Finance Books

The goal of business finance is to raise sufficient capital at the least cost for the level of risk that management is willing to live with. The risk is that a business will not be able to service the debt and be forced into bankruptcy.

Broadly speaking there are 5 main ways of funding a company’s needs:

• Receive credit from suppliers
• Obtain lease financing
• Obtain bank loans
• Issue bonds
• Issue stock

Supplier credit

This is the easiest way that companies obtain funding. Companies buy goods and services and have anywhere from seven days till 6 months to pay for them; when companies need more credit from suppliers the financial controllers will negotiate longer credit terms or larger credit lines. The payment terms can also be stretched and this can work well because the creditors do not want the customer to go into bankruptcy taking their money with them.

Lease financing

Instead of buying equipment, many companies choose to lease equipment – this is a form of franchising.Cars,computers and heavy equipment can be financed for short periods or indeed longer periods.

If it is a short period it is referred to as an operating lease and at the end of the lease the property is still useful and is returned to the finance company.

Long term leases are, in substance, ways are ways of funding a purchase rather than buying the temporary services of a piece of equipment. These are often referred to as capital leases.

For capital leases the leased assets and the financing liability are recorded on the leasing company’s books as though the company had bought the equipment outright.

Bank financing

The next level of financing involves banks. If a company has a credit line or revolver with a bank it draws down and pays back up to set limits of credit as cash is needed and generated by the business. The credit is often secured by assets of the firm however if a business runs into trouble it may not be able to pay the bank and go into bankruptcy

Bond Insurance

Bonds have fixed interest rate contractual payments and a principal maturity. The risk comes to the firm’s owners if they cannot be serviced. The principle bond owners can then exchange them for ownership of the company and oust the owners.

The After-Tax cost of Borrowing

Interest payments for borrowing from vendors, bankers or bondholders are tax-deductible, while dividends to shareholders are not. The after-tax cost of borrowing is the interest cost less the tax benefit.

Stock Issues

Stock issues have non-contractual, non tax deductible dividend payments. Stock represents an ownership in the business and in all of its assets. If additional shares of stock are issued to raise cash, this is done at the at the expense of the current shareholders’ ownership interest. New shareholders share their ownership interest equally on a per-share basis with the current shareholders – this is why analysts say that the new shareholders dilute the interest of existing shareholders.

Summary

In summarising, the higher the percentage of debt to total capital, the higher a company’s value, to a point. At the point where the risk of bankruptcy becomes significant, values fall. The cost of financing decreases as a company adds lower-cost shielded debt to displace the higher returns required by equity investors.

The Internet has greatly simplified the process of re-financing a loan. Years ago homeowners had to go to a lender during regular business hours for lengthy consultations and would have to visit several different lenders to determine which one would offer the best rate. The Internet has not only simplified the process but has also given homeowners the luxury of investigating re-financing options at their convenience and also receiving multiple quotes form different lenders by filling out one simple online form.

Researching Re-Financing Online

The Internet has not only made it easier for homeowners to re-finance but it has also greatly simplified the process of learning more about re-financing. Again homeowners from past generations might have to rely on industry professionals and published books on the subject of re-financing. However, today’s homeowners can look up re-financing and find a wealth of useful information regarding the different types of loans and re-financing options available. Homeowners can also use the internet to access calculators which perform the complicated equations homeowners previously had to leave up to the trained professionals. These same calculations which may have taken a considerable amount of time to complete and correct are now solved within a fraction of a second.

Select a Reputable Lender

Homeowners who are doing the majority of their re-financing research and searches online should carefully consider the lender they choose. This is important because whether a lender is found online or offline, care should be taken to ensure the lender is reputable. The easiest way to do this is to stick with a well established lender who comes highly recommended by friends and family members. This does not mean new lenders and smaller lenders are not reputable but there is significantly less risk involved in selecting an established lender than there is in selecting a new lender.

LendingTree.com

Homeowners who are investigating their re-financing options online may find the website LendingTree.com to be a very valuable resource. This website offers articles and calculators which the homeowner can use to gain the knowledge they need to make an informed decision. The articles on the website are written in clear and concise language which is easy to understand and the calculators are extremely user friendly and allow require the homeowner to enter in a few variables to obtain the desired results.

Another great feature of this website is the inclusion of a link which provides access to obtaining a free credit report. The process is very simple although it does require the homeowner to verify their identity. This is done to protect homeowners from identity theft or other acts of fraud. This is significant because homeowners are likely to realize the terms of their mortgage re-finance will depend largely on their credit score. Homeowners who have good credit will likely be offered favorable rates and terms while homeowners with less than perfect credit will not be offered favorable rates and terms.

