Monthly Archives: January 2018

Applying BSC For Finance

Financial management is a tedious process that requires a highly technical knowledge of effective balancing and application of principles for ensuring that there is efficient distribution and handling of financial resources. Those who are in charge of such management are often required to render hours of analysis and computations in order to make sure the job is well done and that there is little or no risk of financial downfall. For this reason, extensive diligence is often required. Also, there is a constant need to monitor the performance of those having the duty of managing a company’s finances. Thus, the Balanced Scorecard (BSC) instrument finds application. Using BSC for finance management admits of several advantages that are sure to make the entire management process secure and efficient.

What are the advantages of applying the Balanced Scorecard for effective financial management? The main advantage lies in the nature of the instrument, which utilizes a balancing method of all the aspects of a company to ensure that everything is in good working order and that all aspects conveniently and efficiently cooperate with each other, ensuring that there is a maximum output with minimum input. The Balanced Scorecard instrument makes sure that the evaluator is able to consider a company’s performance in its entirety. In fact, all the company’s aspects are taken into consideration. For this reason, the user can see the company from a bird’s eye view, so to speak, in order to see all the strengths and weaknesses of a company.

Another advantage is that the entire process of financial management is made easier without sacrificing the quality of the work rendered. It is one of the features of the Balanced Scorecard to set the guides for which the user will conduct the evaluation process. The user can rely on these guides to effectively perform management duties and whatever duties may be required of the user’s function. The entire process is simplified by reason of the use of the Balanced Scorecard because of the guides that result with its usage. This will, in turn, result to lesser expenses. In every evaluation process, the first matter being decided upon is the expenses that will be incurred in the process. Because of this, some companies would even decide to forego an evaluation process if it means saving up on finances, which may be applied later on to other matters.

However, if the Balanced Scorecard is used, the user can be sure of much more savings and lesser expenses since there is already an established mode of evaluation without the unnecessary need to employ experts or conduct extensive surveys and studies to obtain the same results. Also, with lesser expenses come a lesser time period within which to complete the evaluation. In the same vein, as expenses are lessened, the simplified process also saves time and effort. This means the company will be able to get results in lesser time, giving it more freedom in planning its activities and objectives.

Are You Choosing the Right Motorcycle Finance

If you are in the market to buy a new motorcycle you may be in need of some motorcycle finance. Your previous credit history and your ability to make repayments will to some extent dictate what type of finance you qualify for, but the number of options to consider can be overwhelming.

When trying to get the best finance to suit your individual situation it can be helpful to do some preliminary research into your requirements, before you being looking into what’s available. You can do this by asking yourself questions designed to identify your actual needs.

Question: Do I want to get a loan?
Answer: Loans are the most popular way to buy a bike that you can’t otherwise afford, although your monthly payments might be higher than with other options. A lot of this is dependent on your credit rating – often banks can actually be less expensive if you have a poor credit rating, since bad debt loan companies will charge far higher interest rates to give you your loan.
Question: Do I want to get a lease?
Answer: Leases are a lot more popular now than they were 10 years ago – and it can make sense for some buyers. However, under leases you are often restricted to what type of bike you can buy and have stringent conditions to follow such as regular maintenance schedules.
Question: How much will I need to finance?
Answer: Since you already know which motorcycle you’re going to buy, you know how much it costs. But don’t forget other upfront purchase costs such as insurance or registration. Decide how much of your own money you can spend, then figure out how much you’ll need to finance.
Question: Do I have a deposit?
Answer: The larger your deposit, the less you have to borrow and repay. Some lenders and dealerships don’t require a deposit for financing.
Question: Do I have a trade-in?
Answer: If you have a cycle to trade-in it can alter the type of finance options available. Check with the dealership.
Question: What is my credit history?
Answer: If you have a great credit history you’ll have better options. It’s as simple as that. If you have a spotty credit report, though, you’ll be forced into more expensive terms or questionable deals.
Question: Is this the motorcycle I really want?
Answer: You’ve already picked your motorcycle, but it can’t hurt to re-evaluate it once you start looking at your financing options. You might find that you can save a lot of money with other choices.
Question: Can I truly afford it?
Answer: Motorcycles are expensive. Take your time – motorcycles aren’t going away anytime soon. The more money you can spend on a down-payment, the better off you’ll be in the long run (and you’ll have cheaper financing).

How to Manage Your Finances

How to manage your finances is one of the important components of having a good life. Whether you have a smaller income or a better one, you will truly save yourself from a lot of worries and trouble if you know how to manage your finances well.

