What is Financial Management?

Financial Management infers forecasting, forming, coordinating and controlling the financial activities, for example, acquisition and use of capitals of the company. 

It infers applying general administration standards to the financial assets of the company.

What are the Goals of Financial Management? 

The financial management is normally concerned about the acquisition, distribution, and control of the financial assets of a company.

The goals of financial management are: 

  • Make sure the usual and sufficient supply of capital to the company.
  • Make sure sufficient returns to the investors which will rely on the earning ability, market value of the share, confidence of the investors.
  • Make sure of ideal capital usage. When the capitals are secured, they ought to be used in maximum potential method at the lowest cost.
  • Make sure security over investment, it means, investing in a safe enterprise so that sufficient returns can be made.
  • Make a strategy a stable capital structure. There ought to be a stable and reasonable structure of capital with the goal that equity is kept up among debt and equity capital.

What About Financial Planning? 

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Financial Planning is the procedure of estimating the required capital and determining its competitiveness. 

It is a process of fundraising, investing and administering financial policies in the administration.

Goals of Financial Planning

Financial planning has many goals:

  • Defining capital necessities: It will depend on current and fixed assets expenditures, promotional expenditures and long-range formation. Capital necessities should be viewed in both directions: short-term and long-term necessities.
  • Defining capital structure: The capital structure is the arrangement of capital, which means, the ratio and proportion of capital required in the business. These include debt-to-equity ratio decisions – mutually short-term and long-term.
  • Formulate financial policies for cash control, loaning, borrowings, and so on.

A finance manager assures that the limited financial resources are maximally used in the best way at the lowest cost to get the highest quantifiable profits.

Functions of Finance

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The following breakdown will help to understand each function of finance.

1. Investment Decision

One of the most significant finance functions is to skillfully allot funding to long term resources. This act is also called capital budgeting. 

It is essential to allot capital in the long term resources to get ultimate revenue in the future. Beneath are the two features of investment decisions. 

  • Assessment of new investment regarding profit.
  • Comparability of cut off rate between new investment and existing investment.

Since what’s to come is suspicious so it is difficult to calculate about the expected return. The risk issue should be considered along with the uncertainty.  

This risk issue shows an important role to calculate the estimated return on a potential investment. 

Therefore, it is important to take into concentration both the expected return and the risk involved when considering an investment proposal.

Investment decision not just includes distributing money to long term resources yet additionally includes choices of utilizing funds that are acquired by selling those assets which come to be less productive and less profitable. 

It is smart to decline devalued resources which are not adding worth and use those assets in securing other valuable resources. An opportunity cost of capital should be computing while at the same time dissolving such resources. 

The right cut off rate is determined by utilizing this op opportunity cost of the necessary ratio of return.

2. Financial Decision

Financial decision is one more major purpose which a financial manager should act. It is essential to settle on savvy decisions about when, where and how business gets capital. 

Capitals can be gained in numerous ways and channels. Comprehensively the right proportion of equity and debt must be kept up. This blend of equity capital and debt is known as a company’s capital structure.

A firm is most likely to benefit once the market worth of an organization’s share expands this not exclusively is an indication of development for the firm yet as well expands shareholder’s resources. 

Then again the usage of debt influences the risk and return of a shareholder. It is progressively unsafe however it might raise the return on equity funds.

What is called a complete financial structure is one which targets amplifying shareholder’s return with minimal risk. 

In such a situation the market estimation of the firm will expand and thus an ideal capital structure would be accomplished. 

Other than equity and debt there are a few different apparatuses that are utilized in choosing a firm capital structure.

3. Dividend Decision

Acquiring benefits or a positive return is a typical point of a considerable number of organizations.

However, in the case of profitability, a financial manager performs the key function: it is decided that all profits will be distributed to the shareholder or all profits will be retained or part the profit will be distributed to the shareholder and the other half of the business should be retained.

It is the financial manager’s obligation to make an ideal dividend policy decision that maximizes the firm’s market value. Thus the ratio of paying an optimal dividend is calculated.

It is a general process to pay regular dividends on profit. One more way is to give bonus shares to existing shareholders.

4. Liquidity Decision

Maintaining a firm’s liquidity position is very important to avoid insolvency. The company’s productivity, liquidity, and risk all are related to the investment in current resources. 

It is important to invest sufficient funds in current assets to maintain a tradeoff between profitability and liquidity.

However, since current resources don’t acquire anything for business subsequently an appropriate computation must be done before investing in current resources.

Current resources ought to appropriately be valued and disposed of from time to time as they become reasonably profitable. 

Common resources must be utilized in the period of liquidity issues and periods of breakdown.

Roles of a Financial Manager

Financial activities are one of the most significant and complex workouts of a firm. So a financial manager performs all the financial activities necessary to take care of these activities.

A financial manager deals with all the significant financial functions of a company. The person in charge should keep a close eye on the funds to ensure that the funds are being used most effectively.

Its actions directly influence the firm’s profitability, growth, and well-being.

Following are the main functions of a Financial Manager:

1. Raising of Funds

To meet the commitment of the business it is imperative to have enough money and liquidity. A firm can raise assets by the method of equity and debt. 

A financial manager must choose the proportion of debt and equity. It is imperative to keep up a decent balance between equity and debt.

