium is affordable and you can get discount when you buy it online. It is common for people to get into accident every once in a while. Therefore, it is best to always equip yourself with adequate insurance coverage just to be on the safe side.

Driving a car without car insurance is illegal. If you get caught, you may get a hefty fine. The premium of your car insurance policy must meet the minimum requirement of your state. Every state has different insurance requirements. Most of the states require you to have liability insurance. Some states like New York and Florida require drivers to have a personal injury protection.

Having an adequate car insurance can protect your finance in case you encounter an accident. If your car collide with someone else’s car and you are at fault, you will have to pay an expensive damage fees. The damage fees will cover the other party’s car’s damages along with the hospitalization or medical fees of the driver or passengers.

The damage fees often reach up to a few thousands dollars. You will be broke if you use the money from your savings to pay the damage fees. If you don’t pay for the damages, the other party may sue you in the court. If you have an insurance policy, you just have to file a claim and they will reimburse the damage fees.

You may want to consider getting a comprehensive/collision car insurance as it not only protect the damages of the other party’s car but also the damage you suffer as a result of the accident. Many people who drive on the highway don’t carry enough car insurance. For this reason, if someone collide with your car and run away, you will at least can claim the damage fees from your insurance company.

Comprehensive/collision coverage provides coverage when you accidentally hit an animal that is crossing the road. It covers damages on the broken windshield, hail damage, fire damage or collision that happen as a result of a storm. Your comprehensive insurance will also reimburse the compensation on a stolen vehicle that has gone missing for over 1 month.

It gives you coverage over any type of vandalism performed on your car, for example, someone uses a key to scrap the paint off your car. It offers coverage when your car is damaged due to high flooding water caused by a hurricane. It is your comprehensive coverage that will pay for the damages when your car is being smashed by a fallen tree.

The comprehensive coverage will protect your vehicle when it is parked in place. Your home insurance will not provide coverage when the garage collapse or other physical damages happen when it is parked.

When purchasing car insurance, you have to choose a deductible. The deductible is …

Nov
20

Small Business Financing Problems and How to Solve Them

Many, if not most, small businesses will experience financing problems at some point during their life. How well management deals with these problems will go a long way to determining the ultimate success or failure of the business. There’s an old saying in business; “Cash is king”, and so it is. There are many instances of businesses being profitable on paper only to be unable to sustain operations due to poor cash flow management.

The financing problems created by improper cash flow management are ranked high on the list of problems faced by business owners. In fact, the 2007 Small Business Survival Index ranks financing problems up on the list of small business problems along with taxes (which can create financial problems of their own), government regulation compliance, legal threats, and finding quality employees.

If your small business is experiencing financing problems, what can you do to solve them? You have several options. You can bring in more revenue, reduce expenses, or become more efficient at managing your cash flow. In most cases you would better served by doing all three. Let’s look at these solutions and how to achieve them.

Increasing revenue is certainly a worthy goal of every business, but may not in itself lead to a solution for your small business’s financing problems. This is because in many cases additional funds are necessary to support the larger operations that create the additional revenue. For example, if you have a contracting business, you’ll need more staffing to take on additional work, which will lead to a short term cash flow problem until collections catch up with your increased labor costs.

This can be seen for manufacturing businesses as well. As your business grows and production levels rise, your business will incur additional plant, equipment and labor costs to support the larger number of orders you’re receiving. Until your receivables catch up with your increased costs you will have financing problems.

This means that increasing revenue isn’t always a solution to cash flow problems,and can actually exacerbate them. Increasing revenue to solve small business financial problems is desirable in the long term, but will only help in the short term if the revenue increase can be obtained without substantially increasing costs or if your business operates on a chiefly cash basis. If you extend credit to your customers, the additional costs required to grow your revenue can easily lead you into a cash position that gets worse before it gets better.

What about reducing costs as a solution to improving financing problems? For most businesses, reducing costs, if it can be achieved without reducing revenue, or reducing costs associated with unprofitable revenue is of utmost importance. Not only do costs directly impact the bottom line, they can reduce the operating efficiency of the business, large or small. Traditionally the largest business expense is labor. While this rule isn’t always true, the majority of business owners can attest to the fact that labor costs are what keep them awake at …

Nov
19

Finance Accounting Outsourcing Can Take Control of Expense Management

Is it that tax filing season is approaching near and your financial documents are still in a messy? In this regard, finance accounting outsourcing will certainly prove to be beneficial for you. Finance is something that needs proper attention and careful handling. It is because slightest mistake can cause big blunders and you may end up having problems with tax raids. This will not only cause you unnecessary tensions, but much of your precious time will be wasted. Finance accounting generally deals with handling day to day expenses along with other major expenses. And it becomes really tedious to tally and manage all the expenses properly.

