231 Front Street, Lahaina, HI 96761 info@givingpress.com 808.123.4567

Manage Debts the Smarter Way!

Spiraling debts can be a cause of concern for any borrower. They can create an adverse effect on the financial status of the borrower. Wondering how to deal with the troublesome situation? If you are facing financial hardship due to them, it is time to seek help. Debt management might be the solution to all your problems! Read on and find out how…

Know why should you seek this kind of service?

o One affordable monthly payment

o Reduced credit repayments

o The guide to a debt free future

The truth is that credit card debts are usually an outcome of unplanned spending and late repayments. They are the worst debts you would have encountered! You have a number of options to get rid of such problems.

When you opt for solutions with a team of financial experts, the professionals will assess your current financial situation and help you choose options on a spending plan. You can seek help from such experts. They will negotiate terms of your debts with creditors as well! In simple words, they will take care of all kinds of debt problems on your behalf.

There are several ways of managing this kind of problem. To start with, you could avoid credit card usage as much as possible or opt for consolidation finance as a part of the solution. You must begin by trying not to spend too much over your usual balance. This will help you ease your debt worries. Doing so, will ensure that you are on the road to a debt-free life sooner than you had imagined!

Managing payment of credit card bills can be one of the major contributing factors of managing such kind of problem. It saves a large chunk of your money with one single payment every month, well within your reach! It is much simpler to pay just one bill every month. Hence, if you are burdened by this kind of problem, you need not put yourself through any more stress! By following this kind of advice, you can manage your financial problems easily. You can also reach out to financial experts who can take care of your financial predicament.

You must consider these kinds of solutions only after a careful analysis of your personal circumstances and constraints! Make sure you make the company aware of your problems. This will only help arrive at a suitable solution.…

"Right of Offset" – Protect Your Money and Assets

What is the “Right of Offset”?

The “Right of Offset” gives a lending institution (i.e. Bank or Credit Union) a legal right to seize funds that a debtor may have in a deposit or asset account at that particular banking or financial institution, to cover a loan in default. It is also known as the “Right of Set-Off”.

What are the dangers of the “Right of Offset”?

If an individual, couple, or other entity has a checking, savings, or other form of deposit account at the same financial institution where they have a credit card, auto loan, mortgage, other debt account, that individual or entity has what can be considered a “banking conflict”. In other words, anytime an asset account is kept at the same banking institution as a liability account, a potential “banking conflict” occurs due to that banking institutions “Right of Offset”. What this means is, if an individual for whatever reason fails to make payments on a liability account, the financial institution has the legal right to not only freeze that individuals asset/deposit account, but to also seize any funds available to offset the debt due to that financial institution.

What types of liability accounts or debts does the “Right to Offset” pertain too?

A financial institutions freedom to utilize the “Right of Offset” is determined primarily by how they are chartered.

State chartered and regulated credit unions and banks, along with federal credit unions chartered and regulated by the National Credit Union Association (NCUA) have the freedom and authority to exercise their “Right of Offset” on both secured accounts or asset backed (i.e. mortgage loan, auto loan), and unsecured accounts (not backed by collateral) or open-ended revolving accounts (i.e. certain credit cards and credit extensions).

Federally chartered and regulated banks (i.e. Bank of America, Wachovia Bank, Wells Fargo) have the freedom and authority to exercise their “Right of Offset” on secured, but not unsecured accounts. A bank/financial institutions rights and authority as it pertains to its use of “Right to Offset” may vary between institutions. To find the specifics of a particular institution research the following areas:

  • The institutions regulatory authority.
  • The institutions member agreement received when establishing an account.
  • The institutions loan/debt documents or agreements received when establishing a loan.

Who regulates state chartered and federally chartered banks and/or financial institutions?

State chartered banks and financial institutions are regulated by the particular state Department of Banking, Department of Financial Institutions, or Department of Finance from which the bank or financial institution conducts business.

Federal credit unions are regulated by The National Credit Union Association (NCUA).

Federally chartered National banks are regulated by The Office of the Comptroller of the Currency (OCC). The OCC is a bureau of the U.S. Department of the Treasury.

How can I protect my assets?