2. Allotment of Funds

Once the fundraising is done through various channels, the next imperative task is to assign the funds. The funds ought to be allotted in such a way, that they are ideally utilized.

The following points should be considered for the allocation of funds in the best possible way:

  • The size of the firm and its development capacity.
  • Long-term or short-term assets status.
  • The mode by which funds are collected.

The above-mentioned financial decisions affect other management activities directly and indirectly. So forming a good asset mix and proper allotment of funds is one of the most vital activities.

3. Profit Planning

Profitability is one of the main tasks of any business association. Profitable earnings are vital for any company to survive and thrive. 

The profit plan refers to the appropriate use of the profits generated by the firm.

Profit rises due to many components, for example, pricing, industrial rivalry, condition of the economy, demand and supply process, cost and output. 

A strong combination of variable and fixed factors in production leads to increased firm profitability. Fixed costs are spent using fixed factors of production such as land and machinery.

To keep up tandem it is imperative to continue to value the depreciation of fixed production costs.

An opportunity cost ought to be determined to replace the factors that have caused the product to wear and tear. If it doesn’t get noticed, these fixed costs can cause vast fluctuations in profits.

4. Understanding Capital Markets

A company’s shares are traded on the stock exchange and the securities are constantly sold and purchased. So a strong idea about the capital market is a vital task of a financial manager. 

There is a massive risk involved when securities are traded on the stock market. So a financial manager comprehends and computes the risk related to this business of shares and debentures.

It is the financial manager’s decision on how to distribute the profits. Many investors prefer not to distribute profits among shareholders as dividends to the firm, instead of investing the business themselves to boost growth. 

The financial manager’s observation directly affects the operation of the capital market.

So in summary, the financial decision is one more major purpose which a financial manager should act. 

Then again the usage of debt influences the risk and return of a shareholder. It is progressively unsafe however it might raise the return on equity funds. 

What is called a complete financial structure is one which targets amplifying shareholder’s return with minimal risk. 

Financial activities are one of the most significant and complex workouts of a firm. A financial manager deals with all the significant financial functions of a company.

Different Insurance For Your Business

Running or starting a fine business is a definite risk as there are uncertain things that could happen like if an employee gets injured or natural disaster destroys buildings or property that consume for business. 

It is important to take preemptive measures for your business and personal too. Insurance is guaranteed to provide compensation for your specific loss in return for payment for a specified premium. 

A business leader cannot eliminate the risk for his business, but he can take measures to overcome it by having insurance for it.

If you own your own trade, your business is your lifeblood and it deserves all protection and measures. 

Insurance companies provide so many policies and recommendations for having insurance for better growth of your business. 

Having a good insurance plan helps you build efficiency, the uncertainty of business losses reduction, the welfare of employees, enhancement of credit, and business remain long-lasting.

How can you ensure your company has the insurance coverage it needs to survive a significant loss? 

Make sure that your company has the right mix to secure your business. Krywolt commercial insurance brokers can help and suggest you according to your business nature.

how to pick insurance for your company


If you are the owner of a business, this general liability insurance should be on your top priority. 

It protects you from many different general causes of claims like personal injury, property damage, and bodily injury. 

General liability insurance is a combination of a business owner’s policies to ensure property and liability coverage.


If a company uses vehicles, those vehicles should be fully insured to protect businesses. 

If an accident or sudden downfall takes place and employees are using their cars for business, their insurance will cover them in the event of an accident.


This service is convenient for employees associated with any business if they got injured or become ill while performing their job. 

It includes medical expenses, death benefits, apportions of lost wages and rehabilitation. Depending on the employee background and financial state company set it.  


Insurance for your business property or coverage liability is known as property insurance. It is helpful in case of earthquake, flood and other natural disasters. 

Term and policies that we signed and pay for are to protect your business property from different uncertain environmental issues.


Credit insurance is for a business that sells goods, products or services on credit. It is always a risk for any business that customers won’t pay you money. 

Credit insurance provides you with backup from bad debt situations. It covers all parts of account receivable and payables helps with customer’s credit management or debt collection. 

It helps you identify potential losses, reduce bad debt provision and transfer risk to the insurer’s balance sheet for your business.  

Credit insurance enhances working capability, facilitates to access finance, cost-effective sheet provision, enables the company to extend credit terms, reinforce the credit management process, empower business growth and support sale to higher-margin market.


Errors and omission insurance is also known as professional liability. It will protect your business reputation, as well. 

This insurance protects your business from customers blame for services, for instance, there is a business of interior designing, but if your client received the services and then later on it wants to change the design after implementation. 

In such situations, it is good to have errors and omission insurance. It is the most important for services based on doctors’ and designers’ professions.


If you are a big and someone stole your identity and delivered their goods by your name. In business, there is always a risk facing fraud and crime like this. 

To secure your business identity is the thing everyone should take special care of it. Many businesses ignore it at their start, but this is important when you become a big brand. 

Once the damage is done this the roadmap back to gain your identity and potential customers.


Cyber insurance is important to have to protect sensitive employee, client and financial information. 

It is a type of insurance that an organization pays to secure its data from hacking, misuses and maintain good cyber-security procedures. 

This insurance covers the loss of any cyber-related issue that happens to an organization. 

