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Functions of Business Finance

Functions of Business Finance

Introduction:

The ultimate goal of any business is to be profitable at all times and earn money; it is money that helps a business to grow and expand. In order to be successful, an organization needs to able to manage money in a sophisticated manner and so all organizations have a finance department that takes care of different monetary transactions.

The financial department in any company consists of various sub-departments or teams to take care of many functions, apart from buying and selling of products, thus business finance is the broad term that describes all functionalities of the finance department of a commercial enterprise.

The two main functions of business finance:

Investments: Functions include finding investment options for the company such as, creating new products, asset acquisition, increasing local purchase of securities or shares, etc. Also the decisions of investing in mergers and acquisitions for the expansion of the company have to be scrutinized by this department before the Board of Directors can finalize them.

Financing: This team deals with seeking funds for the company from various sources like banks, financial institutions, investors, share holders, capital market etc. and then assessing the funds so that the company can get borrowed capital at the lowest interest rates possible and with minimum liabilities.

Additional Functions:

Accounting: This team keeps a track of all monetary transactions in the form of accounts so that the expenditures of an organization can be tracked, to calculate the net profit at the end of the year. Keeping a track of the expenses helps the company to set the prices of all the products and the services offered, in a way that the net expenditure should be less than net income.

Payroll: They handle the salary payments of the all the employees of an organization; functions like calculating yearly bonuses, salary increase and also rolling out pay structure for new joiners are accomplished by them; this is done by working in coordination with the recruitment team.

Billing: This sub-department takes care of the billing process and prepares an itemized bill, which is sent to the clients at the end of the month, for the purpose of payment. It is of enormous importance in the service industry where an error in the bill can strain commercial relations with clients.

Thus, effective management of business finance is necessary for the smooth functioning of an organization and this can only be achieved by having a well-defined goal for the finance team.…

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Importance of Finance News in Stock Trading

Importance of Finance News in Stock Trading

The stock market is regulated largely by financial conditions; therefore being aware of finance news is of primary importance if you wish to enter the stock trading. The volatility of the financial world is well-known and economic activities throughout the world get driven by financial conditions. For a stock trader, it is important to keep a track of the latest global stock market news.

The stock market is also very sensitive to stimulating events, such as terrorist attacks, civil uprisings, political unrest, natural disasters, diplomatic failures and fluctuations in oil prices. All these events ultimately have a direct bearing on financial conditions of a company, a country, or even globally and being in touch with finance news is the best way to analyze and speculate effectively.

Investors in the stock market should keep a track of fluctuations in the prices of shares based on the market situation and other factors. If they find that share prices of the stocks that they are holding are likely to change drastically, they should immediately take action to avoid losses. Keeping track of finance news and latest market news will enable them to be prepared for any drastic changes in share prices.

Finance news can be obtained from different sources, such as the Internet, which can easily be described as the most convenient and best one. There are many sites such as “Google Finance” and”Yahoo Finance”that provide live stock news and information about most active stocks so that you can study the live market updates and the latest share market information.

You can also get finance and business news from news channels on the TV that caters entirely to business and market news. Along with news about different events that have a direct bearing on the markets and information regarding stock prices, and performances of stock exchanges, you can also find opinions from some market experts.

The other sources for finance news are newspapers, especially the business newspapers that have detailed information regarding the finance markets, expert advice regarding the correct choice of stocks and any changes in statutes that affect the market.

Business magazines and business portals can also help you with updates regarding stock predictions, acquisitions and mergers, corporate initiatives, market news and economic forecasts. You can study all these factors and also avail information regarding the performances of companies from business magazines and portals, which provide quarterly or annual balance sheets.…

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Can I Interest You in Free Money?

Can I Interest You in Free Money?

A grant is defined as a sum of money given to an individual or business for a specific project or purpose.

Despite the fact that grants may not cover the full costs of the project or purpose, the advantages of this type of funding are that as long as you keep to any conditions attached to the funding, there is no requirement to repay it as you would with a loan, nor will you have to give up any share of your business, as you would with an equity investor.

Grants are generally given to assist with business development and will therefore be linked to a specific area of activity such as training, new product development or investment in plant and equipment.

In practice however, obtaining grants can be a long, time consuming and frustrating process, with no guarantee of success.

