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Finance

The Importance for Businesses to Control Their Cash Flow

While it may seem somewhat obvious to highlight just how important proper financial management is for a business, the regularity with which that advice is ignored makes it worth repeating. Most companies will lull themselves in to a false sense of security by doing just enough to keep their books ticking over, but when anything slightly deviates from the norm – which, may we add, it tends to from time to time in business – they are the ones who find themselves at a loss most quickly.

Chief amongst those things most often overlooked – and perhaps the most pertinent of them all – is cash flow. On its surface it may seem a simple enough concept, but it’s taken for granted and misunderstood enough for businesses to dig themselves in to some serious holes due to overconfidence– but there are a few things worth keeping in mind at all times which can help keep things ticking over better than the may do otherwise.

the importance for businesses to control their cash flow
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Organise Financial Records and Manage Outgoings

All businesses have expenditure, it’s just how it works. What you can’t have, however, is losses, and that happens when companies aren’t keeping as close of an eye on what is coming in and out of the business as they should. Whether it’s making payment, organising salaries or ad-hoc payments like equipment upgrades or staff engagement occasions, there has to be enough in the accounts to make those additional moves worthwhile – they’re designed to enhance a business, not strangle it.

Nothing should ever be spent within a company without at least two people having approved and signed off on it, and all regular outgoing should be carefully processed and managed by a dedicated member of staff. Additionally, all company financial records should be organised and filed appropriately, so that they’re easily accessible and understandable in any event that they’re required. Businesses who have unorganised books will have untidy accounts, and that’s a real shortcut to disaster.

Invoice and Invoice Discounting

Businesses will inevitably have to bill for things, and in doing so, invoices will be formed. While they can be easily created, having a system in place to keep up-to-date and on track with how they’re progressing is a little more sophisticated, but just as important. A good place to start is by implanting reference numbers for both internal and third-party use, so you always know what you’re discussing. Where unpaid arrangements are concerned, one option available to businesses is to utilise an invoice discounting facility, allowing the company to release working capital.

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Finance

How The Ever-Moving Financial Markets Can Affect International Businesses

Global businesses can be affected by all sorts of systematic economic events. They can find themselves the victim of drops in demand, for example, or a strategic decision to expand to a particular new destination can backfire if it turns out the labour market isn’t as strong as the firm’s leaders had hoped. And there’s always a risk that the financial markets will swing the wrong way. Whether it’s stock markets plummeting, the value of a multinational’s stock going down or a problem with the currency markets hindering high-value cross-border transactions, there’s a lot to worry about. But knowledge is power, and it’s wise for leaders of global businesses to make sure they know what’s happening – and what they can do to mitigate and manage these issues.

how the ever-moving financial markets can affect international businesses
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Stock Markets

The world of stocks can have all sorts of impacts on global businesses. Of course, the most obvious way in which a stock market movement can affect a business is if that business is listed on the stock market itself. If a business has “floated” in this way, then its shares will be available for members of the public or institutional investors to purchase in exchange for cash. An overall slowdown in a stock market, then, can easily lead to individual companies seeing reduced profits. And given that “stock market contagion” as it is known is a common occurrence, this can have brutal consequences for multinationals.

But a decline in the performance of the global stock markets can also have indirect effects on global businesses. It is often interpreted by other economic actors as a sign of low confidence: if fewer people invest in an economy’s stock market, it is often assumed that there is an underlying reason to avoid that economy altogether. Lower investor confidence can have knock-on effects – such as increased company taxes to produce government stimulus packages, or lower consumer confidence and hence less demand. For an international business which is exposed to the whims of governments and economic actors not just in one country but in several, this could end up posing a real problem.

Currency Markets

Another financial market which often experiences ups and downs is the global currency market. Converting an amount of cash from one currency to another is not as simple as it may seem: an exchange rate will always apply, and these are for the most part set by market forces. If you have a large amount in pounds which you need to change into, say, dollars, the exact amount of value you’ll gain or lose by carrying out the transaction is determined by all sorts of economic and political forces – and it can change on a daily or even hourly basis.