Never assume that it will not happen to you. The present difficulties present in the current economy have created unexpected lay-offs and job losses. Expensive medical emergencies happen every day. Take the following steps to protect …

The Target Capital Structure

Firms can choose whatever mix of debt and equity they desire to finance their assets, subject to the willingness of investors to provide such funds. And, as we shall see, there exist many different mixes of debt and equity, or capital structures – in some firms, such as Chrysler Corporation, debt accounts for more than 70 percent of the financing, while other firms, such as Microsoft, have little or no debt.

In the next few sections, we discuss factors that affect a firm’s capital structure, and we conclude a firm should attempt to determine what its optimal, or best, mix of financing should be. But, you will find that determining the exact optimal capital structure is not a science, so after analyzing a number of factors, a firm establishes a target capital structure it believes is optimal, which is then used as a guide for raising funds in the future. This target might change over time as conditions vary, but at any given moment the firm’s management has a specific capital structure in mind, and individual financing decisions should be consistent with this target. If the actual proportion of debt is below the target level, new funds will probably be raised by issuing debt, whereas if the proportion of debt is above the target, stock will probably be sold to bring the firm back in line with the target debt/assets ratio.

Capital structure policy involves a trade-off between risk and return. Using more debt raises the riskiness of the firm’s earnings stream, but a higher propor- tion of debt generally leads to a higher expected rate of return; and, we know that the higher risk associated with greater debt tends to lower the stock’s price. At the same time, however, the higher expected rate of return makes the stock more attractive to investors, which, in turn, ultimately increases the stock’s price. Therefore, the optimal capital structure is the one that strikes a balance between risk and return to achieve our ultimate goal of maximizing the price of the stock.

Four primary factors influence capital structure decisions:

1. The first is the firm’s business risk, or the riskiness that would be inherent in the firm’s operations if it used no debt. The greater the firm’s business risk, the lower the amount of debt that is optimal.

2. The second key factor is the firm’s tax position. A major reason for using debt is that interest is tax deductible, which lowers the effective cost of debt. However, if much of a firm’s income is already sheltered from taxes by accelerated depreciation or tax loss carryforwards, its tax rate will be low, and debt will not be as advantageous as it would be to a firm with a higher effective tax rate.

3. The third important consideration is financial flexibility, or the ability to raise capital on reasonable terms under adverse conditions. Corporate treasurers know that a steady supply of capital is necessary for stable operations, which, in turn, are vital for long-run …

The Five Components of a Business Strategy

Can you define exactly what makes up a business strategy? Some people say no, but we think you can.

In fact, we believe a valid business strategy has five components:

  1. Your company’s current or desired core competencies
  2. A description of how you will differentiate vs. competitors
  3. The industry or industries in which you intend to compete
  4. The initiatives you plan to implement in the areas of marketing, operations, information technology, finance and organizational development
  5. A financial forecast that shows how your plans will meet stakeholder requirements over the next 3 to 5 years

Let’s look at each of these components.

The first component of a valid business strategy is a clear description of your company’s current or desired core competencies.

You may be thinking, “Great, but what’s a ‘core competency?'” While there are many definitions, here’s a good one from Wikipedia:

ACore competency is something that a firm can do well and that meets the following three conditions:

  • It provides consumer benefits
  • It is not easy for competitors to imitate
  • It can be leveraged widely to many products and markets.

A core competency can take various forms, including technical/subject matter know how, a reliable process, and/or close relationships with customers and suppliers. It may also include product development or culture, such as employee dedication.”

For example, we could say that Southwest Airlines is a reliable airline that offers low fares. But in order to provide those benefits, it has to have certain “core competencies,” important capabilities that enable it to have low fares and to be reliable. We believe that Southwest Airlines has four core competencies that it executes so well that it regularly beats all other US airlines in terms of profitability.

These core competencies are:

  • The lowest operating costs per plane
  • An economical point-to-point airport network
  • A fanatical culture focused on customer service and cost savings
  • An ability to keep planes in the air more of the time than its competitors.

Southwest airlines couldn’t offer the benefits of low prices and reliable service if it didn’t master these core competencies. What key benefits do you want to offer your customers? What core competencies do you need to master to provide them?

The second component of a valid business strategy is a description of how you differentiate vs. competitors.

In our experience, differentiation is about being the best at something. This should be encapsulated in your mission statement – what are your company’s aspirations and how are you going to beat the competition? We just talked about how Southwest Airlines differentiates — what are you going to offer customers that will make them choose your products or services so that you can grow your business?