The concept of outsourcing is concerned with the fact that you can give some part or the entire work to a third party. This idea basically works when accounting firms or other business houses are stuck in work overload. Well, it is the tax season that calls for a whole lot of paper work and managing finance and accounting work is nothing but a task that has to be done with cautiousness. Some of the important documents that can be given for outsourcing are invoice generation, financial statements, trial balances, profit and loss account, tallying balance sheet, daily expenses bills and many others.

Generally, big business houses keep in-house staff for handling finance and accounting work. But, they have to give certain add-ons such as bonus, house rent allowance, gratitude, cash advances and even conveyance charges. All these along with handsome salary can come up to big amounts and outsourcing will help to cut down all of this. This is the reason that outsourcing has developed so much in recent times. Usually, it helps to save your extra money that can be invested in other profit venturing aspects of a particular business. As everyone is here to make profits and take care of the departments that are responsible for the growth of business.

By adopting the way of finance accounting outsourcing, you can get your work done at half the time through through in-house staff. The issue behind this is that, the staff will also be taking care of other matters and so are bound to take extra time in managing this task. In this way, when the tax season approaches, they would be seen running to their CPAs office. It is better to go for outsourcing because the professionals in an outsourcing firm have to deal only the task related matter or project given to them. So the speed of completion would be much better.

The present scenario of the business world is such that everything needs to be done in time and that too with speed. There is no place of errors and accuracy is of prime importance. It is this reason that outsourcing has become an integral part of every business house. No one likes to waste time in extending the work. Time is money and this is the most important fact that has turned many accounting firms and business homes …

Nov
2

How to Raise Money For Property Investing

Usually the largest hurdle preventing many people from getting into property investing is raising the necessary funds for the deposit and refurbishment. However, there are a number of ways around this. The obvious route to take is to use your own personal savings to fund a property investment. This should hopefully help you avoid taking out risky loans with interest rates.

Some people choose to borrow from friends and family. This is sometimes a good option, but can often put additional pressure on you and there is also always a risk it could affect valuable personal relationships.

If you are currently a homeowner you could look into re-mortgaging your property to raise the finance. This will probably increase your monthly mortgage re-payments, but is often the quickest and easiest way to get you started. You can download a great free re-mortgage guide from Moneysavingexpert, which provides some helpful tips.

In some cases people take out an option on a property. This is a legally binding agreement between you and a vendor to buy a property. The option should provide you with a below market value price. In order to take advantage of this option you could sell the option to a third party for a sum that still enables them to buy the property below market value. This option agreement should benefit all parties and enable you to generate some funds for your own property investment. One of the best indirect ways of raising finance is to keep your credit rating as clean and high as possible. This will enable you to borrow and finance your property investing.

A joint venture is another popular way of raising funds. If you can find a partner or even partners that are willing to invest with you this can things much easier. You can use family and friends or even networking event to find partners. One important note is that you should always seek legal advice before undertaking a joint venture with a formal written agreement in place.

If you are lucky enough to have multiple investors you could probably start a property club. All parties involved should have designated roles. The benefit of this is that it's potentially open to new members as word spreads. You can even find property clubs online. …

Oct
1

What Credit Crunch? Financing Alternatives in Today's Tough Credit Environment

With the credit crunch in full force, many small businesses are finding it harder and harder to land a business loan. Even business lines of credit are being squeezed tighter-often yanked right out from under companies that have long established histories with financial institutions.

Fast-growth companies are especially vulnerable in the current credit environment. Those with 20 percent or higher annual growth rates can make banks nervous even during the best of times, since fast growth can knock their ratios out of whack and result in temporary periods of incompitability.

There is hope, however, for companies in this predicament. A creative financing alternative known as asset-based lending (ABL) can be a true lifeline for these types of businesses. ABL is ideal for companies that can not qualify for traditional business loans due to fast growth or other extenuating (and often temporary) circumstances. Start-up firms and those with heavy seasonal inventory needs are good examples, but any company with a solid foundation and a history of success that's facing temporary financial challenges could benefit from ABL.

How It Works

ABL generally takes one of two primary forms: factoring services or accounts receivable financing.

With factoring services , companies sell their outstanding receivables to a commercial finance company (sometimes referred to as a "factor") at a discount that's typically between 2-5%. The amount of the discount depends on such variables as the collection risk, number of days the funds are in use, and how much of the receivable is advanced (80% is common). There are two key benefits of factoring:

Drastically improved cash flow -Instead of waiting 30, 60 or even 90 days or longer to receive payment, the business gets most of the accounts receivable when the invoice is generated. This reduction in the receivables lag can mean the difference between success and failure for companies operating on long cash flow cycles.

No more credit analysis, risk or collections -The finance company performances credits checks on customers and analyzes credit reports to uncover bad risks and set appropriate credit limits-essentially making the business's full-time credit manager. It also fulfills all the services of a full-fledged A / R department, including folding, stuffing, mailing and documenting invoices and payments in a ledgering system.