Finding out what grants are available for your business can be complex as there are a wide variety of different funders providing grants across the country including local authorities, Regional Development Agencies, central government and European Union funding as well as non-government organizations such as the Prince’s Trust; and quangos such as the National Endowment for Science Technology and the Arts (NESTA) or the Carbon Trust.

Each organization will have its own application procedures and will award grants to projects which are judged to meet the body’s own objectives and this then determines the criteria you have to meet to qualify such as:

* the size of your business, some may only be available for small or medium-sized businesses (SMEs)

* the industry you are in, some may be designed to help a specific industry, or a general grant scheme may exclude businesses in some specific sectors; and

* your location, where for example many European Union grants are only available in specified geographical areas requiring economic regeneration

* as well as the use to which the funds are to be put.

Very few grants are retrospective so you normally have to apply for your proposed project in advance. As a result, you project may suffer delays in getting underway if you have to put it on hold whilst you apply for a grant.

Few grants will provide 100% of the cash required for a project and you will therefore need to both arrange the matching funding to provide the balance, and be able to prove to the grant provider that this is in place. This match funding can be by way of new cash introduced into the business by the owner or a new investor, or come from the company’s own cash reserves, or be money that has been borrowed for the purpose, or in some cases the cost of employees time that goes into the project can be included as part of the matching funding.

There may also be elements of your project which are not covered by the grant so you will have to raise the funds to pay for these as well.

Remember that even once you’ve been awarded a grant you still have to then actually receive it. This payment is usually in arrears following your submission of proof that you have incurred, and in some cases paid for, the costs of the project as the grant is claimed as reimbursement. You therefore will need to look at your project’s cash flows to ensure that you are able to finance the project until the grant cash actually comes through.

It is also true to say that grant application procedures can be time consuming, while the approval process can be prolonged, be subject to availability of the pot of funds (and they do run out), and can involve you making commitments in respect of your business, such as where the grant funding is tied to levels of jobs or location of premises, that can impose restrictions on subsequent changes in your business.

Since however, substantial sums can be raised by way of grants and so the prospect of achieving grant funding of up to and over or more against a project makes it imperative that the prospect of grant funding should be investigated for any major project.

In the current economic climate, it’s also important to know that at the moment substantial grants are being made available, on tight timescales as part of government initiatives to help support sustainable businesses.

Fortunately there are some specialist advisors who can help businesses navigate the mass of schemes on offer and assist in firstly identifying the types and levels of grant for which any particular business may qualify and then help in managing the application process so as to raise this type of finance as quickly and efficiently as possible.…

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Tax Advice For Contractors

Tax Advice For Contractors

If you are a freelancer or contractor working in the UK, then your tax issues are likely to be a bit more complicated than people who are regularly employed. We’ve put together a guide to help you through it and sort out your tax. One major thing you need to sort out as quickly as possible is whether your business means you need to register a company or if you are self-employed and working as a sole trader as this can affect what tax you pay.

Then there’s the issue of VAT. You don’t have to worry about this too much if you’re on low to average earnings, but if you earn over A�64,000 a year then you need to register for VAT. This is so you can collect and claim for Value Added Tax. It can be a complicated business as it adds an extra complication to your tax return, so if you’re worried about it you could ask an accountant to help you. It can be useful to separate the VAT when sending invoices.

You also need to make arrangements to pay your National Insurance contributions as the rules are slightly different for self-employed people. Unless your earnings are extremely low, then you’ll be expected to pay Class 2 NI contributions. You can normally set up a direct debit with Her Majesty’s Revenue and Customs in order to do this easily. You can also opt to pay a higher rate of national insurance or, if you earn a lot of money, you’ll be required to pay the higher rate.

One of the biggest tax issues UK freelancers have to deal with is the yearly self-assessment tax return. In order to complete this, you should keep a record of all costs associated to your work as well as all your earnings so you can input them into the form. This helps HMRC work out how much tax you owe. The tax return is based on the previous financial year (from April – April) and the tax you pay is based on your earnings in that year.