It takes a lot of hard work to come up with a great answer to this question and even more work to make that differentiation real. It’s easy for us to say that Southwest is the best low-cost airline in the US, but it’s extraordinarily difficult for them to pull it off.…

Modern Financial Management Theories & Small Businesses

The following are some examples of modern financial management theories formulated on principles considered as ‘a set of fundamental tenets that form the basis for financial theory and decision-making in finance’ (Emery et al.1991). An attempt would be made to relate the principles behind these concepts to small businesses’ financial management.

Agency Theory

Agency theory deals with the people who own a business enterprise and all others who have interests in it, for example managers, banks, creditors, family members, and employees. The agency theory postulates that the day to day running of a business enterprise is carried out by managers as agents who have been engaged by the owners of the business as principals who are also known as shareholders. The theory is on the notion of the principle of ‘two-sided transactions’ which holds that any financial transactions involve two parties, both acting in their own best interests, but with different expectations.

Problems usually identified with agency theory may include:

i. Information asymmetry- a situation in which agents have information on the financial circumstances and prospects of the enterprise that is not known to principals (Emery et al.1991). For example ‘The Business Roundtable’ emphasised that in planning communications with shareholders and investors, companies should consider never misleading or misinforming stockholders about the corporation’s operations or financial condition. In spite of this principle, there was lack of transparency from Enron’s management leading to its collapse;

ii. Moral hazard-a situation in which agents deliberately take advantage of information asymmetry to redistribute wealth to themselves in an unseen manner which is ultimately to the detriment of principals. A case in point is the failure of the Board of directors of Enron’s compensation committee to ask any question about the award of salaries, perks, annuities, life insurance and rewards to the executive members at a critical point in the life of Enron; with one executive on record to have received a share of ownership of a corporate jet as a reward and also a loan of $77m to the CEO even though the Sarbanes-Oxley Act in the US bans loans by companies to their executives; and

iii. Adverse selection-this concerns a situation in which agents misrepresent the skills or abilities they bring to an enterprise. As a result of that the principal’s wealth is not maximised (Emery et al.1991).

In response to the inherent risk posed by agents’ quest to make the most of their interests to the disadvantage of principals (i.e. all stakeholders), each stakeholder tries to increase the reward expected in return for participation in the enterprise. Creditors may increase the interest rates they get from the enterprise. Other responses are monitoring and bonding to improve principal’s access to reliable information and devising means to find a common ground for agents and principals respectively.

Emanating from the risks faced in agency theory, researchers on small business financial management contend that in many small enterprises the agency relationship between owners and managers may be absent because the owners are also managers; and that …

How Can I Impress the Interviewer At A Banking And Finance Interview?

Regardless of what many may think or say, first impressions do count and never more so than attending your first interview and especially if that interview is for a position within a professional organization such as banking or finance. So, it cannot be over emphasized that you must present a polished professional image the second you walk into the building.

It wouldn’t be the first time that I have attended an interview and the person due to interview me or a member of the HR department was already waiting for me in the company’s reception area.

Always remember that companies of the stature of which you have shown an interest are looking to hire professional people. People who care about themselves and their career so, look the part and act the part.  Dress conservatively. Preferably wear a well pressed suit and avoid wearing too much jewelry or fragrances. Accompany the suit with a clean white shirt and tie. It’s also important to remember your personal hygiene and cleanliness. Bathe or take a shower, brush your teeth, and make sure your hair is well groomed before an interview as well to present a polished professional image.

Prepare in Advance

Whether you have attended many banking or finance interviews or not, it is likely that you can predict at least some of the questions you will be asked. Take the time to practice giving your answers to these questions. Even though you are not asked that question exactly, there is a very good chance you will be asked a question similar to it. The more you practice the more confident you will be in the interview.

Prepare to give well structured answers as well as practicing the tone and method of delivery. You want to give the impression of being confident but not arrogant. Good interviewers will know that you have prepared and that is no bad thing as they will appreciate how much this opportunity means to you.

Moreover looking the part and being well prepared for the interview will definitely minimize any anxiety or nervousness that almost all interviewees suffer when they walk into an interview.

You have prepared to answer questions. You also need to prepare to ask questions. It is in your best interest to gather as much information as you can about the company and the job opportunity you are about to be interviewed for.

Impress the interviewer by doing your homework. Research the company prior to the interview and gather key information with which you can prepare interesting and intelligent questions to ask the interviewer. This knowledge will help to demonstrate that you have a genuine interest in the company and the opportunity for which you are being interviewed.