Data breach and cyber-security insurance also based on the depth of agreement some insurance companies include both in one and some keep them apart. 

It includes some data breach investigation cost, lost revenue, hardware, and software damage cost and fines incurred by lost data. 


It is the refund of your product, equipment, materials or accessories lost due to transportation through truck or train. 

For instance, when a business is based on delivering products through transportation, incidents like a collision of trucks and cargo or theft in it can happen. 

Safety from these types is why your business needs this type of insurance too.


Key-person life insurance means when a company’s failure or success is depending on one person that is the key employee or face of the company. 

If the failure of that company might happen because of that one person, it’s always good to have life insurance of that person. 

And if that person dies, its company unexpectedly will receive insurance to cover the loss and damage of the company.


Tax audit insurance helps you to identify and manage sudden cost and unforeseen tax audits. 

Mostly company that provides insurance makes sure to facilitates you from these Income, Land and Payroll Tax, Self-Managed Superannuation Funds, record keeping, FBT, BAS/GST Compliance and Superannuation Guarantee and Compliance.


keep your business insured

In conclusion, the major benefit of having insurance for your business is you can keep your business secure from theft and natural disasters. 

It is also necessary to make your business credible, guard human resources, attract and retain more employees. 

It’s part of law or contract, to save you from hassles and reduce chances for getting sued, to keep your business up and to run and surely because you cannot predict the future. 

Every company needs insurance conferring to what kind of business they are involved with, and according to the location, depending on the nature of business. 

The customization need is to be handled carefully by the consulting agent for insurance and take advantage of their suggestions. 

And make your business safe and secure, distribute risk with your insurance associate, enjoy good businessman always recommends the normal and stable profit for your business, development of social factors and social cooperation and makes it convenient for you to get loans for your business. 

5 Tips on How to Improve Customer Experience

No matter what industry you’re in, if you want to succeed, you need to ensure that your customers are having the best experience possible when purchasing an item or service from you. The benefits that come with good customer experience are undeniable. 

For example, according to Lucidpress, exceptional customer service will help your business to grow, become more profitable and remain loyal to you over time. These benefits aren’t to be ignored – especially for startup businesses who are still trying to get a foot in the door. 

Once you know who your customers are, you can start to build a strategy that incorporates their needs. But how do you do this? Here are 5 tips that you can use:

customer service

1. Invest in Customer Service 

You want your customers to know that they can contact you if they have any queries regarding a product or service that they want to or have invested in. And this is where a customer service team comes in. 

Able to handle any calls or messages that your business gets through a variety of channels, you can have the peace of mind that your customers’ needs aren’t being ignored. 

This is perhaps the first step towards ensuring good customer experience and an essential investment that every new business should make.

However, you’ll need to make sure that the staff is fully trained in customer service and that they are aware of the correct way to handle different situations. 

If they provide your customers with a negative experience, it could wreak havoc on your business. So take the time to ensure that they are qualified and offer them training if they require it.

2. Frequently Improve The Quality of the Product or Service 

In order for your customers to keep purchasing from you and to guarantee that they recommend your business, you’ll want to frequently improve what you have to offer. 

The quality can have a big impact on what your customers think of your business and whether or not they will remain loyal to you.

So it’s a good idea to look at the quality and see ways in which you can improve it. You don’t want a subpar product and to fall beneath your competitors after all.

3. Address Each Customer’s Needs Quickly and Efficiently 

Whenever a roadblock comes up, it’s essential that you address it quickly and efficiently. 

You don’t want to face further frustration or lose revenue because you handled a situation poorly. So ensure that as soon as an issue arises, your team fixes it in a way that satisfies your customers.

4. Reward Loyal Customers

To retain loyalty, you’ll need to show your customers how much you appreciate them. This can be by offering them incentives such as discounts or vouchers. 

Once you’ve done this, not only will they continue to opt for your business above others, but they will spread the word about your brand in a very positive manner – which could result in new customers.

5. Create A Customer-Centric Culture 

Within your business, ensure that every team member strives for excellent customer service. 

This way, the experience that they have will be unforgettable no matter who they come in contact with. It’s not only your customer service team that should be aiming to impress customers but others in the workforce as well.

What Are The Different Types of Marketing?

Businesses to exist, distinguish, highlight, and astonish need strategies known as marketing strategies to achieve the defined goals.  

The strategies are required for small businesses, newly established businesses, succession businesses, and businesses that have a long history in the market too. 

These strategies include leadership strategies, employee management strategies, in-house handling strategies, goals achieving strategies, and, most importantly, marketing strategies. 

Marketing strategies, however, if dealt separately, are the milestones for the success and profit earning chart of the business. 

Marketing types, however, involve:

  • above the line,
  • below the line
  •  catalog
  • digital
  • ethnic
  • field
  • global
  • industrial
  • mobile
  • newsletter
  • etc. 

Other types include ”online,” real-time,” retail,” social media,” technical,” vertical,” etc. the viral and trendy type of marketing in the contemporary technological world, however, is digital marketing. 

For this purpose, there is assistance available online, especially with the online marketing gurus. The purpose of SEO companies is to present and increase online sales and offline customers.

Online Marketing Gurus (OMG) was established in 2012 with the purpose of making websites of companies simple for the consumers and profitable for their clients. 