One last thing to consider is how you’ll be paying your tax bill. It can be a good idea to have a cushion of money put by in case the following tax year is a bit lean and you don’t earn much as you’ll still be expected to pay the tax bill for the previous year. It can also be wise to put aside money throughout the year so that when tax time rolls around, you’ll have enough saved that you’ll be able to pay is easily.…

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How To Identify Unreliable Sources Of Financial Information

How To Identify Unreliable Sources Of Financial Information

There are some people that want to assume control of their finances by reading a book or consulting a financial advisor because they were smart enough to realize that they’re not financial savvy. But you must be aware that there are several challenges and pitfalls when choosing an advisor.

There’s also a problem when reading to learn how to manage your finances. Although reading a book is good and fundamental to your learning process, you can find sources not too reliable and get misinformed and that is something to avoid at all costs.

You may think that any renowned investment guru would make you rich but beware of that. I remember one formerly bestselling book about personal finance that gave the advice to “Buy disability insurance only if you are in poor health or accident prone”. There are two major problems with that statement. First, how in the world would you find an insurance company that is concerned on making a profit that will extend a disability policy once you have fallen into poor health? And second, can you please tell me how would you know when you are accident prone? It seems to me that if you follow this kind of advice you will need the help of your horoscope to see disabilities coming.

Consider also the famous investment seminars offered everywhere. These seminars promote themselves promising huge returns that don’t seem credible. Most of the time this seminars promise you will have returns as high as 20% per month on your investments and comparing the annual return of 10% the stock market generates over long term, you can easily spot some kind of fraudulent publicity.

This is why you have to understand how all those investment gurus get so popular even with visible defects in their advice. In most cases this gurus work the media and given that many members of the media are financially illiterate themselves, they get great coverage and publicity and get quoted in the press and get invited to renowned talk shows.

Be aware that talk shows and the media in general provide useful information on a wide variety of topics, but sometimes bad advice appear. Don’t assume that just because someone with something to sell is getting good publicity is going to be a good advice to you. It can only be a good job on public relations and marketing.

More important, remember that virtually all the newspapers, magazines, web sites, television, radio, etc. are completely dependent on the money from advertisers. And in some cases these advertisers are the ones dictating the content you read, listen or view in the media.

You may be wondering how can you identify or separate good publications from the biased publications and following are some ideas on the subject.

First, consider how dependent on advertising a publication is. For example, most of what is published on the internet is driven by advertisers. Many of the sites publishing investing advice on specific stocks are derived from brokerage firms looking for more clients.

Your feelings must always be involved to determine if some publication, television show or radio program is oriented to consumers and if you believe they’re looking for your interests or the advertisers’. For example, if you are reading a car publication and you see a lot of auto manufacturers advertising, is that publication talking about the importance of saving money when buying a car or is it just telling you to buy a car by all means?…

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Online Help For Debt Management

Online Help For Debt Management

Most people, at some point of their lives, get into financial situations that can at best be described as constricting. Financial problem do not just afflict the so called regular solid working people – they affect everybody regardless of their management skills. A sudden illness, car break down, caring for elderly – all these can throw a carefully balanced budget out of control.

The next thing to happen when the budget is out of control is getting into debt. Before you know this debt gets out of control and you resort to falling on credit cards to bail you out of debt. As you can see this can become a vicious cycle.

How to stop oneself from getting into debt? The best way to keep out of this situation is to always to keep a firm grip on personal finance maintenance.

There are many personal finance management tools or software that allows you to maintain your financial situation in good shape. Also, if you go online, you can see many websites that offer products that enable you to stay on top of your debts. These companies that are online can negotiate on your behalf and offer you easier ways out of the credit card debt. They will negotiate on your behalf and see that you are no longer burdened with that kind of debt.

These debt management companies have many ways of negotiating with the credit card companies whom you owe money to. They will work out reasonable and workable deals for you. I recommend that you go to these websites and get help immediately.…

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Understanding Forex Investment

Understanding Forex Investment

Forex trading is considered as a high return investment but the risk that comes along is typically high. The forex trading principle is via a differential gain – by buying and selling foreign currencies, you make a profit if the trade goes your way. As this type of investment is high risk, it is only recommended to those who had the time, patience and capitcal to keep an eye on the market, as well as someone who can manage the risks associated.

