Financial Jargon – Basic Finance Terminology Explained

The financial business is adding new terms and neologisms every month due to the increasingly complexity of personal finance and commerce or business relationships. However, for someone that is not familiar with all this jargon it turns very difficult to understand even the basic explanatory brochures or articles explaining common products. To clear some basic concepts, following is a list of common terms used frequently on financial flyers and other pieces of writing.

Collateral, Guarantee, Security

There are two types of loans out there: Secured and unsecured. Unsecured loans are awarded to people without other assurance of repayment than their word (signature) or personal credit. This means that if the borrower fails to repay the loan, the lender has no other means of claiming his money than taking the debtor to court on a long and tedious legal process.

Secured loans on the other side provide the lender with an additional protection. An asset is pledged as guarantee of repayment and in the event of default (lack of repayment), the lender can either repossess the asset or obtain the money owed by forcing its sell on a public auction. The asset pledged as an assurance of repayment is indistinctively referred to as: Collateral, Security or Guarantee.

Provisional Financing, Refinancing, Restructuring, Roll Over Agreement

These terms are often used with different meanings but with the intent of clarifying financial jargon, we suggest the following uses for the terms: Provisional financing refers to a short term loan or line of credit that is used for buying the borrower some time till a more convenient and definite loan can be obtained; Refinancing implies the cancellation of a previous loan with the money obtained from a new one that has different terms (usually lower monthly payments either because of a lower rate or a longer repayment program); Restructuring often implies a series of refinancing agreements that imply more than one debt and more drastically term changes than a simple extension of the repayment program; Finally, a roll over agreement implies the postponement of the loan repayment by obtaining approval for an identical loan with the same lender.

Delinquency, Default, Bad Credit

These terms are often used on articles and flyers about personal financing and non-traditional financing. People that have to face financial difficulties often damage their credit by paying late debts that are due, or missing a payment or missing several consecutive payments. All of these are recorded on the debtors’ credit report and hurt their credit stance lowering their score.

The above situations are referred to as delinquencies: paying late or missing payments. Failing to repay the loan (missing several consecutive payments) is known as default and usually leads to the debt being sold to collection agencies that will try to claim the money by different means. Finally, the consequences of default and delinquencies on your credit along with other problems like excessive debt have a negative impact on people’s credit which is known as bad credit, poor credit or low credit score.

Principal, Interest, Term

The Principal is the amount of money that is lent by the lender to the borrower and has to be repaid. The Interest is the price of the transaction: This price can be expressed as an overall amount but unless the loan is a short term loan, it is usually expressed as a rate or percentage. The term is the period of time for the loan repayment; it can refer to the overall repayment period including the repayment deadline but it can also refer to the repayment frequency whether you have to make monthly, biweekly or weekly payment.

Finance and Accounting Job Tips!

Among the best graduate jobs in the UK are graduate Finance jobs and graduate jobs in Accounting. Commerce degree holders have a large pool of employment opportunities waiting for them. There are plenty of these graduate jobs that they can go out and hunt for. Whether they have taken up Mathematics, Economics, Accounting or Statistics in their universities or colleges, they have already revved up their chances of landing a job that will secure them a more or less stable financial status and a promising career.

Despite having a large option for employment, however, job seekers should acknowledge that the hunt for the best professional or graduate job in the UK is getting tougher and tougher. The number of qualified candidates is soaring, which makes the competition even fiercer. The key is for you to look for the right job for yourself where you can use your qualifications on the job and then later on advance to the kind of career you have always dreamed of.

The UK has the best graduate finance job opportunities. Those jobs are even found in some of the largest and most established financial companies all over the world – Bank of America, Capital One, Barclays Capital, Credit Suisse, Fidelity International and Edward Jones Limited, to name some.

The job openings from these companies vary. Below are some of the best graduate jobs in Banking and Finance in the UK, and their primary responsibilities:

1- Financial Managers – provide financial advise to clients;
2- Stockbrokers and Traders – on behalf of the clients, stockbrokers and traders invest on various financial products;
3- Corporate Treasurers – they are in charge or improving and maintaining the finances of the respective companies that they are working for;
4- Investment Bankers – they are financiers for different companies, institutions and even government agencies;
5- Commodity Brokers – they buy and sell physical commodities;
6- Investment Analysts – they do the research and they gather information on investment opportunities for the Fund Managers;
7- Investment Fund Managers – getting the information they need from the Investment Analysts, they then assist their clients and give them advise on where to invest their money.

