Oct
18
When a business chooses a factoring company it can expect to pay factoring costs in the form of a fee or a commission for performing the agreed upon credit and collection services. Typically, the commission or fee is between 0.1% and 0.3% of the sales.
What determines the factoring costs charged to a business are numerous and noteworthy. First, the very nature of the business, including seasonal elements, product stability, market sector (wholesale or manufacturer) and styling considerations, is the single most important element in establishing factoring costs.
Sales volume is another aspect examined for determining factoring costs. Factoring applies a sliding scale based on annual sales volume of the client and percentages decline as volume increases. Sales volume per customer also affects the percentage. The more concentrated the customer base, the smaller the percentage because there is less work and follow-up with fewer customers.
Size of orders can predetermine some factoring costs. The profit margin of large orders filled over the same time as it would take to process a small order is significant; fees can be lower with larger orders from the customer base.
Other factors such as client credit worthiness, selling terms and billing practices can affect the fee or commission charged by the factor for factoring costs. If selling terms are long and the credit is substandard, the fees will rise in accordance with risk.
Moreover, factoring companies do charge interest for funds disbursed. It is generally a rate above the base rate established by the Bank of England.
Oct
13
Many businesses have considerable capital tied up in their physical assets, in addition to receivables. Stock, property, plant and machinery are reservoirs of cash that can be released under an arrangement known as asset based lending. A business can borrow against both these assets and its sales ledger to increase working capital without having to raise equity or restricting growth.
This method is designed for larger businesses, and is a cost-effective, rapid and accessible way to speed up cash flow when it is needed. In particular, seasonal fluctuations can be eased and growth promoted without having to raise equity. Furthermore, cash flow grows in line with assets, but more can be raised this way than through traditional borrowing.
The cash raised can be used to fund exports, develop new business areas and cover those regular flat or low sales periods afflicting some business models. Unlike invoice factoring, the process is hidden from clients.
Asset based lending is arranged to fit the specific needs of a business, with fees and charges agreed in advance, rather like a mortgage, with the business audited by the lender and the addition of invoice factoring or invoice discounting for invoices raised in the relevant period.
The lender will take an active part in auditing the process to monitor the fluctuating credit being drawn down by the business, and collateral will be needed against repayment failure, although protection against bad debt is negotiable.
Oct
11
It is true that the forex market is the largest market in the world, trading trillions in currency every day. It operates 24 hours a day, five days a week and is larger than all of the world’s equity markets combined.
Because the forex market is so active, it may make people think that it is quite easy to make money by trading in it, even though it is not. Of course you can succeed, but you have to be careful. The key is to learn the forex market in your own time. The first thing you will notice is that there is a learning curve, which will challenge you. You will need to assimilate that fact and then go on to set up a system for yourself, which has rules that will help you decide when to trade and when to get out.
A successful forex trading system, above all, is simple. The forex market moves very, very quickly and as a result, you will not always have time to devise an instant plan. Instead, you will need a predetermined plan to follow when you execute trades.
Check forex forums for more advice on executing trades, there is plenty of free forex information out there. Your trading system will probably be slightly different from others, because as you adjust to and learn the market, you will come up with your own parameters for successful trades. Eventually, you will be able to make trade decisions quickly and confidently.
Oct
8
It is often the case that a business needs access to cash that may be tied up in unpaid invoices. It might sometimes be impractical to wait for these invoices to be paid, as money might be needed by the business sooner. Invoice finance can help with cash flow, meaning the money occupied by an unpaid invoice is released into the business more rapidly.
An invoice financer is a company that provides business loans to businesses that use their unpaid invoices as collateral for the borrowing. Using this method, a business can free up cash at a quicker rate, rather than waiting for what could be some time for an invoice to be paid.
Using invoice finance, a business can receive a percentage of the sum of an invoice within 24 hours. This invoice is, in effect, sold to the financer who then chases the payment from the invoiced client in order to repay the loan. Through invoice finance, companies can also save money on administration costs; the financer acts as a credit controller, communicating with the business’ customers and making sure payments are made.
The cost of factoring is calculated based on the turnover, the total amount of invoices and the service provided by the financer. Invoice finance can also protect a company from the non-payment of invoices, taking the responsibility for payment themselves, and consequently protecting the company from the subsequent effects of a client not being able to pay.
Oct
6
To be a successful forex trader, you must have a forex system established that you understand intuitively and can follow. Forex trading can be tricky and can be especially problematic if you are not experienced.
Most successful forex traders eventually devise their own plans or blueprints for trades, systems that they use to determine when to get in and out of trades, so that they maximise their profits and minimise their losses. Forex trading looks deceptively simple, indeed many think it is just about trading in currency pairs, with the ultimate goal of guessing which currency is going to do better against the other in the pair. However, in reality it is actually quite a bit more complicated and experienced forex traders understand that. It takes analysis and careful planning, but even with all of the tools available the most carefully planned trades can go still awry. Knowing what you are going to do before such events occur is the key to success.
Put simply, a successful forex system is one you slowly develop over time, using both your own acquired skills and knowledge you gain from other, more experienced, traders. Once you develop a system, stay with it and learn to trust it, but that point will only come after you have spent some time in the forex market and have become thoroughly familiar with it. This is when your trading methodologies truly become your own.