This knowledge can also give you an edge over your competitors. You can use it to prepare examples of how the skills set you possess and the experience you have are an excellent fit to meet the needs and challenges facing the organization.…

Knowing How To Get Approved For Your Tractor Loan

There are some people that have an acreage having a few acres of land or a large yard and have nothing to do with it. It is best that you farm on it so that the land becomes productive. You can after all take advantage of farm equipment loans so that you can get started on your new venture. You’ll surely need a tractor to help you maintain your land however the problem of most people is that they don’t have cash to buy one. Good thing there are actually several ways that you can finance a tractor for your farming. Be sure to follow the steps below because these ways require planning and advice.

To get started, you need to know the exact size of your land. This will also help you enable to find out how many tractors you will need. This is not enough however, of course you will need to find out how much you can exactly afford. Depending on the terrain of your land, you might need one or several types of tractors. A farm equipment loan can definitely cover this for you. Tractors come in an array of sizes and horsepower or engine sizes. You need to be sure that the workload you will subject your tractor to is only that it can carry. Other options for tractors also vary which includes but is not limited to wheel configuration. Again this depends on the terrain of your land and the type of soil that you will toil. There is an online tractor data guide for your information that you can visit to help you determine the type of tractor that you need when you apply for your loan.

Bear in mind that when you shop, shop only for tractors that fit the horsepower that you need, nothing more and nothing less. Also, be sure that you consider your repayment ability. You wouldn’t want to buy something that you really cannot afford. You can look into the classified ads, local sales lots, or again try to go online to look for good deals. The latter option usually can get you hundreds of results within just a matter of minutes so it’s very convenient.

To have a better chance of getting approved for your tractor loan, it is best that you put together an impressive business plan that shows the reason why you need a tractor, how much it costs, and how profitable your upcoming business venture would be because this will determine that method of repayment that you’ll have to pay off the loan.

You can also ask dealerships if they have financing deals to take less stress off of your budget. Most of them do offer financing deals. Be sure that you bring with you your business plan and know the type and model of tractor that you’ll need. Prepare well to show them that you have the ability to pay off everything in due time. In no time, you can bet that you …

Advantages of Non-Financial Performance Measurement Over Financial Performance Measurement

Financial Performance Measurement

The motive of every business is to achieve the bottom line of maximum financial benefits. In order to comply with the same, companies have come up with financial performance measurement techniques. The very idea is to ensure that no matter what the resources do and the way they function, they would have to show profits in the profit and loss statements. It is carried out generally in three different steps. They have been mentioned as follows:

Firstly, it encompasses selecting the goals of the organization.

Secondly, and also as the most important part, it is to consolidate the measurement of information with respect to the performance.

Finally, the required changes made by the managers so as to serve as a remedy over the weak links in the financial charts of the company. So, one can say that the financial aspects of performance measurement is basically sales driven. There are certain milestones that companies set for employees. A deficiency in being able to fulfil even a certain process can be harmful for the position. So, this method of performance measurement is also known to show certain insecurity for the employees. Hence, it might not give the most authenticated results. Business Performance Management is by and large measured by the financial aspects of performance measurement. The specific techniques for the same have been mentioned as follows:

Approaches to Financial Performance Measurement

Economic Values Added

This method deals directly with the economic profit of the organization that goes directly into the balance sheets. This method in other words can be used to measure the Net Operating Profit after Taxes. There are also certain adjustments that are made in the calculation of Economic value added so that the companies can make it more synchronized with the profit entry in the profit and loss statements. This method is generally used by lower stature companies these days. The reason for the same is that at the moment, the companies can afford to look at the business functioning only from the financial perspective. There is much more to achieve.

Activity-Based Costing

The fundamental law of economics says that management would have to make the most from the least resources that are available to them. In regard to keeping with the statement, the companies generally identify the processes that are in the system and then classify them as separate activities. Followed by this, the companies assign separate costs to each of the activities. This can be done in the form of direct and indirect costs.

Reason for shift from Financial to Non-Financial aspect

In other words, we can say that this is also a form of performance measurement on the basis of finance aspects. One can assign costs to each of the activities, but then there are always, restrictions on the use of the activities that are highly expensive. Once, again, this method would not be applicable in the long-run. The reason for the same is that this method forms a hindrance to the long-term …

Application Software in Business Activities

Business is any activity undertaken by an individual or a group of person with an intention to make profits. A business engages in various activities like planning of resource, scheduling of activities, coordinating and other managerial activities. All these have to be completed in time in order to generate maximum profit in the production. Prospective entrepreneurs should adhere to these objectives.

