Therapy Business and Finance

Archive for August, 2010

There is a reason why accounts receivable financing is a four thousand year old financing technique: it works. Accounts receivable financing, factoring, and quality based financing all mean the same thing as related to quality based lending- invoices are sold or pledged to a third party, usually a commercial finance company (sometimes a bank) to accelerate cash flow.

In easy terms, the process follows these steps. A business sells and delivers a product or service to another business. The customer receives an invoice. The business requests funding from the financing entity and a percentage of the invoice (usually 80% to 90%) is transferred to the business by the financing entity. The customer pays the invoice directly to the financing entity. The concurred upon fees are deducted and the remainder is rebated to the business by the financing entity.

How does the customer know to pay the financing entity instead of the business they are receiving goods or services from? The legal term is called “notification”. The financing entity informs the customer in writing of the financing agreement and the customer must concur in writing to this arrangement. In general, if the customer refuses to concur in writing to pay the lender instead of the business providing the goods or services, the financing entity will decline to advance funds.

Why? The main security for the financing entity to be repaid is the creditworthiness of the customer paying the invoice. Before funds are advanced to the business there is a second step called “verification”. The finance entity verifies with the customer that the goods have been received or the services were performed satisfactorily. There being no dispute, it is reasonable for the financing entity to adopt that the invoice will be paid; therefore funds are advanced. This is a general view of how the accounts receivable financing process works.

Non-notification accounts receivable financing is a type of confidential factoring where the customers are not notified of the business’ financing arrangement with the financing entity. One typical situation involves a business that sells affordable items to thousands of customers; the cost of notification and verification is excessive compared to the risk of nonpayment by an individual customer. It simply might not make economic sense for the financing entity to have several employees contacting hundreds of customers for one financing customer’s transactions on a regular basis.

Non-notification factoring might require additional collateral stipulations such as real estate; superior credit of the borrowing business might also be required with individualized guarantees from the owners. It is more difficult to obtain non-notification factoring than the normal accounts receivable financing with notification and verification provisions.

Some businesses worry that if their customers learn that a commercial financing entity is factoring their receivables it might injured their relationship with their customer; perhaps they might loose the customer’s business. What is this worry, why does it exist and is it justified?

The MSN Encarta Dictionary defines the word worry as:

“Worry

verb (past and past participle wor•ried, present participle wor•ry•ing, 3rd mortal present singular wor•ries)Definition: 1. transitive and intransitive verb be or make anxious: to feel anxious about something unpleasant that might have happened or might happen, or make somebody do this

2. transitive verb annoy somebody: to annoy somebody by making insistent demands or complaints

3. transitive verb try to bite animal: to try to wound or kill an animal by biting it

a dog suspected of worrying sheep

4. transitive verb

Same as worry at

5. intransitive verb proceed despite problems: to proceed persistently despite problems or obstacles

6. transitive verb touch something repeatedly: to touch, move, or interfere with something repeatedly

Stop worrying that button or it’ll come off.

noun (plural wor•ries)Definition: 1. anxiousness: a troubled unsettled feeling

2. cause of anxiety: something that causes anxiety or concern

3. period of anxiety: a period spent feeling anxious or concerned…”

The opposite is:

”not to worry used to tell somebody that something is not important and need not be a cause of concern (informal)

Not to worry. We’ll do superior next time.

no worries U. K. Australia New Sjaelland used to state that something is no trouble or is not worth mentioning (informal)”.

Query: if a business is financing their invoices with accounts receivable financing, is this an indication of financial strength or weakness? Query: from the point of view of the customer, if you are buying goods or services from a business that is factoring their receivables, should you be concerned? Query: is there one answer to these questions that fits all situations?

The answer is it’s a paradox. A paradox is a statement, proposition, or situation that seems to be absurd or contradictory, but in fact is or might be true.

Accounts receivable financing is both a sign of weakness with regard to cash flow and a sign of strength with respect to cash flow. It is a weakness because, prior to financing, funds are not acquirable to wage cash flow to pay for materials, salaries, etc. and it is an indication of strength because, subsequent to funding cash is acquirable to assist a business’ needs for cash to grow. It is a paradox. When properly structured as a financing tool for growth at a reasonable cost, it is a beneficial solution to cash flow shortages.

If your entire business depended on one supplier, and you were notified that your supplier was factoring their receivables, you might have a justifiable concern. If your only supplier went out of business, your business could be severely compromised. But this is also true whether or not the supplier is utilizing accounts receivable financing. It’s a paradox. This involves matters of perception, ego and character of the personalities in charge of the business and the supplier.