Before applying for a graduate job in the UK, you must first spend a lot of time on research, gathering as much information as you can to find out which of these career options is the best for you. Take the time to review each job’s description and responsibilities in order to make you decide whether or not you are capable and willing to take the job. Chances are, there might be one or more of the job opportunities mentioned above that attracts you. If you are still undecided, you must try to asses yourself and your qualifications, and find out which one would be the best for you. If the excitement of buying and selling physical commodities attracts you, for example, then you might be picturing yourself as a Commodity Broker. Or, if you wish to help people invest their money, an Investment Fund Manager position is probably the best for you. There are more graduate banking and finance jobs in the UK that you can apply for. All you have to do is look.

A large number of graduates of Accountancy and Actuarial find themselves taking jobs in public accounting firms. These jobs are paid internships that give the employees a great chance of gaining good experiences by working with different local agencies and companies. After gaining as much experience as they can in the field, helping out clients prepare their taxes and file their tax refunds, most of these employees make their way to advance into higher or principal positions. In order to do that, however, they must acquire a Certified Public Accountant (CPA) license. However, the best accounting graduate job is still to become your own boss. A lot of Accounting graduates and CPA’s all over the world put up their own accounting firms after years of public service.

Do not allow yourself to get disheartened or confused when job hunting. Get your spirits up and take the whole race as a great learning experience. The options are endless for you and your fellow Commerce degree holders. The key to having the very best graduate job in the UK is looking for something that you imagine yourself doing. Ultimately, the decision is yours

Finance Accounting Outsourcing – A Boon For Trade and Commerce

Upholding financial statistics in an appropriate and precise manner is enormously necessary for the progress of economy and the company’s reputation. This basic prerequisite has been believed to be a tedious affair as it requires a lot of hard work and time. Therefore, companies are now engaging finance accounting firms to sort out the financial problems.

With the assistance of an outsourcing firm a business house can gain an edge above others. Outsourcing offers various benefits and renders the customers with lucrative and expert means to handle the finances. Finance accounting outsourcing has always proved to be a good decision. With this the energies of the companies can be directed to other important sectors comprising in marketing, and promotion among the various others. Outsourcing is a means of achieving a manpower which is immensely productive at a diminished price which makes it a reasonably profitable. It also enables in saving ample office area as the facilities required for performing these tasks is not essentially to be housed inside the office. Outsourcing ensures enhancement of the business and also saves time and money. These reasons are impressive enough for the owners of the companies to hire outsourcing firms as the only aim of any business is to make profits.

Finance accounting outsourcing keeps in consideration that there should not be any discrepancies that can impede the business relationships, vital monetary decisions and the concluding statements of the company. A single mistake in calculation or an inaccurate transaction entry can be evaded easily by taking the essential assistance from an outsourcing firm. These firms are fully equipped with numerous skilled and competent accountants, who know about the minutest detail pertaining to this field. They are well versed with the fact that keeping up accounts is a vital task for each and every business. Besides this the owners of the companies can take suggestion on matters related to effectiveness of cost, management of the capital and other related issues from these professionals whenever they face troubles. This process of attaining the facilities of outsourcing is carried out with the backing of online services. This also renders an opportunity to the client to communicate easily with the experts.

Companies who have taken the help of finance accounting outsourcing have made an exceedingly wise decision as this will also assist in enhancing the overall competence of the company. Massive workload can hinder the development of your production so it becomes imperative to correlate yourself with a consistent service provider who can handle the monetary tasks with great efficiency. For laying your hands on this golden opportunity all you are required to do is browse through the Internet and garner all the indispensable information about the firms offering these services. Apart from this you can also check with your social group who are already cashing in profit with the support of outsourcing firms. An owner of the company will no longer have to worry about disorganized finance department as the finance accounting outsourcing experts have the skills and experience to handle it in an intelligent manner.

Online Market Places – Charting the Future of Trade and Commerce

The World Wide Web has revolutionized the concepts of trade and finance and has literally redefined the way people purchase and sell goods.