For a business which needs to make international funds transfers, this sort of fluctuation can be a problem. If you need to get company cash over to a new international branch of your business in a foreign country in order to cover start-up costs, for example, you may have to delay the transaction until the exchange rate is in your favour – or simply accept the value loss. You may also have to pay fees on some currency transactions, so it’s well worth speaking to a professional who can help you decide which route is best.

Debt Markets

It’s no secret that many of the world’s most successful companies have been built in part on debt. Arranging finance on agreeable terms in order to buy a building, hire the first few staff and more is a common occurrence in the business world. But how easy you’ll find it to access this sort of debt is dependent in large part on how well the debt markets are operating at the time. If interest rates are set at a high level by a central bank, for example, it may become more expensive to access debt – but if they are low, you might find that borrowing is cheap. For an international business, this could mean that you need to strategically focus your existing resources on countries in which borrowing costs are high, and use debt in places where it is readily available.

Markets of all varieties hold the power to affect international businesses. From a dip in the stock markets to a sudden reversal in the fortunes of the currency markets, there are lots of ways in which global firms can be hit by a market change. Learning about how each of these markets work and what the risks are, then, is essential for a functioning global business to think about.

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Finance Legal Management

IT Governance and Legal Compliance; How to Practical and Effective?

Every small and big enterprise needs legal compliance and IT governance. It is important to ensure that the company has the right support for their business management and success. The corporates are formally powered by IT governance by the lawyers and legal advisors like Dolan Dobrinksy Rosenblum, LLP who help the businesses. Effective practical compliance manages and strengthens the company with all legal requirements. It is important for a competitive environment of the corporates to helping to stand them as unique. Here is the complete guide on how it can prove effective for your business.

IT Governance and Legal Compliance
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What is IT Governance?

It is the framework that ensures that organizations’ structure gets enough IT support for achieving their business objectives. IT governance provides the future strategy for the businesses that are actually the formal framework for the companies that they can follow and achieve their goals. This framework considers the interests of the stakeholders, staff and the employees to make the process working and helpful for all. To sum it up, IT governance of the most important part of enterprise governance.

Why Organizations Need It?

It is extremely important for multinational companies and leading organizations. It also increases competitiveness among the corporates. A balanced and integrated IT support is the best investment you can ever make for your company.

Companies and corporates are subjected to so many regulations by the authorities that provide them with the security of their data, information, damage recoveries and financial accountability. The corporates among others with IT governance can have better relations with the market, employees, stakeholders and consumers. A formal IT program is required to be implemented for the best working, practice and control for all internal and external obligations.

Both Public and Private Sector require IT governance

It is also crucial for the public and private sector to make sure that their IT section is working well and it supports their strategies and goals. The established and supportive technology system for accountability and financial support need time and effort. The larger organizations have a goal to reach a point for being a developed and flourishing state where IT governance is fully regulated. Small business organizations might need practising only necessary elements of the IT governance but the big companies need to have a mature and complete strategy.

How to Implement the Program?

An IT governance program can be implemented with the help of the legal advisories and firms that provide support and services in this regard. You can ask the business experts or experienced corporate IT governance program providers certain frameworks to you and your company. You can choose from a number of frameworks for streamlining and operations. It is the investment that is best for your business management and achieving milestones.

You can ensure a program is best for you and your business and monitor the progress of the business while keeping it aligned with the parties.

Consider Compliance

You should consider the framework that it should comply with the company regulations, risks and responsibilities. It should speed the growth by taking decisions for the company. It should also help the company to keep going for day-to-day operations. IT governance and legal compliance should be mature but flexible for better capabilities.

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Finance

Bootstrapping? Consider a Loan to Boost Your Business

Subprime lending was once a normal activity. However, a market crash between 2007 and 2008 changed all this. Banks enforced strict requirements to avoid a high rate of defaults and to protect the economy from a downfall.
Many businesses opt for bootstrapping either because they fear piling debts or they don’t know about other existing options. Bootstrapping is an excellent way of financing your business, but there are other options you can utilize. Loans can be a great alternative.

Nevertheless, lenders take great care in going through loan applications. This means there are many factors which will determine whether your business is approved for a loan or not. You need to prepare and plan in order to get the best shot for obtaining financing.