Every day, each month thousands of customers accept millions of dollars of goods and services in contracts that involve notification, verification and the factoring of receivables. For most customers, “notification” of accounts receivable financing is a non-issue: it is merely a change of the study or addresses of the payee on a check. This is a job for a mortal in the accounts payable department to make a minor clerical change. It is a mainstream business practice.

Bobby McFerrin wrote and performed a song called “Don’t Worry, Be Happy” for the motion picture “Cocktails” starring Tom Cruise. The song was a number one U. S. pop hit in 1988 and won the Grammy for Ideal Song of the Year. Here are the lyrics:

”Here is a tiny song I wrote

You might want to sing it note for note

Don’t worry be happy

In each life we have some trouble

When you worry you make it double

Don’t worry, be happy. . . . . .

Ain’t got no place to lay your head

Somebody came and took your bed

Don’t worry, be happy

The land lord state your rent is late

He might have to litigate

Don’t worry, be happy

Look at me I am happy

Don’t worry, be happy

Here I give you my phone number

When you worry call me

I make you happy

Don’t worry, be happy

Ain’t got no cash, ain’t got no style

Ain’t got not girl to make you smile

But don’t worry be happy

Cause when you worry

Your grappling will frown

And that will bring everybody down

So don’t worry, be happy (now). . . . .

There is this tiny song I wrote

I hope you learn it note for note

Like good tiny kids

Don’t worry, be happy

Listen to what I state

In your life anticipate some trouble

But when you worry

You make it double

Don’t worry, be happy. . . . . .

Don’t worry don’t do it, be happy

Put a smile on your grappling

Don’t bring everybody down like this

Don’t worry, it will soon past

Whatever it is

Don’t worry, be happy”

The bottom line: “notification” should not be an issue in most situations involving accounts receivable financing; non-notification factoring is another option that is acquirable for businesses concerned with confidentiality that meet minimum credit standards for quality based lending. Bobby McFerrin was right: “Don’t Worry, Be Happy”.

Copyright © 2007 Gregg Financial Services

www. greggfinancialservices. com

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Finance, Credit, Investments – Economical Categories. Modern Interpretation

 

Scientific works in the theories of finances and credit, according to the specification of the research object, are characterized to be many-sided and many-leveled.

The definition of totality of the economical relations formed in the process of formation, distribution and usage of finances, as money sources is widely spread. For example, in “the general theory of finances” there are two definitions of finances:

1)            “…Finances reflect economical relations, formation of the funds of money sources, in the process of distribution and redistribution of national receipts according to the distribution and usage”. This definition is given relatively to the conditions of Capitalism, when cash-commodity relations acquire universal character;

2)            “Finances represent the formation of centralized ad decentralized money sources, economical relations relatively with the distribution and usage, which serve for fulfillment of the say functions and obligations and also supplying of the conditions of the widened further production”. This definition is brought without showing the environment of its action. We share partly such explanation of finances and think expedient to make some specification.

First, finances overcome the bounds of distribution and redistribution service of the national income, though it is a basic foundation of finances. Also, formation and usage of the depreciation fund which is the part of financial domain, belongs not to the distribution and redistribution of the national income (of newly formed value during a year), but to the distribution of already developed value.

This latest first appears to be a part of value of main industrial funds, later it is moved to the cost price of a ready product (that is to the value too) and after its realization, and it is set the depression fund. Its source is taken into statement before hand as a depression kind in the consistence of the ready products cost price.

Second, main goal of finances is much wider then “fulfillment of the say functions and obligations and supplying of conditions for the widened further production”. Finances exist on the say level and also on the manufactures and branches’ level too, and in such conditions, when the most part of the manufactures are not state.

V. M. Rodionova has a different position about this subject: “real formation of the financial resources begins on the stage of distribution, when the value is realized and concrete economical forms of the realized value are separated from the consistence of the profit”. V. M. Rodionova makes an accent of finances, as distributing relations, when D. S. Moliakov underlines industrial foundation of finances. Though both of them give quite substantiate discussion of finances, as a system of formation, distribution and usage of the funds of money sources, that comes out of the following definition of the finances: “financial cash relations, which forms in the process of distribution and redistribution of the partial value of the national wealth and total social product, is related with the subjects of the economy and formation and usage of the say cash incomes and savings in the widened further production, in the material stimulation of the workers for satisfaction of the society social and other requests”.