One of the landmark evolutions of the recent time has been that of Online Marketplaces. Online marketplaces, or e-markets as they are popularly called aim to create efficient platforms to bring together buyers and sellers at a massive scale.

Internet takes a business to a global scale and presents it before and international audience. Experts predict that more than 85% of the computer literate population of the world use the Internet to purchase goods. Hence, it offers tremendous business opportunities for buyers and sellers both.

Online market places are excellent venues to find potential service providers and sales leads and further profitable business endeavors. Let us examine some special features and highlights that makes online marketplaces so appealing to the business population.

Buying at the Best Prices
Who doesn’t like a good bargain? And especially when you can pick the best out of the lot. Online marketplaces give service providers and businesses an opportunity to strike a great deal with one another. This is because online marketplaces have a huge database of service providers which one can browse through and select the one that offers the most cost effective rates for the particular services.

Online marketplaces are highly popular in these times of recession and credit crunch. This is because people are trying to reduce costs and seek the cheapest rates possible for quality services. Thus they are embracing the services of the Internet.

Global Pool of Service Providers
Internet is able to extract value from otherwise unreachable areas. Web based marketplaces act as a global platform where buyers and sellers from across the world can come together and further profitable business endeavors. This helps in creating a online free market environment where businesses and service providers can interact profitably with one another. Because of the visibility of the deal, both the parties of the deal have power. Buyers who fail to make payments or service providers who fail to deliver can get negative rankings on the website and can even be removed from the site altogether.

Variety of Choices
Everyone like to be in control of things. Online marketplaces offer buyers the luxury of browsing through a variety of potential solutions for their requirements. Buyers can check out several options before making a choice. This gives them a sense of power and control and they are more convinced about the decision they make. Also, this make them spend money more readily.

Security Policies
Because there is huge amounts of cash involved in online marketplaces, these portals have strict security guidelines and privacy policies. All the information that is exchanged and all the credit details are secured and processed safely. This minimizes the risk of fraudulent transactions and deals and ensures safe processing.

Extensive Array of Products and Services
Online marketplaces generally cater to a broad range of industries. There are certain portals that specifically cater to certain segments but others generally include a variety of products and services. All one needs to do is post the requirements and place a Request for Bids and there will be vendors who offer the same and would submit Bids.

Online marketplaces create value addition for a business as it facilitates information sharing about products/services and their pricing. It matches buyers with corresponding sellers and improves the speed and accuracy of transactions.

Disclaimer: Sabra Easterday is the owner and founder of MatchB2B. Sabra is also a lawyer with a special interest in business issues and e-marketplaces. Notwithstanding that Sabra Easterday is a lawyer, nothing in this article and no services of MatchB2B or its website are legal services and no attorney-client relationship exists between any reader of this article or user, customer or potential customer of MatchB2B, and MatchB2B, its website or Sabra Easterday.

International Finance for Trade and Commerce

International trade involves international financial transactions because different countries have different units of money. When your nation wish to buy goods from other nations, they usually must pay for the goods in the currency of the exporting country. In other words, Japan will probably demand yen, France will demand francs, West Germany will want deutsche marks, Great Britain will insist on pounds, and Mexico will demand pesos in payment for the goods they sell. Foreign currencies are called foreign exchange, and they are bought and sold in foreign exchange markets, which are markets that deal in the buying and selling of foreign currencies. Some banks specialize in financing international trade, and they are the major participants in foreign exchange markets. If an American importer wishes to buy automobiles from a Japanese manufacturer, the importer will go to a bank that specializes in financing international trade, and will exchange dollars for yen.

Exchange Rates: The foreign exchange rate is the price of one currency in terms of another. For example, the British pound might be worth 76 times more in Indian money. Historically, there have been two major types of foreign exchange rates: fixed exchange rates and flexible exchange rates.

Under the fixed-exchange-rate system, the price of one currency was fixed in terms of other currencies so that the rate did not change. The advantage of such a system is that importers and exporters know exactly how much foreign currency they can purchase with a given quantity of their own nation’s currency today, next week, or six months from now. Foreign exchange markets operated under a fixed-exchange-rate system from 1944 until the year early 1970. Prior to 1971, the value of the United States dollar was tied to gold at the rate of $1 equals 1/35 of an ounce of gold. In other words, one ounce of gold was equal to $35 in American money. Since the value of other currencies was also fixed in relation to gold, the dollar price of each foreign currency remained constant.