The following are some of the area’s lenders will be interested in before approving your loan application and how obtaining a loan can accelerate growth.

consider a loan to boost your business
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Your Credit Score

As a startup, good credit is vital if you have dreams of securing a loan from any financial institution, you can try nation 21 loans for quickly find a startup lender. On the other hand, building a stellar record can be a difficult task. Often, you’re just starting to build your own credit, which means you may not have a long history.

How, then do you convince a financial institution to provide startup funds? Use your personal credit card. This is your best shot at rebuilding or building your credit for a chance at getting a loan.

There are two different types of credit cards. Secured and unsecured. With an unsecured credit card, you’ll get approval from the lender on a certain limit which you can afford to spend over a certain period. After the period expires, you’ll have to pay off what you spent. As you can see, this type of credit card is more like a loan. In contrast, a secured credit card requires the consumer to pay a deposit as security to get approval. This type of credit is good if you intend on building or repairing your credit.

Debt-to-Income Ratio

Of course, you’ll need some kind of income to make your loan payments. On top of that, the lender will want to know how much debt you already owe and what your income can cover. This is a major factor when applying for a loan, therefore, you want to put all your finances in order to make sure you convince the lender.

In addition, you’ll be asked to provide proof of your claims. This includes bank statements, tax forms and pays stubs to prove your income. What’s more, they’ll also analyze your debt-to-income ratio. If it’s too high, then you pose a high risk to the lender.

Your Social Media Presence

Almost every business has made a shift to digital platforms. These platforms have turned into gold mines for businesses and thanks to data mining, companies can now find whatever they want about you from such sites.

Your profile shows a lot about responsibility and this what lending companies will be after the moment you apply for a loan. Chances are, they’ll pay for information or they’ll go through your profile themselves. This doesn’t mean all lenders do this, but for the sake of your loan approval, make sure your business looks as professional as possible on all social media platforms.

Why You Need a Loan to Accelerate Growth

Physical Location is Too Small

When starting out, you might have needed a small space for your operations. However, the time has gone by and your business has outgrown your initial space. This means it is time to move out and look for a bigger location.

A bigger location means you need funds to finance the rent as well as the move to the new location. A loan is your best option at this point but be sure the new location will bring in the required revenue to finance operations.

You Need New Equipment

This is a no-brainer when it comes to why you need a loan to accelerate growth though some business owners see some pitfalls as well. For example, you might need some extra machines to help meet customer demands which, in turn, will boost revenue.

A plus to acquiring new equipment is that you can use it in the future as collateral to take out another loan. However, make sure you actually need whatever equipment you intend to buy.

You Need to Purchase Inventory

Inventory takes up a huge percentage of any businesses expenses. Sometimes you might run out of stock, yet the demand for your product is high. Also, the return on investment might take some time, thus creating a gap in revenue, making it hard to buy more inventory.

Loans can help you out of such a situation. They will enable you to buy the inventory and wait to make the profit later.

Final Words

Knowing what your lender will look for when applying for a loan is crucial to improve your chances of securing a loan. On top of that, always make it a habit of paying loans on time to improve your credit history.

Loan applications can be quite nerve-wracking. However, these loans will help you to expand your business, employ new staff, and buy extra inventory. All these things will increase productivity.

Most of the time, fear holds a lot of people back, but you won’t realize your dreams of accelerating growth without some funding. Therefore, don’t be afraid, take a bold step and apply for a loan to take your business to the next level.

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Finance Management

How Companies Manage Cash?

When it comes to business and handling your own company, the most common question that is being asked by people on the internet is how do companies handle their cash. What are the kinds of strategies that they use to common management their cash? Apparently, there are two levels on which the companies handle their cash flow. The first is the operational level and the next is the strategic level. Operational level deals with the things that are in the business. The usual time for the operational level is 8 to 12 weeks in which the amount of cash flow can be identified. On the other hand, the strategic level deals with the things on the business. It involves all the kinds of strategies that are used before the operational level. The duration of this level is 8 to 10 months.

How Companies Manage Cash
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Following are the things you should know about cash management in companies:

Spotlight on Cash Flow Management, not Profits:

This may sound conflicting; however, it’s most certainly not. Utilize your breakeven point as a benchmark. After you reach breakeven and your business is beneficial, regardless you have to deal with your income, obviously. You have achieved another phase of your business’ life.