With accounts receivable financing , companies borrow against the value of their accounts receivable, instead of selling them to a finance company outright. Their receivables, in effect, become collateral for the business loan, with the finance company advancing funds based on a calculation of the outstanding receivables. The best candidates for accounts receivable financing are companies that can demonstrate a history of strong financial planning, that have solid financial reporting capabilities, and that do not have high customer concentrations (eg, no more than 60% of sales to one customer).

Finding a Commercial Finance Company

When searching for an ABL lender, talk to your bank first. However, since ABL is a specialized type of lending, many banks do not do it in-house, instead referring their customers to commercial finance companies. …

Aug
17

How diversifying your portfolio in cryptocurrencies helps you minimize risks

Last year, Bitcoin traders and owners made a lot of gains as it was at its all-time highs of $19,000. This caused an influx in the Bitcoin arena, as prospective and expert investors went out of their way to purchase more bitcoins in a bid to cash in more. Nevertheless, the glory did not last long as the market cap for bitcoin dropped to around $7000. Even though this price is still quite valuable, those who invested in the last minute underwent massive losses while those who invested earlier still had something to smile about as they had made enough gains way before the bubble burst. Where is all this going? Well, this is to show you that investing in crypto is not always fun and games. The world of crypto is subject to market fluctuations and many other factors which affect the price and curve of the crypto graph. In respect to that, anyone planning to invest should at all times retain a vigilant attitude towards the investment choices he/she makes. One way to do so is by broadening your horizons. If you’re a newbie to the crypto universe, below is how diversifying your portfolio in cryptocurrencies helps you minimize risks giving you an opportunity to join the world of BronzeMarkets earners.

Spreads risks

To most investors, making multiple investments in cryptocurrencies might sound insane and ridiculous. However, those who practice this, are sufficient proof that doing so is not only beneficial in the long run, but is also one of the primary ways to meet your long term financial goals without losing your shirt.

Investing in multiple cryptos helps you minimize your exposure to the risk associated with one asset as it helps spread the risks over various investments. Take for instance, a trader who had invested his money on 30% Ethereum, 30% ripple and 40% bitcoin suffered less losses during last year’s bitcoin fall as he/she still had another channel to not only sustain him but also bring him 60% profit in comparison to one who had invested 100% on bitcoin.

There’s no telling which crypto will be dominant in future

Even though there have been numerous advancements in blockchain technology such as smart contracts, the blockchain, and crypto technology is still in its earliest stages. Additionally, they are highly susceptible to market volatility, and no matter how proficient one is, it is impossible to tell which cryptocurrency will become dominant in future. Thus diversifying your portfolio is a wise strategy as it gives you an upper hand on whichever crypto rules the market in the near future. For instance, using the same example above, if in future Ethereum becomes dominant, then the first trader will still have the upper hand and will enjoy more gains while at the same time enjoying the profits made by the other crypto in which he/she owns. The complete opposite will be experienced by a trader who invested solely on bitcoins as they will be forced to sell at a lower …

Mar
15

Manager For Your Finance – Debt Management Solution

Managing your finance is a tougher job when you are carrying lots of debts with yourself. Either you have taken loans or any other form of debts in the past; this may solve your financial problems. But the real story begins when the time for repayment arrives. It makes us put all our effort to calculate the installation amounts and plan our monthly budget. After doing all the hard work at last we came to know that our finances are not meeting up the expenses. Than what are we left with ???? ….. only debts and more debts ??? At such moments you need to find your debt management solution for your troubles.

Debt Management Solution is provided by financial consultants and agencies at some charge. The solution basically means a form of financial advice regarding how can and how you should manage your money so that you can easily bear your expenditure and simultaneously making repayments of the loan amount. The most common suggestion or recommendation given by these agencies is consolidation of debts.

The debt consolidation in a single line can be defined as reducing your debts in number by taking a loan and paying all your debts. Now their remaining a single debt and that too too low rate of interest. This cuts down your monthly expense to a larger extent. The other thing which needs to be taken care of is to minimize your use of credit cards, use a debt card instead. Following are the services provided under debt management solution:

o Debt consolidation advices from professionals.

o Debt consolidation programs and debt reduction.

o Advices and facts about bankruptcy.

Applying for a Debt management solution is very easy through online option. The application form consists of details such as your name, permanent address and contact information, residential status (whether you are home owner, tenant or living with parents), email ID for communication, home and work phone, amount of debts with you at present, details of debts, accept the terms and conditions after reading them and click on submit to get the further assistance from the advisers.

Debt management solution can help you write off nearly 90% of your debts. Advisers and consultants will talk to your lenders; negotiate with them for loan repayments installments. As the installation become smaller, debts become lesser, interest rates goes down, automatically your expenditure will decrease and you will be able to live a better life without the financial stress and tensions. …