As an investor, you have a responsibility to take care of your assets. This includes your cash put into forex trading. Therefore, you should pay attention to the different investment channels and understand their risks before actually invest in the market.

For a lower risk trading, you can choose forex related investment products instead of directly trading the foreign currencies. For example, you may trade the related products which are linked to exchange rate, interest rate and gold price (for example). This type of investment may give you up to 10.0% or more return on average.

However, even though the risk is lower compared to forex trading, the gain might not be as much. You might not have the best of both world! You can lose money when the market does not perform well as a whole.

Forex saving is possibly the nearly risk-free way to invest in the forex market. As with the low risk, the return is not that really attractive. Investing in forex saving does not mean you need not to catch up with the market information though. You must also pay attention to the market information so that you can change your portfolio.

Finally, if you are not that familiar with the trading of forex or forex products, you may try forex trading systems which run automatically. Such systems follow the rules strictly in order to maximize your gain in the long run. And it is practically proven to give you more stable return since trading emotions are taken away from the equation.…

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5 Tips on Increasing Your Chance for Business Success

5 Tips on Increasing Your Chance for Business Success

Over 50% of small businesses fail within the first 5 years. What makes successful businesses different? Both successful and failed business owners had passion, expertise and drive to make their business grow. The difference – – successful business owners made sure that they focused on the five things that are critical to their business success.

Critical Item 1: Make Sure Your Money is Right Both Professionally and Personally

As a part-time CFO, I have had many clients that did not have in place a formal accounting system. This is critical because if you do not have a handle on how you earn and spend money, you will never know where you can safely cut costs, raise prices or focus advertising. However you decide to track your finances, they must include the following:

Separate accounts and tracking of business and personal expenses

Ability to track financial information at a detailed enough level to perform analysis such as revenue earned by department. For example, a spa with departments broken out by service area (e.g. nails, spa, salon).

Continuously look for ways to cut costs without cutting performance or customer service (e.g. periodically look for less expensive providers for supplies).

Manage cash flow by projecting future needs in a 6-12 month cycle so that you ensure that you are able to pay the bills that keep your doors open (e.g. rent and payroll) and spend money on important customer building expenses (e.g. marketing).

Critical Item 2: Continuously Improve Customer Service

Customer service is vital to retaining current clients and wooing prospective clients. In today’s “always on” world, you must have the ability to service customers across multiple platforms in person and online. Your customer service toolbox must include the following:

Professional website not a do-it-yourself one if it ends of looking like a DIY site

Regular customer communication which can be through emails and newsletters

Easy way for customers to find you and connect with you

Beyond average customer service

Critical Item 3: Know Your Competition

In order to maintain competitive, you must keep an eye out for what your competition is doing right and wrong. You can learn from what they are doing right and incorporate it into your business. You can learn from what they are doing wrong and capitalize on it. You can also capitalize on what makes you different from the competition. By knowing your competition you can do the following:

Determine the share of the market your business should have and set goals to achieve it

What makes your business different from competitors – both positive and negative attributes

Ways you can lessen the competition by capitalizing on what makes your business different

Critical Item 4: Be Able to Delegate Non-Essential Tasks

Because their business is their “baby”, many business owners do not feel anyone can do anything right unless they oversee it or do it themselves. This can be death to a business. As a business grows, you must be able to delegate everyday mundane tasks to others. Tasks that can have a major impact should not be delegated unless you have the appropriate person in place (e.g. trusted manager or hired consultant) such as hiring of key staff.

Once you have begun to delegate, you can spend more time on strategically growing the business and analyzing your business results.

Critical Item 5: Maintain Multiple Revenue Streams

Your business should not rely on just a few customers or one mode of revenue generation. If there is a change in the industry or a customer goes out of business, you could irreparably hurt your business. For example, if you own a service business such as a hair salon, you should also sell retail product as another revenue source.

If you do have a business with only a few major customers, then find new target customer segments that would be interested in your product or service. For example, Cisco, the technology company, has traditionally had only corporate clients but recently it introduced a product for the consumer market, its home networking router product.