Having a global approach, a company can easily search for local SEO companies near me to get the benefit and earn the profit. 

SEO, moreover, catapults the company’s rating due to which it appears on top of the screen when a consumer searches online.  

Depending on search results, the consumer then contacts the company on the contact number available online on the website. Both the online and walking customers can easily be entertained and assisted in their queries. 


marketing for business

To attract consumers, business companies use different marketing strategies. These strategies not only boost the sales of the company but uplift the morale of employees and the trust of the consumers as well. 

Perfect marketing, along with product price settlements and quality and risk control management are different sub-parts of the marketing strategy. 

Below are the types of marketing that are effective, in trend, and 100% result guaranteed as well. 

  1. Above the line marketing

This is the type of marketing and publicity done on TV, radio, and the internet. Adds are made of 30-60 seconds generally to attract the consumers of every age.  

Selecting medium, moreover, from any of them, is tricky and assisted by many professional agencies. The trend of watching TV and listening to the radio has generally been recorded as low as compared to using the internet since its invention. 

Therefore, the perfect platform of advertising to target the right consumers and their needs is mandatory in this line. 

2. Acquisition marketing

The acquisition is the type of marketing strategy that brings in new customers by addressing and fulfilling their needs. 

This, however, takes double the cost to attract and sell the same product to the new customer than to the old one. 

This includes targeted and uncomplicated content, emails, and search engine optimization features. 

SEO is the best example of an acquisition strategy that is followed by proper process planning and implementing steps to improve search engine rankings. This is to have more online traffic as well. 

3. Brand marketing

example of brand adverstising

Each business has an inspiring story of starting up, followed by a logo that attracts the consumers as well. 

Brands then market in the name of their logo, design, and not certainly the product. 

Brand marketing can be of any company selling mobiles, clothes, electrical appliances, home appliances, cosmetics, fashion accessories, etc. Shell, PSO, Coca-Cola, iPhone, McDonald’s, KFC, Daraz, etc. are the brands that do digital and print brand marketing. 

4. Buzz marketing

As the name identifies, it is the type of marketing that is to create a hype of the product.

A trailer, teaser for the product in a humorous, exciting, and dramatic way is revealed. The trailer, etc. can be on social media platforms or on mass media. 

This marketing is appealing, results guaranteed, but much risky as well as the anticipation of the product can be positive and negative both if found discriminatory or discouraging to others. 

The super bowl buzz marketing strategy is the perfect example of this category. 

5. Catalog marketing

An old but authenticated marketing strategy to attract consumers directly is catalog marketing. 

In this catalog, printed in a digital way or in hardcopy display the list of the products by size, by price, by year or by season, etc. catalogs are emailed to the subscribers of the company or regular clients as well. 

Many brands selling home appliances, shopping malls, and clothing brands have catalog printed for their customer’s ease. 

6. Celebrity marketing

Celebrity marketing is one of the effective and sales guaranteed ways of marketing. By celebrity endorsing a product, fan-base of a certain product is increased, enhancing its demand and supply. 

Many electronics, food, cosmetics companies, etc. use this way to market their product. While celebrities depending on the budget and the right choice of the brand can be both national and international as well. 

7. Digital marketing

SEO digital marketing

The most effective way of marketing nowadays is digital marketing. 

In this way, advertisement is done through the internet, TV, radio, smartphones, tablets, etc. to promote the product and its services. 

This is the money-saving marketing type in which customers can be entertained personally as well. 

This, if used perfectly, enhances brand loyalty as well. The other names of it can be global, social, internet marketing. 

8. Direct marketing

Direct marketing is the way to engage with consumers directly. 

This direct engagement can be through promotional and new launch information messages, calls, emails, brochures, flyers, and letters. 

This not only includes certain product details but a catalog having all product details with name and prices and regularly updated models.

9. Ethnic marketing

Ethnic marketing endorsing diversity and cultural marketing is the best way to boost the sales of the company. 

Many cosmetics and food companies use the cultural products that are native, specialized, but non-discriminatory to others as a tool for enhancing sales. 

10. Green marketing 

New but effective of them all is the green marketing strategy. 

Green marketing can be on social media, print media, digital media, or any other platform highlight the environment-friendly procedures in creating, producing, and even selling of the product. 

Many clothing brands, milk selling brands, cosmetic brands especially use this technique of marketing to attract consumers. 


Marketing is a basic and challenging task for a business to grow. 

There are many types of marketing, including digital, direct, green, ethnic types of marketing to attract more and more consumers. 

The most important point, however, is that a company should be aware of the right tools, techniques, and most likely results of the product after marketing. 

Moreover, a reliable source of marketing should be preferred and regularly updated. 

What Are Accounts Receivable Financing and its benefits

Companies that use accounts receivable financing transfer some or all of their open accounts to lenders to obtain an advance. That is done for a fee. Accounts Receivable AR Financing permits organizations to receive early amounts on their unsettled invoices.

Compared to asset-based loans, firms have more flexibility to select debtors for transactions and trades. But investor fees may be higher and credit lines lower comparatively.

Like ABL, all trade accounts receivable are recognized as bad debts pending in the company’s balance sheet.

The essential kinds of receivables finance:

Asset-Based Lending (ABL)

Asset-based loans are also called commercial loans. They are also sometimes known as traditional loans. They are an on-balance sheet method that usually comprises of a substantial fee. Organizations covering most of its debtors from this scheme has limited flexibility to deal with debtors.

