Banking Finance

The biggest reason that small businesses fail is a lack of adequate cash flow. When the economy is good and sales are high, this isn’t usually a problem. However, the economy is not always strong, and sales are not always high. During these down times, the cash flow can slow, and cash reserves begin to dwindle. Or you may be enjoying the good economic times, and decide that it is time to expand your business. When this happens, you need to make sure you have a plan for obtaining small business financing.

For well established businesses with a good credit record, finding small business financing is not usually a problem. If this describes your business, you probably already have a relationship with a bank. You should be able to talk to the loan manager at your bank, and it is just a matter of structuring the financing in a way that is acceptable. If you do not already have a relationship with a local bank, it is an easy thing to do. Most banks are more than willing to work with successful businesses.

However, not all businesses are well established, and not all businesses have a solid credit history. For those businesses, obtaining small business financing can be a bit more problematic. There are, however, lenders that are willing to work with business that have struggled financially. They specialize in lending money to businesses that might not qualify for financing with a bank.

For businesses that are already operating, many lenders only require the past several months credit card transaction records as proof that the business is generating income. The lender then “buys” a portion of your credit card sales as repayment for the loan. When you take out a loan, the agreed upon portion of credit card sales will go to the lender until the loan is repaid in its entirety.

Because there are so many lenders in the small business financing industry, it is important that you do your homework. Make sure you completely understand the terms of the loan before you sign any loan agreements. Read the agreement thoroughly, and if there are any parts you do not understand, ask for clarification. It is a good practice to have your attorney or CPA examine any documents. They are trained to read legal and financial documents, and they may be able to spot any problems before the agreement goes into effect. While it is important to keep your cash flow healthy, signing a bad loan agreement can hamper your business growth for years to come.

Taking out small business financing is a normal part of business. Do not look at the need to take out a loan as a sign of bad business or failure. It is a necessary part of doing business. Sometimes it is the difference between keeping your business running during a slow time, or closing your doors before you even have a good chance to succeed. When given that choice, a loan seems like a very good idea.

If you have not yet tried bank online services you may find that it is a great way to simplify your banking.

Banks are offering all sorts of online services these days. You can do anything from open a new account to check your current balance on your checking account. These services can simplify your life and save time as you are able to do many things from your home computer that you formerly would have to drive to the bank to complete.

Nearly every bank today offers some type of online services. Some smaller banks may offer only limited services but other virtual banks may offer all their services online with no live tellers or branches that you can visit.

Many customers enjoy the ability to view account activity online. This will allow you to see when deposits and withdrawals are made to your account. It also gives you the ability to see if checks have cleared the bank and an instant account update. The transaction history is like getting a bank statement every day of the year yet requires no paper be wasted in printing your banking activity. It is also useful in ensuring that there is no unauthorized activity taking place in your account.

Another online feature that is very handy is online bill pay. This allows you to make electronic payments to many of you creditors without having to give out your credit card or bank account information online. All that is needed is the company name and address along with your account information for that company. If the bank is unable to process the payment electronically, they will cut a paper check and mail it to the creditor on your behalf.

If you have more than one account with a bank, you are often able to transfer funds between accounts. This can be helpful in situations where you may be experiencing a cash flow problem and need to transfer money from a savings account to a checking account. In addition, it can help with savings as an automatic transfer can be set up to come from checking and go into your savings account.

If you need to open a new account, you can also take care of this online. Thus, you will be able to open the account without ever leaving your home. This is a great way to open a savings account or a second checking account to meet your needs.

If you have credit cards with a bank, you are often able to schedule payments online. This will ensure that the payment is credited to your account before a due date. Many people set the credit card to automatically have the minimum payment due on the due date. This means that you will never again be charged a late fee because a payment was delayed in the mail.

With bank online services, there are many things that can be done at home that formerly required a person to make a trip to the bank to accomplish.

For the growth of your business or to meet the cash flow shortages, you have to struggle to attain capital. But, for small business houses, if the loan and credit are limited, then you can opt for accounts receivable financing. Account receivable financing is selling your invoices at a discount to a factoring company, which is prepared to take risks on the receivables and offers instant cash.

Extending payment terms is quite common in the business world. Your company is bound to run in problems, unless you have sufficient cash for business expenses such as rent, salaries and suppliers. The ultimate result would be, either you will settle for low pay orders to conserve cash or delay the payments of your staff and key suppliers.

Obtaining a business loan from bank is quite difficult, unless you have a good record and substantial assets. Banks only lend to organizations, which can provide a profitable operations for many years and a detailed financial statement. Apart from the loan, there would also be a fixed amount. For additional expenses, again you may have to go through the same process.