(1) Set priorities carefully plan your finances. Know your wants and your needs. Do not be confused with what you need and what you want. If you want to make big purchases like getting a home or a car, careful planning will be your key to make it a little easier.

(2) Make a budget. It is always helpful to make a guide on your spending for the next few months. Having a plan on spending is very much helpful for you to see how much you can afford to spend in a month. Make a list when you go to the grocery or when you go shopping and keep reminding yourself to stick to the list. Sticking to your budget today is definitely one good way of being free from financial worries later.

(3) Do not spend more than what you earn. Do not splurge on spending with your credit card if it is not clear where you will get payment for it the next month. Thinking about spending a lot today hoping you will get a job the next month is a no-no.

(4) Manage your debts. Pay your credit card promptly and do not go over your credit limit. Late payments and maxing out your credit cards will cost you expensively. When credit card companies are giving you lower interest rates, you might end up having to pay for higher fees. Late payments and overspending will likely stain your credit report in the end as well. Knowing how to manage your debts is indeed one huge step in learning how to manage your finances.

(5) Save. Make it a habit to save and include savings on your budget. Allot a percentage of your income as your savings. Having a good amount of savings regularly always helps you face your future with confidence and will save you from a lot of financial worries.

(6) Be informed. If you are borrowing money, making investments, or renting anything, always be informed with interest rates and the terms and conditions. When dealing financial transactions, it is always wise to read the fine prints. This way you will save yourself from financial troubles later on.

(7) If you want to invest your money, be wise. Know your market, know the feasibility and success rate of your investment. Especially these days where the economy is down, you also have to be careful where to invest your money. Find and study the opportunities with lower risks.

(8) Think your way out of debts and overspending. Indeed, it may be difficult for some to overcome the habit of overspending and splurging on many things in life. If you are facing the same situation, try to train the power of your mind to manage your thoughts on spending. Resist the urge to do unplanned spending by waiting for a day or two. In the end you might find out you don’t exactly need it.

Should I Use Cash Or Take Out Financing

In the past, owning an in ground pool was thought of as a luxury for the rich. If you didn’t have the money available, you simply weren’t able to get a swimming pool. Luckily, there are numerous lending companies available that will provide swimming pool financing for you. But the real question is. “Should I take advantage of pool financing or should I simply use my available cash to pay for a pool to be built?” This article is designed to help guide you to the right answer.

Let’s assume for a moment that you are able to pay cash upfront for the pool. If you think this isn’t realistic, you may be surprised to learn that over half of new swimming pool owners do not finance their swimming pool.

Assuming you have the cash available, would it be wiser to pay for the pool upfront versus using financing? To determine the answer, you have to think about whether or not you could use the money in a better way.

As an example, if you can put the money into the stock market and achieve returns of 10% and a pool loan is costing you 8%, it would make more financial sense to finance the pool. On the other hand, if you are only making 3% in a certificate of deposit and your pool loan’s interest rate is 8%, you would be better off paying for the pool upfront in cash.

Therefore, when it comes down to choosing whether to pay for the swimming pool upfront or using financing, you just need to run the numbers and determine which way is better for your money.

Alternative Sources of Business Growth Finance

Talk to any business owner or read the business section of any newspaper and you’re likely to come across stories of struggles to access sufficient finance to grow or maintain their business. But we are beginning to witness a change in how business owners access finance with many now actively seeking out alternative sources.

A survey carried out by the UK’s Forum of Private Business found that 26% of businesses were hunting out alternative financial products, with 21% seeking them outside of the traditional main High Street lenders. In fact, in another survey undertaken by the Federation of Small Businesses, it was discovered that only 35% of respondents used a traditional overdraft facility in 2011.

So, if banks are continually reluctant to lend to all but the lowest risk businesses, how can the remainder of the UK’s business population finance growth? Here are some of the increasingly popular alternative sources of finance to investigate.

Better Management of Working Capital

This may appear to be an odd source of finance but very often businesses are sitting on undiscovered cash reserves which can be used to finance growth. A report issued by Deloitte in 2011 revealed that the UK’s largest businesses were sitting on £60 billion of unproductive working capital. Inefficiencies in how working capital (debtors, stock and creditors) is handled can unnecessarily tie up your cash. Cash can be unlocked and released back in to the system thereby allowing self-financed growth plans by taking a close look at credit procedures, how credit terms are granted and how outstanding payments are chased.