Traditional Factoring

Unlike the reverse factoring, a company sells its accounts receivable to a third party through traditional factoring. However, the amount of the down payment is less than the total amount receivable. For instance, a company may get an advance payment of 80% of the invoice amount net of the processing charges.

Selective Receivables Finance (SRF)

Selective receivables finance permits firms to select which debtors to advance for prompt disbursement. Moreover, selective receivables finance permits organizations to secure their prompt payment for the full cash money of each debtor. Financing rates are usually less comparing to other alternatives. This approach may not be considered as debt-dependent on the program structure. The reason is that selective receivables finance is ignored during the creation of the balance sheet. Also, it does not influence the debt ratios or other unsettled credit lines.

Why Selective receivables finance always considered as a preferred choice?

Matching with the ABL as well as traditional factoring, SRF offers cash flow profits efficiently. It also comprises of low costs and risks. One of the main reasons is that it is not counted as debt.

When created adequately, SRF is not reported as a transaction in the financial statements. It does not have any influence on unsettled credits or future requirements for lines of credit.

Moreover, it is the organization that has the option to select which debtors are paid promptly. Firms can select the debtors from their choice. It is their preference that receivable should submit early disbursement.

As an outcome, they can more adequately monitor their capability to trade-off profits and funding expenses.

Also, selective receivables finance encourages firms for participation only when it requires. That is essential for companies that face seasonal risks in demands or during times of economic downfall.

SRF can encourage a company to incorporate various funders into a scheme. This decreases the internal risk based on a single financial association. 

How Does Selective Receivable Finance operate?

The most effective selective debt financing program is backed by a state-of-the-art software platform. It allows companies to sell prepaid invoices before the actual payment deadline.

However, in most cases, it does not require any participation from its consumers. The platform allows the real sale of claims, not factoring or loans.

The platform automatically processes all transactions between various clients and offers additional cash flow to organizations. That is mostly done in different countries and currencies. 


With the development and integration of new technologies, accounts receivable financing is becoming more common. Moreover, new technologies help link corporate bonds with accounts receivable financing platforms.

AR financing is generally easier for companies to access than other forms of capital financing. This is especially true for small businesses that easily meet loan financing standards. Similarly, big companies can also easily integrate technology solutions with AR financing.

Dating the invoice

Another element to consider in the contract is the date of purchase. Under normal circumstances, you will be billed within 180 days. Companies prefer new invoices that have a higher collection life comparable to those that have a short-life. 

Duration of the Agreement

The duration of the AR financing agreement is important for the company. Either they are months, years or more than that; AR financing can have fluctuating influence on an entity.

Make sure that you understand the duration of the agreement. It does not matter if it is a short or long-term contract; it is still vital to your business. 

Pros of Accounts Receivable Financing

In general, every opportunity to finance a company has its advantages and disadvantages. Accounts receivable financing also possess some key benefits. First, no mortgage or warranty is required.

This is an unsecured commercial financing service that does not require a guarantee in the form of ownership. It helps you retain ownership of your business.

You do not need to get rid of part of your business ownership to finance this type of capital funding.

In addition, accounts receivable financing allows companies to receive money immediately without waiting for long. Comparatively, you do have to do that in obtaining a commercial loan.

When an organization assigns the factoring firm to collect the pending amount, then there is no need to worry about recovery. When a company collects a factoring loan, it immediately receives 100% of its value. No additional charges are deducted.

With the development and integration of new technologies, accounts receivable financing is becoming more common. Moreover, new technologies help link corporate bonds with accounts receivable financing platforms.

AR financing is generally easier for companies to access than other forms of capital financing. This is especially true for small businesses that easily meet loan financing standards. Similarly, big companies can also easily integrate technology solutions with AR financing.

Even though accounts receivable financing has many advantages, it can also have negative consequences on your business.

In particular, the cost of financing the factoring firm may be higher than that of traditional methods. This is majorly for accredited companies.

Companies can lose money through the distribution of debt when selling debtors to factors.


In a loan structure, interest costs may be high or exceed the amount of late payment or amortization interest. Accounts receivable financing procedures are often referred to as factoring companies.

Factoring companies generally focus on debt financing. However, factoring firms can generally be the product of any financier. Funders can prepare themselves in different ways to structure the available contracts with different contingency reserves.

Regardless of its size, a business owner will always need a commercial loan to support its business operations on a daily basis. Companies may need quick resources to improve their businesses.

Unfortunately, credit channels have become particularly narrow, especially for small businesses. Many traditional lenders are reluctant to offer practical help. Accounts receivable financing can help companies overcome these financial challenges.


How Do Currencies Swap Work?

Do you have any idea what currency swaps are? They are a critical instrument employed by banks and multinational corporations and investors all over the world.

A currency swap is basically a contract between two parties involving some sort of interest payment and in some cases principal amounts exchange while gaining exposure to the desired currency.

To put it in simpler words, it is an exchange of currency between two parties. It’s usually a company or bank that is the typical party of swap and not necessarily an individual.

This type of swap is also commonly known as a cross-currency swap. There are a lot of similarities between currency swaps and forex swaps and they both function in a similar manner to some extent.