So the best option would be going for accounts receivable financing also known as factoring, which will pay you immediately to meet your business expenses. Moreover accounts receivable financing can be easily obtained than a bank loan. The work process of receivable factoring is quite simple. It gives you an advance payment, which ranges from 80 to 90% of the invoice depending upon the kind of industry and your clients. Now this advance helps you to pay the current expenses rather than waiting for the delayed payments from the clients. The remaining transaction that is 10 to 20% with a deduction of factoring fee is settled as soon as your client pays the open invoice.

Factoring fees are determined by the amount of financing you receive and on the payment reliability of customers. The monthly cost may vary from 1.5% to 3.5%. Accounts receivable is a cost effective solution and a best tool to make financing and sales grow in your organization. This accounts receivable will also help you to go for better pay orders too.

One of the major benefits of accounts receivable financing is the flexibility. The financing lines of your organization by the invoices you submit are tied directly to your monthly sales. This means that as your financing line increases your business grows. This will provide you cash and enables you to maximize the sales opportunities. Accounts receivable financing helps you to maintain a steady cash flow in your organization. It increases working capital of your business.

You now have control on your money, even if your clients pay after 30 or 60 days. Your running expenses can be easily taken care of. Due to this increased working capital, the factoring financing availability grows automatically. Unlike banks, you don’t need approval every year for additional funding and have a 30 day rest period every year, before drawing on a line. Moreover, you don’t have to pay any kind of monthly loan payments. You can take advantage of trade discounts, which are offered by the suppliers. Now you can concentrate more on the company’s growth than on managing your receivables. This will lead you on the road of success.

When starting a small business one of your primary concerns should be the banking services you employ. Those who are starting out often think that by mixing their personal and small business finances they will have greater efficiency and far less stress. Many part time business operators often use their personal account to carry out their business banking functions but on the whole, this kind of strategy should be avoided.

There are many reasons to have distinct personal and small business banking options for your company. A common misconception is that by combining finances it will be possible for your business to cut out extra banking charges that come as part of having a small business account. In effect however, while you may be avoiding the odd charge, you could be hurting your financial position.

The first reason not to mix your personal and small business banking is down to expenses. Government legislature makes it quite clear that it is only possible to write off expenses if the company has a business account. By keeping you finances in your personal account it will seem that your business is purely a hobby. The longer you do this, the harder it will be for the government to recognise the validity of your company and hence, harder to retrieve expenses and VAT charges.

The second reason is down to transparency during the tax calculation period. When you have to declare income and earnings you will have to spend a considerable amount of time separating all of your personal transactions from those of your small business. This can be a major banking headache and the time you spend combing your statements could be better spent devoting your energies to improving the profitability of your company. A separate business account will make the position far clearer and easier when it comes to the time of tax returns.

Thirdly, while there may be no law enforcing that a small business must have a specialist banking solution, it is not always advisable to ignore the benefits in terms of record keeping. You must have accurate records of your transactions throughout the year. These records must be complete and show the income and expenditure of your small business. Once again, a specialist account will mean that your records come in their own statement and hence are clear and transparent audit trail will be created.

Fourthly, your business could be harmed when mingling your finances by missing deductions that you may be entitled to. The statements of a combined account will be a mess of transactions and the chances of you missing a transaction that you may have given you a deduction is quite high. These can be detrimental to your profits and when you consider the time and energy either you or your accountant will have to spend raking the records, highly wasteful.

Fifth and finally, it may seem a minor point but by not having a separate account for your business, the professionalism of your services can be seriously affected. For instance, a customer writing a cheque to your business in your name may eventually see your company purely as a part time operation. Even if it is part time, do you really want your customers thinking that?

Taking the time to look into specialist banking services for your small business will be ultimately rewarding. Remember to research different account packages and find the one that most suits your type of company. The question you need to ask yourself is that while you may think that combining your finances is a good idea, can you really afford not to keep them separate?

Saudi Arabia Banking Sector Analysis
 
 Saudi Arabia has one of the largest and fastest growing banking markets in the Middle East. In terms of banking assets, the country ranks second in the region after the UAE. The sector is highly capitalized, well regulated and more profitable in the region. Despite the heavy slowdown in the economy, the banking sector continued to post healthy growth rate in the recent years. As per our estimations, the banking assets are forecasted to grow at a CAGR of around 18% during 2010-2013. ( http://www.bharatbook.com/detail.asp?id=132575&rt=Saudi-Arabia-Banking-Sector-Analysis.html )
 
 Weathering the global financial crisis well, banks in Saudi Arabia continued to expand their lending activities. Bank loans grew at a CAGR of over 17%, while deposits posted a CAGR of over 16% during 2004-2009. The private sector dominates the Kingdom’s banking sector and accounts for the bulk of credit extended as well as deposits received, says a new report “Saudi Arabia Banking Sector Analysis’ by RNCOS, a leading market research firm.
 