Keep up Some Cash Reserves:

You will have money deficiencies. Your business’ exceptionally survival may rely upon how you move through those shortages. In the event that you begin with some trade out your financial balance, it will be less demanding to centre on income and you won’t worry about the setbacks.

Urge Customers to Pay up Faster:

Offer your clients early instalment rebates and keep credit prerequisites strict. Set up a composed arrangement of norms for figuring out who is qualified for the credit. Uphold those models inflexibly. You don’t need each client strolling in the entryway endorsed for credit.

Broaden Payables to the extent that this would be possible:

Conversely, get the best give you can on payables. Stretch out your payables to net-60 or net-90, on the off chance that you can. A few providers charge late expenses, nonetheless, so ensure you pay on time.

Lift Sales with Creative Incentives:

Inventive approaches to rapidly support deals may incorporate supporting a challenge, facilitating a client gratefulness occasion, offering referral motivators, or taking your workers on an attention visit.

Assign a Cash Flow Monitor:

Appoint the errand of checking income to a dependable representative. Have that individual illuminate you when you achieve a specific limit — for example, when your income hits $1,000.

Treasury management:

The next thing that many companies are involved in is treasury management. This is very important and this is why many people train their officials before they do that. When it comes to money, there are not many people that you can trust. SO you have to limit yourself and find some trustworthy people in your company. Learn from other companies and see how they are handling their finances. It is better to learn from someone else’s failure than your own.

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Finance

The Importance of Professional Indemnity Insurance to Business

Having the right insurance is important in order for businesses to properly function and survive. From property coverage to liability policies, they exist to shield the company from various unforeseen events that may result in damaging financial blows that can cripple the business and prevent it from achieving its desired success. With the multitude of different kinds of insurance available, it’s easy to overlook a few essential ones. One of the most important is professional indemnity insurance.

Professional Indemnity Insurance
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What exactly is professional indemnity insurance?

In a nutshell, professional indemnity insurance is a type of cover that protects companies against claims for damages from third parties alleging that they were given misleading or inappropriate advice or service.

Such claims typically relate to negligence, copyright issues or unintentional confidentiality breaches. These may seem to be problems that can be easily avoided, but it’s never a bad thing to err on the side of caution and add a layer of security in the event that mistakes happen.

Coverage of Professional Indemnity Insurance:

Professional indemnity insurance covers the legal fees and potential damages associated with claims from third parties that your company has caused them financial loss due to inadequate service, bad advice, or a breach of contract on your part. But the specific policy you have with your insurance provider will dictate to what extent the costs of any liability claim are covered by your insurance.

You can learn more about this type of insurance and exactly what type of coverage you need by reviewing Hiscox professional indemnity insurance. Important considerations include contractual requirements for PI cover, and calculating the potential cost of legal defense fees and damages in relation to your sector. In the event of a claim, having comprehensive cover will make all the difference, so be sure you’ve chosen the right policy.

Is it Mandatory?

While professional indemnity insurance may not be compulsory by law, certain professional bodies, as well as regulators, will oftentimes require you to have it for your business to function. Why This isn’t limited to certain professions such as law and accounting either. In fact, as long you are providing a service or have access to any confidential information that can affect the financial integrity of your customers, it can be just as advantageous to secure professional indemnity insurance as other business insurance policies.

Should you get it?

If it’s financially feasible and won’t break the bank, it’s better to have professional indemnity insurance in place. It will not only help get you out of a financial pinch, in terms of legal costs, but it will also give you peace of mind that your work is covered and allows you to better run your company without any distractions. It will go a long way toward keeping your company from being underinsurance and suffering potentially catastrophic financial losses too.

At the end of the day, the success of any business or company hinges on financial security and safety. Everyone makes mistakes, and as much as we may try to minimize them we cannot eliminate them completely. By having professional indemnity insurance, you’re adding an extra layer of security for your business and allowing it to grow and thrive without the fear that an error could sink your company. Keep in mind, however, to put in the time doing research and comparing rates. This will help you get the most out of your money.