However, some major differences set them apart from each other.

ricky guiterrez-2

Difference between FOREX Swaps and Currency Swaps

According to the Bank for International Settlements (BIS), regardless of currency swap, in a forex swap, no exchange of interest occur throughout the contract term. However, the number of funds are exchanged when the contract is about to end.

Forex swaps are utilized by the parties to offset the risk of the exchange rate. Whereas a currency swap can be used to offset both interest rate as well as exchange rate risk.

Financial corporations usually use currency swaps (cross-currency swaps) to fund foreign currency investments.

The duration can range anywhere from 1 to 30 years. Whereas, conventional investors and exporters/importers frequently use forex swaps are that need to strengthen their financial positions.

The duration can range anywhere from one day to one year and in some cases, even longer.

Each of these swaps has distinctive features that make them appropriate for different purposes depending on the investment standpoint and the investor’s risk profile.

Breakdown of Currency Swap Contracts

Currency swaps generally depend on two streams of floating or fixed interest payments dubbed in two dissimilar currencies. The interest payments transfer ensues of rates that are already pre-determined.

Additionally, if the swapping parties decide to exchange principal amounts, these amounts must be swapped at the exact exchange rate on the maturity date.

Currency swaps are most often used to avoid potential risks regarding the ongoing currency exchange rate fluctuations or acquire the lowest possible interest rates on loans in a foreign currency.

However, companies or corporations that operate in different countries utilize currency swap.

forex charts

Types of Currency Swaps

The classification of Currency swaps based on types of streams (legs) involved in an agreement or a contract just like a conventional interest rate swap. The most conventional types of currency swaps encountered are as follows:

  • Fixed vs Fixed

In a typical fixed vs fixed currency swap, both legs and streams of currency swap contracts experience payments at a fixed interest rate.

  • Float vs Fixed

In this type of a currency swap contract, one stream of interest payment is fixed, while the other leg represents a stream of floating interest payments.

  • Float vs Float

Float vs float currency swap contract is usually referred to as a basis swap. In this type of currency swap contract, both swaps streams comprise of floating interest payments.

How Does A Currency Swap Work?

For better understanding, let’s assume there are two parties ‘A’ and ‘B’. Both parties are under a contract that allows them to exchange the principal amount of loan along with the applicable interest rate in A’s native currency for a corresponding principal amount with the interest rate applicable to it in B’s currency.

In a typical currency swap scenario, the first party A borrows a definite amount of foreign currency from party B at a pre-determined foreign exchange rate.

During this period party A also lends a corresponding amount in its native currency to party B. Throughout the duration of the contract, both parties pay back at the exchange interest rate in the currency of the principal amount that was received.

Once the contract expires at a later date, both parties can repay the principal amount to each other.

Another good example would be a cross-currency swap between an American and European company. In which the American company borrows 1 billion EUR while lending 500 million USD to the European company with a pre-determined exchange rate of 2 EUR per USD indexed New York Interbank Rate after the initiation of the contract.

During the contract period, the American company will every so often receive interest payments from its European counterpart along with a basis swap price.

It will also be paying the European company in EUR at the interbank rate. After the expiration of the contract, the American company will pay 1 billion EUR back to the European company and receive its starting 500 million USD.


How Is A Currency Swap Beneficial?

Often times, it is not feasible to get desirable loans in foreign countries. For example, an institution or a business owner might have a hard time getting foreign loans at a desirable and low-interest rate.

In your native home country, however, it’s moderately easy to get loans with desirable interest rates as compared to foreign ones. Similarly, a foreign business owner might find it difficult to get similarly favorable terms in your native country.

Other countries can say the same for you. These situations create the perfect conditions for a currency swap. By signing a currency swap contract between yourself and a foreign business owner, both the parties can, in essence, take care of the loans for each other.

Afterward, they can swap these loans so that both parties receive the benefits of a lower interest rate.

It is very common for swaps to last for a long time based on the contract agreement. During this period, the exchange rate in the market will change drastically more often times than not.

To avoid this fluctuation in exchange rates, business owners or institutions lean towards currency swaps. By agreeing on a currency swap contract, they get to know the exact amount of how much money they will be receiving as well as how much they will be paying back in the future.

There are a variety of ways to pay the interest, such as paying at a floating rate, fixed-rate or even with the combination of two where one party pays at a floating rate while others pay at a fixed one.

Final Thoughts

Currency swap contracts are basically instruments used by corporations and businesses all over the world to counter the constant exchange rate variation in the market. They are usually used for medium to long term periods.

It is always important to learn about the forex market as much as possible as more knowledge of the trading environment will provide you with opportunities to earn interest from currency swaps.


Politics And Poverty

The subject of poverty has triggered a fervent debate in the US. Over the course of several decades, there have been discussions and accusations, with policies and politicians criticized for failing to tackle poverty head-on. Despite ongoing arguments, there have been improvements in poverty rates.

The infographic below outlines milestones in the fight against poverty in the 20th and 21st centuries. In 1959, over 27% of the population lived in poverty, and in 2014, the figure had fallen to just over 21%. Since 1970, the average personal wage has also increased by almost 50% to $30,176. 