However, the most significant feature of this website is the ability to obtain up to four quotes from qualified lenders by filling out one simple form. The information required is rather basic in nature and is information which most homeowners have readily available. Once this information is submitted into the system, the responses are received from up to four lenders almost instantly. The information contained in these reports is customized for the homeowner according to the information inputted into the system.

Doug Richard’s recent report on business support in the UK highlighted that there are 3,000 government agencies and most of them simply direct people to other agencies. This can lead to a never ending cycle of being passed from pillar to post and having to explain yourself over and over again. So if you want help with your business finance, where can you go?

Here are the various options open to SMEs in the UK to help you decide the best route for you.

1. Your Bank

The high street banks (RBS, Barclays, HSBC, Lloyds) can certainly give you advice in terms of loans, overdrafts, invoice finance and they can also give you some guidance on developing cashflows and general business advice. Usually the advice is coming from staff who are well trained internally and have seen lots of businesses from the outside but may not have had the direct operational experience of running a business.

2. Your Accountant

Accountants come in many guises and it’s important that you understand whether you are dealing with an auditor (responsible for verifying your accounts after the year end), a tax advisor (helping you with Tax and VAT issues) or a firm helping with your bookkeeping, management reporting and accounts. Each of these has different specialist skills and you shouldn’t assume that just because someone helps you with your tax, they’ll also be giving you overall business advice. Equally, you’ll find that many firms from the big four (PWC, Deloitte, KPMG, E&Y) , the mid tier (Grant Thornton, BDO, Baker Tilley) and the fast growing newer firms (Tenon, Vantis, Target) can give you good specific advice on business finance issues. However, make sure that you have agreed this specifically in any engagement letter. Otherwise they might think they’re just keeping your books or auditing your company and you might think they’re advising you on how well your business is performing and highlighting any potential finance issues. The gap between these expectations has caused significant problems for many companies.

3. Your own FD or CFO

If you have your own finance staff then make sure you make the best use of them. It’s easy to dismiss the finance team as being too much in the detail and always taking a negative view but they are often highly experienced and well trained professionals who have a very good insight into your business. Listen to what they have to say and don’t just disregard their views because you prefer to hear all the good news that your sales director is telling you. A good FD or CFO will often have experience from other companies that they can bring to bear in your business.

4. Part Time FD Companies

These have been rapidly growing in popularity for SMEs and even some larger corporates and they can provide an excellent source of support and advice. They provide someone in your business on a part time basis who can guide you from their knowledge and experience in a way that’s particularly relevant to your business. When you can’t afford your own full time FD or CFO these companies (FD Solutions, Secantor, Marshall Keen, FDUK, MyFD) can all provide the support and guidance you require for your business finance in a manner that can be very beneficial for your business. Having an FD or CFO in your business, even on a part time basis can give your company a real boost and can give you a trusted advisor to turn to for advice on your company finances.

5. Government Agencies

As the Richards Review highlighted it can easily end up feeling like you’re chasing your tail when you deal with these agencies and sometimes the time and effort you put in can feel wasted when you don’t get anywhere. Business Link, which provides somewhat of a hub, has a variable reputation depending on your local region. Some of the Enterprise Hubs are more supportive and operations like Finance South East have built a good reputation for clear and relevant advice.

6. Corporate Finance Firms

There are many companies competing in the market to help you raise money for your company. These are businesses in their own right who are seeking to make a profit but that shouldn’t put you off. It means they are incentivised to help you succeed. Generally these firms do charge an upfront fee but most of them earn more of their fees from a back-end success component (a percentage of whatever is raised). Charges will range from £2k to £15k upfront and success fees are generally in the region of 5%, although they can go up to 20%. Beware of companies that either offer the service for free (on the basis that you generally get what you pay for) or that charge a very high upfront fee. There are also some who appear to guarantee an investment providing you pay for Due Diligence (DD). You end up paying £40k in advance and they find something in DD that prevents them investing (which they never really intended to do anyway). Make sure you understand and agreements before you enter into them.

7. Your Friends and Family

In reality, this is where many people go for initial advice. Now unless your friends and family happen to fall into any of the previous 6 categories, it’s likely that their advice may be somewhat questionable. If they’ve had actual experience of the same issues and they’ve resolved it then by all means listen to them. However, you should always think about the source of your advice. Where has their knowledge and experience come from?

The key lessons here are to consider where the information is coming from, whether that information is based on real world experience and training and how relevant it is to your particular business.

In an era when education is no longer free, money plays an even more important role in the lives of students. Financial burdens cause stress of financial strains placed on students. And here student finance services serve their causes to make them able to avail the quality education. They can often be managed with assistance from the financial adviser located everywhere in the money market.