Oct
2
Selecting a factoring company that is suited to your business is undoubtedly crucial both for your business and your peace of mind. There are so many service providers available to you, including independent factoring companies, subsidiaries of banks and other financial institutions. As you will want to make the most informed choice available, investing some time studying the market and identifying what your company needs most from your factoring partner is imperative.
First and foremost you should be reassured that the factoring company has a detailed knowledge and experience within your sphere of operation. Many factors seek to provide specialist services for particular markets and it is important that the company you choose can operate effectively within yours.
Many factors wish to set monthly minimum transactions, ensuring that they will have a certain volume of invoices presented to them. This procedure is fine in theory and will normally attract better terms for your company. However, if there is a dip in sales then you may be liable to make up the cost. Finding a provider who does not insist on minimum transactions might be better for your company.
Fee structures can vary greatly across the industry and shopping around will prove most beneficial. Many fee structures are complex and a company providing a transparent fee structure is preferable and avoids any potential for disputes.
Perhaps the most crucial aspect when selecting a provider is finding the factor that provides the services most appropriate to your specific needs. You might want to balance the cheaper cost of a company who takes a more impersonal mass approach to one that might be slightly higher in cost but holds a more inclusive ethos.
Sep
30
Beginner forex traders make some common mistakes. Anyone just starting out in currency trading should educate themselves, but also use common sense to avoid these errors.
Forex Broker
Finding a forex broker is easy. There are numerous forex brokers available to new traders and they are all eager for new clients. Beginner traders who do not spend time searching for a reputable broker who will charge fair spreads and give advice, will end up wasting money.
Money Management
It is very easy to be carried away when trading in the fast-paced and exciting forex market. With a little planning and set spending limits, traders will avoid losing due to emotional trades.
Strategy
The best forex traders make trades with a plan in mind. It is tempting for beginner traders to simply jump in and make trades without deciding on a strategy or considering the overall picture. Traders must learn about the various strategies and then choose one in order to be successful.
News
While forex traders do not predict changes in currency values, they do react to them. The key to making money in forex is to react to changes, unlike other markets in which participants attempt to predict future values. For this reason, it is essential for forex traders to be aware of what is going on in the world. Any trader who does not keep up with world news, especially economic news does so at his or her peril.
Sep
27
Businesses often look to outside investment in order to expand or improve cash flow. This might involve asset based lending whereby a business takes out a loan against a financial asset. In most cases this may be a perfectly reasonable way to improve a business, but for some, asset based lending might not be the most viable option.
An alternative way of raising cash is debt factoring. This process involves the borrowing of money against unpaid invoices, using them as collateral for the loan. The debt factoring company, or factor, provides the business with a percentage of the invoice amount and then procures payment from the invoiced client as repayment for the loan.
Companies who need money from a bill as soon as it is invoiced often use this service. This is opposed to waiting for the client to pay it, which can sometimes take a number of weeks, at which point it can become difficult to chase. A factor can also help with this, communicating directly with clients on the businesses behalf, and ensuring payment is made.
If payment is not made, however, there is an additional service a business has the option to take, as insurance against this downfall. A non-recourse factoring agreement can be made with the factor. This ensures the payment of an invoice to the business even when the client has failed to make the payment themselves. Through this agreement, the factor becomes responsible for the invoice payment and therefore your business does not suffer as a consequence of it not being settled.
Sep
22
It is always possible that errors will be found in your VAT accounting. They could be either accidental or deliberate. Whatever the reasons for them occurring, it is likely that a VAT inspector will find them. It is therefore essential that you deal with VAT errors in the correct manner. This article will advise you on what to do if an error is found in your VAT accounting.
When an error is discovered you will be given the opportunity to correct it by making a voluntary disclosure to the local VAT office. Of course, this assumes that the error was accidental. If the net value of the mistake is less than £2,000 it can be corrected easily at the VAT office. When discrepancies are discovered you are given a reasonable amount of time to correct them. It is essential that you rectify errors as soon as possible, otherwise you may risk incurring penalties or being fined.
Discuss Difficulties
VAT officers are highly trained and you should therefore use a VAT inspection as an opportunity to discuss any difficulties you have with the management of your VAT accounts. This will help ensure that mistakes or uncertainties are avoided in future.
Use Your Accountant
Your accountant is also there to offer advice on managing your VAT accounts. You should therefore raise any questions or concerns with him or her as soon as you become aware of them.
Sep
20
The foreign exchange, or forex market is one of the most extensive and liquid trading markets in the world. Investors trade based on the changing value of foreign currencies. As with other markets, the goal is to buy low, sell high, and make a profit.
Trading in currencies is generally achieved through a forex broker. Forex brokers serve as intermediaries in trades and may also provide tips and advice for maximising profits. This advice often comes from extensive technical analysis and approaches to trading based on research.
Banks and other financial institutions have historically been the biggest players in trading currency, to the point of having a monopoly. All that changed with the arrival of the internet, which allowed virtually anyone to begin trading, as they could access brokers directly and trade on the forex market.
For a new trader, choosing a forex brokerage house is an important decision. A broker that is accustomed to working with new traders or at least willing to help those who are new to it is essential. Beginners in forex trading will need to become educated about the process and best techniques and a helpful and knowledgeable broker is the best place to start. To make the best choice, it is advisable that new traders try several different brokerage houses such as Citi Forex and fxcm.co.uk and use their online trading tools before committing to a final decision. In this way, a new trader can become an expert trader in no time at all.
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