The disadvantage of the fixed-rate system was that it did not make allowances for changing economic conditions in various countries. For example, if the developed country like United States of America was experiencing high inflation at a time when Japan or China was experiencing little or no inflation, American-made goods would become increasingly expensive in relation to goods made in Japan or in China. As a result, Japan or China would purchase fewer American-made goods while Americans would tend to buy more goods made in Japan or in China. This in turn would lead to a serious imbalance in imports and exports between the two countries.

With a flexible-exchange-rate system, the type of system under which world trade operates today, the forces of supply and demand determine the value of a country’s currency in terms of the value of other currencies. Therefore, under this system, the price of a country’s currency can fluctuate up and down daily in response to market conditions.

The supply and demand for foreign exchange usually are largely determined by the supply and demand for goods and services. For example, if United States of America importers wish to import increased quantities of goods from a country, suppose from Japan, there will be a strong demand for the Japanese yen. This could force the price of the yen up substantially unless Japan was at the same time providing a large supply of yen in order to increase their imports from the United States of America. The demand for goods and services is not the only factor that determines the demand for a nation’s currency. Political or economic instability in other countries may cause people in those countries to exchange their currency for a more stable currency, such as the dollar of United States of America. In addition, high interest rates in a particular country may cause foreign investors to convert their currencies into the currency of that nation. This happened in the United States of America during the early 1980s. Interest rates became so high in this country that many foreign investors were prompted to exchange their currency for American dollars for investment purposes. This increased demand for dollars caused the value of the dollar to increase in terms of other currencies. The “strong” dollar made American-made products more expensive in world markets. As a result, Americans bought more foreign-made products, and foreigners bought fewer American-made products.

Balance of Trade: The amount of goods and services that a nation sells to other nations, and the amount it buys from other nations, are not always equal. The difference between the dollar value of exports and the dollar value of imports is called the balance of trade. If the United States exports more goods to foreign nations than it imports from foreign nations, it has a trade surplus. However, if the United States of America imports more than it exports, it has a trade deficit.

In 1971, the United States recorded its first trade deficit of the century. In all the years since then, except in 1975 when there was a modest surplus, the United States has imported more than it has exported, and the trade deficits of recent years have been so large that they have caused major concern among some economists.

However, not all economists agree on how serious a problem the trade deficits are, or even on their causes. Some believe that, in the long run, market adjustments will correct the problem. Others are not so sure. Some economists believe that the high trade deficits are linked to the large deficits in the federal government’s budget in the past two decades. They argue that heavy government borrowing to finance high budget deficits helps to keep interest rates high and encourages foreign investors to exchange their foreign currencies for dollars. However, so many things influence the trade deficits that it is not always clear which factors are playing the biggest role in the deficit at any specific time. The one thing that is clear is that the United States must increase its competitiveness in world markets. Like it or not, the world is moving rapidly toward a global economy. The volume of international trade is bound to grow rapidly in the decades ahead. Competition is still the name of the game, but the number of players has increased.

Balance of Payments: Economic relations between nations involve much more than just imports and exports. There are many different kinds of transactions that involve the exchange of money between nations. For example, American businesses invest funds in foreign nations, and American banks make foreign loans. In addition, the United States government spends money for foreign aid and to support military personnel stationed abroad. Americans spend money for goods and services when they travel abroad, and American citizens often send money to relatives living in other nations. On the other hand, money flows into the United States from other countries when foreign citizens travel in the United States, when foreign businesses make investments in the United States, when Americans receive dividends on foreign investments, and so forth.

Each nation keeps an accounting record of all its monetary transactions with other countries. This accounting record is called the balance of payments. A nation’s balance of payments account includes all payments that it makes to other nations, and all payments it receives from other nations during a year. A country’s balance of payments includes imports and exports, flows of investment funds into and out of the country, loans between nations, and all other transactions that involve payments between countries. The balance of payments is a broader measure of the financial transactions between countries than the balance of trade