Much of business time is put waste when it handles its tasks through the use manual system. This necessitates to the use of the software, an automated means which is efficient-oriented. Examples of the software in business application include the Decision Support System, Transaction Processing system and Management Information System. They can be largely used in resource planning where an enterprise defines way to achievement.

Collaborative resource planning software provides the business people with adequate and reliable information. Marketing information and bureaucracy of the enterprise is unambiguous. Previous methods that contributed to the failures can be fully noted. This enables the enterprise to opt to use other successful means in use elsewhere. An efficient resource planning software helps you to generate and retrieve information about resource allocation in form of detailed niche reports. As a result, time as a resource is much conserved and can be used in other productive areas.

Boundaries are clearing defined by the software. The business is expected to work towards the laid limits by the legal authority, operational, technical, economic and social feasibility. Beyond the predetermined extents, no productive operation can be encountered.

Scheduling of activities is best in practice via use of the software. The order and the way in which operation is accurately developed by use of the program, this results into application of qualitative business techniques, where there is matching of skills and jobs to done. The enterprise standards of performance are maintained. Cases of underemployment or over employment are eradicated. In turn, employees’ are encouraged to exercise creativity and innovation in right of their propelling positions, and hence works towards achievement of objectives of the business.

Planning software makes efficient forecasting of resources. Unknown future is determined prior. Situations like inflation, competition increases government provision of subsidies and technological changes can be adequately known. The fallout is to relay strategies to deal with upcoming challenging matters.

Top echelons (management) benefits significantly in software application. Executives’ unstructured decisions are accurately established. They rapidly derive information from the software. For example, decisions on where to establish a new firm or a branch, whether there is funds to finance multiple projects.

Management need to store information in reliable source (in software). This is used for swift evaluation of business performance. They can decide to reward the best performing employees based on the results retrieved from the software. This motivates employees to work zeal and confidence. Their individuals objectives are harmonized to entire business objectives.

Managers use software to control the progress of activities. Those deviating from the predetermined plans can be precisely noted. Management can also rely on software for marketing of its …

Financial Statements – Business Owner’s Friend Or Foe?

Financial Statements are a set of statistics and scores not unlike the statistics and scores that show up after a sports game. For a sports team owner or manager, the statistics, replays, opinions, and ultimately the score, are a vital part of analyzing, tweaking and improving the game. They would never ignore them. It is their way of increasing the win rate. In contrast, business owners and managers, more often than not, it seems, view their financial statements as a necessary evil to satisfy the I.R.S. They either are completely unaware of the power of these reports, or they just choose to discount them. Many business owners are happy to turn the reports over to a bookkeeper or accountant to analyze.

So, what is wrong with that? Well, for starters, when the business owner does not use the financial reports as a tool, profitability is based more on luck than strategy.

Take forecasting the profitability of the business for example. Without knowledge of past performance, how do you come up with reasonable budget numbers? When done properly, there will be at least two components, historical performance and growth projection. However, if you do not clearly understand what is going on in your company, what minor or major changes will you make? Do you have the right mix of staff? Are there product lines that are not profitable? Is your pricing correct? How about your overhead, can that be improved or is it already in line with industry standards? How exactly can you improve your score? Do you know when there is a black hole draining your profits?

Then, there is the control issue. Who is controlling your business? Do you have controls in place? From experience, I can tell you that when the owner does not know what is going on with the finances of the business, there is ample room for corruption. Would you know if someone was stealing from you? Sometimes it is small seemingly insignificant skimming and other times it is more like grand theft. It happens all the time and the business owner is often completely unaware.

The solution is for the business owner to become educated in the financial aspects of the business. This does not mean they have to become an accountant. But, it is critical that they become knowledgeable of the accounting model in place. They need to understand the language. Business finance is no more difficult to understand than most other aspects of running a business. It is probably less difficult than some aspects.

The three most important financial reports are The Balance Sheet, The Income Statement and The Cash Flow Statement. The most important Key Performance Indicators are within these three reports. It is a cake walk!

Are financial statements your friend or foe? Friend, definitely friend! Take the luck out of profitability.…