Policies have influenced poverty rates significantly over the years. In 1935, Franklin D. Roosevelt passed the Social Security Act, paving the way for an array of measures that were designed to reduce poverty and provide opportunities. Public work relief programs and aid for poor families were introduced, and over $4 billion was invested in construction projects. In 1965, President Lyndon B. Johnson passed amendments to the Social Security Act, launching Medicare and Medicaid and providing grants for schools and education centers as part of the Elementary and Secondary Education Act of 1965.

More recently, over 22 million Americans were lifted out of poverty in 2012 as a result of Social Security, with 10.3 million moving above the poverty line due to the Supplemental Nutrition and Assistance Program (SNAP). 

Poverty rates have been declining steadily across all demographics, but the most noticeable difference is the drop in over 65s. The proportion of those aged 64 or over living in poverty has fallen from over 35% to 10% since 1959. 

Infographic Designed By Norwich University

How to Save Money For Your Children’s College Funds

College is becoming more and more expensive

When you have kids, you want to make sure that you save up the money for them to get an adequate education, but it’s getting more and more expensive to pay for college. Even more than that, it’s essential to have a plan.

One way to start saving for college is to decide on an amount of money https://www.gcainc.com/the-secret-to-budgeting/ that you want to put away fro college every year. Fidelity investments propose that you multiply your child’s age by 2,000 and that by doing that, you’ll be saving an adequate amount of money.

For example, if you have a three-year-old, that would be $6,000.00. The most important thing is to contribute consistently. Remember, it’s never too early to start saving for college.

When do you start saving for college?

You can start saving for your kid’s college funds as soon as they’re born. Once you have a birth certificate and social security number for your child, you can set up a college savings fund for them. There are many different ways that you can go about starting to save.

Where fidelity gets the $2,000-rule is that there’s an ESA or educational IRA that allows a person to put $2,000 into the account for their child per year. You don’t have to pay taxes on it, which is an advantage. There’s also a 529 plan, and with that plan, you can make more contributions than that $2,000.

Note that the cap on the 529 plan depends on the state where you reside. There’s also UTMA or UGMA accounts. These differ from the 59 or ESA because they aren’t just for education. The custodian of the child controls the account, and once the child reaches 21, or for UGMA, 18, the child gains ownership of the account.

How students save for college

Applying for scholarships is an excellent way to pay for college because if you have a scholarship, you won’t have to set aside as much money or take out loans. Many students get part-time jobs while they’re in school or open a savings account before starting college, where they can set saving money.

Some also take the Summer off of college to work full-time and save up for the following year at school. It’s not always plausible for parents to save enough money for their kid’s college education. Students can participate in the saving process, as well.

One great way to save is to complete your first two years of college at a community college; you can transfer to a four-year school afterward and save a ton during your first two years. At many schools, there are resources such as financial advisors that are willing to meet with students and help them create plans surrounding finances in and after college.

Managing stress around finances and school

Being a student or the parent of a student can be incredibly stressful. If you’re a parent, you might worry about being able to save enough. You could worry about how it might affect you if you take out a Parent Plus loan.

Perhaps you’re concerned about things related to the experience of your kids going away to college such as empty nest syndrome or the safety of your student once they head out for university.

Finances are one of the largest sources of stress for individuals living in the United States, and the monetary strain of college can contribute to that. If you’re struggling with thoughts about saving for college or the college experience itself, therapy or counseling can help.

If you search for “counseling near me,” you can find mental health providers in your area that can help you work through stress and give you a place to talk about your financial problems.

Another option is online therapy, which is excellent for incoming students who are moving and won’t be able to keep seeing someone in their local area or current students who don’t have a lot of time. No matter what you decide, know that it is possible to save money for college, and to maintain a healthy state of mind.

Author: Marie Miguel Biography

Marie Miguel has been a writing and research expert for nearly a decade, covering a variety of health- related topics. Currently, she is contributing to the expansion and growth of a free online mental health resource with BetterHelp.com.

With an interest and dedication to addressing stigmas associated with mental health, she continues to specifically target subjects related to anxiety and depression.

5 Things to Look for in an Online Broker

Finding an online Forex broker can be a fairly confusing task, particularly when you don’t know exactly what you are doing. Granted, as a veteran, you may know all there is to look for – but when you are a beginner or someone that has not been around for long, it might be rather difficult for you to make the right choice.

However, with proper research, you may easily find an online broker that you can trust. You just need to ask the right questions and look for specific things. Here is what a veteran would look for in an online broker.


The first thing to look for in an online broker is, without a doubt, the security that they provide. You need to make sure that they are high level. After all, you won’t just be giving thousands of dollars to someone who just claims they are legit, right?

Checking this is not going to be difficult. There are countless regulatory agencies that you can trust, and you may even check with Trusted Broker Reviews to see exactly what you may expect of them. This will help you separate the trustworthy from the fraudulent.

Deposits and Withdrawals

A good online broker will let you deposit your funds and withdraw everything that you earn without any hassle. In all truth, they have no intention to make it difficult for you – mainly because the only reason they take your funds is to make the trading process easier.

Transaction Costs

When you are looking for an online broker, you also need to keep the transaction costs in mind. No matter what type of broker you are, you will always be subjected to them.

For each payment, you will have to pay for either a commission or a spread – and obviously, you might want to look for the one that has the most affordable fares. Granted, you may have to sacrifice low transaction sometimes in order to get a more reliable broker.