 Moreover, the Saudi Arabian banking sector has also witnessed a notable expansion in the modern banking technologies, including Internet banking and phone banking services. They have enabled the banks to provide a well integrated and modern range of high-tech banking services. The banks are also modernizing their payment card technology and shifting towards smart card technology to offer more secure and advanced featured card to consumers.
 
 The report “Saudi Arabia Banking Sector Analysis” is an outcome of extensive research and detailed study of the Saudi Arabian banking sector. In this report, all the important performance indicators of the Saudi Arabian banking sector have been comprehensively discussed. Most importantly, it also features forecast for each of the key banking segment to provide better understanding of the banking sector in the country.
 
 The report analyzes the trend of macroeconomic factors critical to the banking sector and their impact on the sector. It has also identified key players in the market and contained their detailed business description. Additionally, the report sheds light on the emerging industry trends which are expected to decide the future of the Kingdom’s banking sector.
 
 To know more and to buy a copy of your report feel free to visit : http://www.bharatbook.com/detail.asp?id=132575&rt=Saudi-Arabia-Banking-Sector-Analysis.html
 
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With the credit markets tightening up everywhere, businesses are finding it difficult get customers approved for financing through their current consumer finance programs. Many of the big banks that are players in the retail finance industry are also players in the mortgage industry as well as other sectors that are not performing to par. This has forced them to tighten up on credit and take a much more conservative approach when deciding who to approve and in what markets they want to continue to offer financing in. This is bad news for businesses as less approvals means less sales and revenue and for many businesses no financing means NO REVENUE.

Fortunately there are solutions to this problem. This situation has created an excellent opportunity for smaller finance companies as well as indirect lenders and other debt buyers to step in and fill the void. Typically these institutions find it difficult to compete with the big boys on pricing so they typically take on the role of a 2nd look option for a business’s customers. Many of these small finance companies and debt buyers aren’t regulated the same ways as the big banks like GE, Citi, Wells Fargo, Chase, etc so they can remain versatile and can approve a wide arrange of credits even in tough economic times.

Using smaller finance companies and debt buyers will solve a businesses approval rate problems and can provide great consumer finance programs but not without a price. These institutions have a higher cost of funds then the big banks and usually higher overhead so the programs are more expensive in terms of discounts. However, it is far less expensive then having a customer walk out the door because you can’t get the financing for them.

Our office has been flooded with calls from businesses experiencing consumer financing trouble, but fortunately we are able to help them. No one knows how long this credit crunch will last. The businesses that survive will be those who find acceptable alternative finance solutions until the big banks bounce back.

In simple terms owner financing means the seller helping the purchaser to buy the house. The vendor can finance one part of the amount or at times even the full amount based on the buyers requirement. This method is used when it is difficult to obtain a loan.

Banks follow number of rules and regulations before approving loans. The process is lengthy and time consuming. The banks are raising bars for loan eligibility which is making it more difficult to acquire finance. Owner financing comes to your rescue at these times.

Loans are rejected due to number of reasons. It may be due to lack of proper documentation, poor credit ratings, time constraints etc. Any of these can prove counterproductive while acquiring a loan.

Owner financing helps unqualified buyers to get loans to buy house. This involves comparatively less paper work then normal bankers. It is just a step forward to assist buyers to possess the house fast.

Owner financing can be called Balloon Mortgage. The major advantage of this type of loan is repayment period can be extended as per the requirement of the borrower. The principal remains outstanding and has to be paid in lump sum. This whole sum at the time of maturity is called balloon payment.

The terms of the loan is provided in the contract. All details pertaining to the loan such as rate of interest, balloon payment date and amount, loan terms, instalments etc are mentioned in the deed. Instead of paying to the bank the amount is paid to the owner.

Another advantage is in case a loan is acquired while under owner financing plan, refinancing could be done at any point of time without penalty; there is no need to wait till the last balloon payment date.

A loan term can be extended, but an additional fee should be paid to change terms. The contract can be rewritten based on the down payment or equity. The repayments should be made without defaulting, to own the property at the end of the balloon date. A sincere effort to purchase the house should be shown at the buyer’s end, only then owner financing works.

This is totally different from rent to own house scheme. In a rent to own scheme the renter is engaged for a stipulated period of time where at the end of the term he has to acquire loans to buy the property, whereas in a owner financing scheme you can become the owner of the house with the help of the seller who offers a finances.

Benefits like tax breaks, equity building and other financial profits are enjoyed only by house owners. Owner financing only can help get such gains.

Unlike banks owner financing is a highly flexible scheme where the buyer’s terms can be entertained. The ultimate goal is to help the buyer and free them of their financial burden. The loan period ranges from a minimum one year to a maximum of ten years. Though, this can be extended on the buyer’s request.