Under the finance services, you are suggested the following tips:

* Budgeting

* money saving tips

* information, Youth Allowance

* Concessions

* Advice regarding buying a computer

* Fee assistance

* Student loans

* Federal grants

* scholarships

Student finance services are made available to both full-time and part-time students. They are enabled to bear up the burden of expenses related to their studies such as books, stationery, computer or printer fees, food and accommodation, lab charges, technical apparatus etc. In some cases, where there are exceptional circumstances, loans can also be for things like rent or a bill that has arrived unexpectedly. International students can also apply for these services.

Importantly, student finance services are not given for any sort of recreational expense. They do not cover your credit card debt, fines or for any luxury. It is also important to note that loans are for one off expenses. You can not intend to invest the fund on as a regular supplement day-to-day expense.

Rate of interest incur upon the student finance services depends on the sort of service charges. However then, these finance services are cost-effective. And sometimes, services are provided interest free as long as they are paid back within the agreed upon time. Even you can shop around for the cheapest possible service.

A quarter of service providers are out there in the money market. You can locate them even online. Online tool is simple and convenient. It saves a good amount of your time and energy. What all you need to do is to fill out a simple online application. The application is reviewed, and later amount of money is granted. You get the fund you need and invest as per your requirements.

Subprime auto loans are advanced by the lenders to help those UK citizens whose credit reports are not so good. People with poor credit score are generally not eligible for a conventional auto loan in the United Kingdom. Hence the financial organisations have come up with innovative products like subprime auto loans. The subprime market in UK financial world contributes at least 27% of the customers. This market segment was ignored by the conventional lenders till the late 90s. In recent market scenario, hundreds of financial organisations are ready to finance the sub prime customers.

People with bad credit report are free to apply for the subprime auto loans. It is very easy to apply and the criteria for qualification are also very lenient. Those days are gone, when you had to wait in a long queue at the lenders’ office to book an appointment with the financial planning manager, or to go through loads of paper works and credit checks before the loan advance gets approved. Nowadays the loans can be applied online whenever you want. You can apply while you are at home or at your work. The process is easy and it does not consume much of your valuable time.

The funds get sanctioned very quickly as the whole process is managed electronically. No credit check is done for the applicant and since no paperwork is involved, the process is hassle free.

The lenders are financing for both used and new cars and trucks. The borrower can use the vehicle for any reason, be it commercial or personal. As a risk factor is involved for the lenders, as they are dealing with people whose credit score is not good and as they are not asking for any collateral they look forward for a higher interest rate than the conventional lenders.

The vehicle can be used by the borrower but the lenders keep a charge on it till the principal loan amount is repaid with full interest and other charges. However, the borrower should maintain the car in a good condition and pay the taxes and insurance bills regularly.

The Big Book of Business Quotations: More Than 5000 Indispensable Observations on the World of Commerce, Work, Finance and Management

So, you’re contemplating purchasing a used car?  Whether the dealership calls it a pre-owned vehicle, a used car or a “new to you” vehicle, it amounts to the same thing.  These can be fantastic deals, giving you a needed vehicle, without the depreciation that strikes a new car the second you drive it off the lot.  However, now that you have decided to look at what’s for sale, you’ll need to know a bit about financing options.  For instance, how long can you finance a used car?  Is an extended warranty included in the financing?

When choosing financing for a used car, there are several things that you must look for, prior to making any decision (whether on the car or the financing option).  First, is the car worth financing?  Obviously, the car has some value, or the dealership would not be selling it, but will it hold its value throughout the loan?  To determine this, you’ll need to consider the brand of the vehicle, as well as how many miles it currently has on the engine.  There are other factors in the equation as well, but many of those are out of your control, such as the state of the auto market when the loan is finally paid off.

Another area of concern when financing a used car is the extended warranty.  Many used cars have the remnants of a manufacturer’s warranty on them, depending on the make and mileage on the car.  However, once that manufacturer’s warranty runs out, there will be no coverage offered, other than your insurance.  You can, however, add an extended warranty to the vehicle and tack the cost of the warranty onto the auto loan.  Of course, this will raise the monthly payments and increase the cost of the loan by a significant amount.  However, this can be a very smart decision to make.

Of course, there are many other considerations to make.  Most of these apply to financing a used car or a new car.  For instance, you will need to know your credit score prior to applying for financing.  You will also need a copy of your credit history, so that you know there will be no nasty surprises waiting for you in the financing office. Finally, you will need to know your monthly budget.  How much can you afford in monthly payments?  How long will it take you to pay off the vehicle with the minimum monthly payments?  Remember that the total cost of the car is just as important as the amount you have to pay each month.

As a final piece of advice, never expect to pay “blue book” value for a used car.  You will finance the vehicle for the price the dealership asks, minus whatever amount you are due from trade-ins, your down payment and tough negotiating skills.  Remember that almost every part of a car sale is negotiable, right down to the amount of interest charged on your auto loan.