Ensuring that stock is kept at an optimum level via better inventory management is another area where cash can be released to support and finance growth. Take a good look at your inventory management process and identify areas where cash is trapped.

Good management of working capital is not just about better control of debtors and stock, it is also about maximising the terms given by creditors. Are you too eager to maintain a first class relationship with your suppliers by paying well before the due date? You can positively impact your cash position by taking full advantage of terms offered by your suppliers. Have you fully leveraged your position by seeking an extensive of terms from say 30 days to 45 days?

Being more efficient in how working capital is managed can release sufficient funds to self-finance growth plans.

Personal Resources

With traditional avenues of funding being more difficult to access business owners are now looking to their personal resources to fund growth. Whether it be drawing on cash savings, using personal credit cards or taking additional mortgages on residential properties, such sources are an instant solution. A survey by the Federation of Small Businesses found that 33% of respondents had utilised their savings to fund growth. As well as being more immediately accessible using personal resources is often a cheaper source of finance.

Family and Friends

Sometimes referred to as the three F’s – family, friends and fools – this can appear to be a less stressful way of raising finance. In some ways it can but it can also be a journey fraught with danger. Tapping into their personal network business owners source finance by either seeking a loan and offering to pay an interest rate higher than that on offer on a High Street savings account, or offering a slice of equity in the business in return for investment.

Raising finance in this way can be relatively easy because the request and fulfilment is very much based on personal trust. Typically a Business Plan would be presented highlighting both the investment opportunity and the risks but at the end of the day success is down to the depth of the relationship and level of trust.

The danger in raising funds this way is that the nature of the relationship will change from that of a personal nature to a business transaction. Failure to regularly pay as per agreed terms, or even total failure to pay, can irreparably damage the relationship so tread with care.

Asset Finance

The Asset Finance industry is based on the concept of either preserving cash or speeding up access to it. Asset finance, which consists of invoice discounting, factoring and funding of asset purchases, has been available as a source of finance for many years, yet it’s only now gaining more recognition. Figures released by the Asset Based Finance Association, a trade association representing the industry, show that to the third quarter of 2011 the amount financed by the Association’s members increased by 9% compared to the same period in the previous year. Whilst the increase may not seem significant it is against the backdrop of a fall in traditional bank lending.

In a world where ‘cash is king’ asset financiers help preserve cash by financing the purchase of assets such as vehicles, machinery and equipment. Because the financier is looking to the underlying asset as security there is usually no requirement for additional collateral. According to the Asset Finance and Leasing Association one in three UK businesses that have external finance now utilise asset finance.

Asset financiers can help speed up the flow of cash within a business by allowing quicker access to cash tied up in the debtor book. An invoice discounting and factoring facility gives businesses the ability to immediately access up to 80% of an invoice instead of waiting for the agreed credit terms to run their course. Such finance facilities will speed up the velocity of cash within the business thereby allowing the business to fund a high rate of growth.

New players such as Market Invoice are entering the market to allow businesses to raise finance against selected invoices. Tapping into high net worth individuals and funds Market Invoice acts as an auction house with funders ‘bidding’ to advance against certain invoices.

Crowfunding and Peer-to-Peer

A relatively new phenomenon is the concept of raising finance by tapping into the power of the crowd. The historically low rates of interest payable on savings have led to depositors seeking out new ways to increase their returns. With business owners struggling to raise the funding they need it’s only natural that a market would be created to bring these two parties together.

CrowdCube entered the market in 2010 to match private investors seeking to be Dragons with those businesses looking to raise capital. Once a business passes the initial review stage their proposal is posted on the site and potential investors indicate the level of investment they wish to make with the minimum amount being as low as £10.

Businesses looking for a more traditional loan should consider Funding Circle. Established in 2010 Funding Circle also matches individual investors looking for a better return with those businesses seeking additional finance. Businesses can apply for funding between £5,000 and £250,000 for a period of 1, 3 or 5 years. As a minimum the business has to have submitted two years Accounts with Companies House and be assessed in order to arrive at a risk rating which guides potential investors.

As the crowd sourcing concept matures we are likely to see more players enter this market to capitalise on the need for better investor returns and easier access to business finance.

There is More Than One Way to Fund Growth

Accessing finance to fund growth plans does not have to be difficult if you are prepared to seek out alternative providers. Funding growth is now no longer the exclusive preserve of the traditional High Street bank and it’s now down to business owners to seek out the alternative routes.