Trading Platform

When it comes to Forex trading, most of the activity that occurs is on a broker’s trading platform. This is why you have to make sure that said platform is stable and user-friendly. Look at what the broker’s platform has to offer and see whether they are worth the investment or not.

Customer Support

No broker is ever perfect – which is why you need to go for a broker that you know you can rely on, should a problem arise. You need to be able to contact them easily, even if you are just in need of some after-sales support.

They should also be able to perform efficiently when you are contacting them with a problem and want to have it solved immediately.

Finding a good broker can be a simple task, provided you know exactly where to look for him. Make sure that you do your research properly and that you choose the best broker available.

Tips To Manage Retirement Funds

It is very frequent (and if it is not so, it should be), that during our active stage we dedicate ourselves with some intensity to plan our retirement. Saving and having private savings to complement our public pension is the best way to guarantee a peaceful retirement and in line with our wishes and needs.

After retirement, another stage opens that we must analyze and plan to properly manage our resources. To get the idea of how you can save your old age financially read further.

Main changes

From the income side: These are reduced compared to the last salary of our active stage by a percentage known as the replacement rate. This rate will depend on the last active salary and the parameters that determine the public pension.

From the expense side: Normally, after retirement, the expense structure is altered. However, it does not have to be reduced compared to the active stage, because what can happen in many cases is that others replace some.

For example, it may happen that travel expenses are reduced, along with eating meals away from home or buying work clothes. However, at the same time, there are previously non-existent expenses, such as those associated with a new hobby to occupy free time.

How to manage savings?

First, it is very important to preserve savings. Once retired, it is not convenient to maintain a speculative saving profile. We do not have a broad time horizon nor do we have high incomes to recover from a bad investment decision. Therefore, it is essential to select our vehicles to channel these savings, always with a conservative approach.


At this stage, it is not usual to address large financial objectives such as the acquisition of housing or obviously the start-up of a business. However, it may be necessary to address other issues such as helping a child carry out a project or addressing health care expenses.

In this sense, the planning is important and is based on determining the objective and the term, analyzing the resources we have and establishing how we are going to address that expense while being the most reasonable. If the situation allows it, we set aside little income little by little

The increase in life expectancy causes you to live longer as a retiree. Therefore, the savings should last longer. It is important when planning the stage as retirees to estimate our income and expenses and assess whether the rate of decapitalization (if any) is reasonable. Otherwise, it should be assessed if there are superfluous expenses that we should reduce or eliminate.

Inflation is a silent enemy since it makes our money worth less and less. It is important, without contradicting the conservative approach. The objective of covering inflation is not a priority but an aggressive investment objective. It is relatively simple to achieve in environments of moderate inflation.

The best way to manage our stage as retirees is to have criteria when selecting income and expenses (ideally, the latter do not overwhelm the former). The best we can do in advance in our active stage is to gradually create private savings or a self-managed super fund to complement our public pension and enjoy a comfortable retirement.

If you have additional issues, it is always important to go to your bank or financial advisor. It is never too late to start making financial changes, and if it did not occur to you before it was important to do so, this is the time. Here are four tips so you can make the most of your money at this stage:

1. Train yourself financially

The first thing you should do is learn a bit about finance and the tools you have at hand to save a little more and why not, grow your money. Some banks have programs for the elderly, other institutions also provide courses, you just have to find out and find the right option.

2. Start investing

investment returns

Again, age should not be an impediment. Understand that through several instruments, you could grow your savings to give yourself the odd taste; it will allow you to start investing. One of the easiest instruments to handle is the Term Deposit Certificates. With them, you can deposit the amount you want and not withdraw it until the deadline (for example, one year); when the deadline is achieved, you can withdraw it and collect the winnings.

3. Take advantage of the benefits

There are many places where they offer special rates for retirees. From cinemas, shows, to pharmacies and clothing stores. What you should do is find out which benefit program suits you best and start using it and that is how you can save on your monthly expenses.

4. Don’t try to solve everyone’s problems with your money.

One thing you should remember is that now that you do not work, you should control your income. It does not mean that you can never give yourself a taste, but it also does not have to go through life offering to lend or buy things to others all the time. Now is the time to worry about yourself and start thinking about your finances, dreams, and goals.

Retirement means living without working. It is a stage of life in which, the person for a chronological issue, generally ceased work in a company or organization. He begins to enjoy (in theory) their contributions made during decades of work, or their savings deposited for a certain amount of years in a pension fund. So far, it sounds good, but the truth is that even retirees require careful management of their personal finances.

On paper, the only income a retired worker will receive will be his pension. Nevertheless, beyond that, regardless of the amount of that monthly pension and the mattress that the person has managed to accumulate to face that period, you must consider an important thing.


The retiree will need to put together a budget where you put all your sources of income and expenses. With this, you can keep an efficient control of your money and stick to an elementary rule that does not change even in the third age: always spend less than what you enter.

A person does not choose a single option to keep their money, but rather distributes it into several different risk and return alternatives.


Speaking of expenses, the final advice for retirees is to avoid excessive disbursements that subtract capital. For those daily or recurring expenses, it is best to use the money they receive as profit. The savings deposited in a financial institution must be allowed to grow and generate profitability.