Incorporate these tips into your business and you will be well on your way to business success.…

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Spotting the Difference Between Invoice Finance and Factoring

Spotting the Difference Between Invoice Finance and Factoring

Most people assume that all business finance services are alike. This is why they can’t seem to tell the difference between invoice finance and factoring. To most, these 2 concepts are one and the same. Business Finance is here to tell us that is not the case! There are plenty of differences between these 2 services. This post is to provide a simple understanding of what varies factoring from invoice finance. Hopefully, businessmen from all across the board will be able to determine which kind of business finance service is suited to their company more, or will give them more benefits!

With factoring, the provider plays the role of managing the sales ledger, credit control, as well as chasing down the customers so that they can settle their invoices in the company. When we refer to someone as the provider, we are referring to the finance company that you approach to get financial services from.

It is entirely different with invoice finance discounting because it is still your business that controls its own sales ledger. It is also your businesses’ responsibility to chase your customers so that they can settle their invoices with your company. No other entity will do that for you.

Another notable difference between invoice financing and factoring is that of confidentiality. If you avail of factoring services, the customers will have to settle their invoices with the factoring company, and not with your business. Your customers will immediately be aware of your financial arrangement with this other company.

When you decide to get invoice financing or invoice discounting, your clients will still be able to pay you. Unless you choose to tell your customers, they really do not have to know that a third party is involved in your financing situation.

Whatever you feel is best for your business should be the financial arrangement that you go with. However, rest assured that both kinds of services allow for pretty similar benefits. Whether you get one or the other, you will still be able to receive up to 90% the value of your outstanding invoices within 24 hours. Your cash will also be secured without you giving up other assets. Your level of available funding can also be increased easily as your turnover rate increases. Most importantly, money is easily freed up so you can deal with any cashflow problems in the business. With all these benefits available, all that’s really left to do is make the choice! With either these 2 business finance arrangements, you can’t go wrong!…

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Mvelopes Review

Mvelopes Review

We all know the importance of getting out of debt. In fact people who are struggling with high interest debt must make eliminating that debt their top priority. The road to financial stability however does not end there. Managing your money responsibly is the only way to avoid future debt issues and increase your financial security through solid savings strategies. Fortunately there are many online money management tools available to consumers to help them get their finances in order. This week we will take a look at a popular method of budgeting based on a tried and tested technique.

Mvelopes is an online budgeting service that can help you regain control over your finances. Combining traditional envelope budgeting with new financial software technology, Mvelopes has created a system that allows users to create and track their spending in different areas of their budget.

What Sets It Apart?

Many online financial tools allow you to see only where you have spent your money. Everyone can agree that knowing where your money is going is a vital part of money management. Mvelopes takes this one step further by helping people determine where they will spend their money. It is a proactive approach to budgeting.

How Does It Work?

Once you create an account, you will be walked through a process that connects the service to your other online financial accounts. There is no software that has to be installed and you can use this service anywhere you connect to the Internet. Once you have connected to your checking, savings and other accounts you will determine how much income you have to pay for expenses. You create “mvelopes” for each spending category such as groceries, cable, entertainment and determine how much money you will spend in each category. Then as you make your payments your transactions appear online and you can move them into the appropriate mvelope. When it is all said and done you can see at the end of month how close you are to being on target. This can help you see where you need to cut costs or make other adjustments to your budget to prevent spending more than you have available. In addition to giving you a birds eye view of your finances, Mvelopes has these additional features:

Online bill pay for up to 15 transactions per month making it easy and convenient to make one time or reoccurring payments.

The ability to track your net worth. By updating all of your financial account information you can follow retirement accounts, auto loans, mortgage loans and much more.

In this day and age of everyone being on the go, you can even track your finances from your mobile phone.

Live support 24 hours a day five days a week.

Website Experience

I enjoyed learning about this online money management tool. In fact I considered signing up for the free trial, only to find you need to enter credit card information in the event you decide to continue your subscription after the trial ends. That is a negative for me and I’m sure many others who have ever experienced difficulty canceling “free” trial offers. That is not to say I wouldn’t consider it in the future as it appears to be a unique and relatively easy way to budget and track your spending. I also like the fact that you don’t have to download any software making it possible to log in from any location to view your account. Overall, I think the system looks promising yet I’m not sure if I would want to pay for it when there are dozens of other online management tools available at no cost.

I’d love to hear from readers who have had an experience with this service to get a better picture of how it works from someone who has used the service.…