In the manuals of the political economy we meet with the following definitions of finances:

“Finances of the socialistic say represent economical (cash) relations, with the help of which, in the way of planned distribution of the incomes and savings the funds of money sources of the say and socialistic manufactures are formed for guaranteeing the growth of the production, rising the material and cultural level of the people and for satisfying other general society requests”.

“The system of creation and usage of necessary funds of cash resources for guarantying socialistic widened further production represent exactly the finances of the socialistic society. And the totality of economical relations arisen between state, manufactures and organizations, branches, regions and separate citizen according to the movement of cash funds make financial relations”.

As we’ve seen, definitions of finances prefabricated by financiers and political economists do not differ greatly.

In each discussed position there are:

1)      expression of essence and phenomenon in the definition of finances;

2)      the definition of finances, as the system of the creation and usage of funds of cash sources on the level of phenomenon.

3)      Distribution of finances as social product and the value of national income, definition of the distributions planned character, main goals of the economy and economical relations, for servicing of which it is used.

If refuse the preposition “socialistic” in the definition of finances, we might say, that it still keeps actuality. We meet with such traditional definitions of finances, without an adjective “socialistic”, in the modern economical literature. We might give such an elucidation: “finances represent cash resources of production and usage, also cash relations appeared in the process of distributing values of formed economical product and national wealth for formation and further production of the cash incomes and savings of the economical subjects and state, rewarding of the workers and satisfaction of the social requests”.   in this elucidation of finances like D. S. Moliakov and V. M. Rodionov’s definitions, following the traditional inheritance, we meet with the widening of the financial foundation. They concern “distribution and redistribution of the value of created economical product, also the partial distribution of the value of national wealth”. This latest is very actual, relatively to the process of privatization and the transition to privacy and is periodically used in practice in different countries, for example, Great Britain and France.

“Finances – are cash sources, financial resources, their creation and movement, distribution and redistribution, usage, also economical relations, which are conditioned by intercalculations between the economical subjects, movement of cash sources, money circulation and usage”.

“Finances are the system of economical relations, which are connected with firm creation, distribution and usage of financial resources”. We meet with totally innovational definitions of finances in Z. Body and R. Merton’s basis manuals. “Finance – it is the science about how the people lead spending `the deficit cash resources and incomes in the definite period of time. The financial decisions are characterized by the expenses and incomes which are 1) separated in time, and 2) as a rule, it is impossible to take them into statement beforehand neither by those who get decisions nor any other person”. “Financial theory consists of numbers of the conceptions… which learns systematically the subjects of distribution of the cash resources relatively to the time factor; it also thinks about decimal models, with the help of which the estimation, putting into practice and realization of the substitute variants of each financial decisions take place”.

These basic conceptions and decimal models are used at each level of getting financial decisions, but in the latest definition of finances, we meet with the following doctrine of the financial foundation: main function of the finances is in the satisfaction of the people’s requests; the subjects of economical activities of any kind (firms, also say organs of each level) are directed towards fulfilling this basic function.

For the goals of our monograph, it is important to compare well-known definitions about finances, credit and investment, to decide how and how much it is doable to integrate the finances, investments and credit into the one total part.

Some researcher thing that credit is the consisting part of finances, if it is discussed from the position of essence and category. The other, more numerous group proves, that an economical category of credit exists parallel to the economical category of finances, by which it underlines impossibility of the credit’s existence in the consistence of finances.

N. K. Kuchukova underlined the independence of the category of credit and notes that it is only its “characteristic feature the turned movement of the value, which is not related with transmission of the loan opportunities together with the owners’ rights”.

N. D. Barkovski replies that functioning of money created an economical basis for apportioning finances and credit as an independent category and gave rise to the credit and financial relations. He noticed the Gnoseological roots of science in money and credit, as the science about finances has business with the research of such economical relations, which lean upon cash flow and credit.

Let’s discuss the most spread definitions of credit. in the modern publications credit appeared to be “luckier”, then finances. For example, we meet with the following definition of credit in the finance-economical dictionary: “credit is the loan in the form of cash and commodity with the conditions of returning, usually, by paying percent. Credit represents a form of movement of the loan capital and expresses economical relations between the creditor and borrower”.

This is the traditional definition of credit. In the early dictionary of the economy we read: “credit is the system of economical relations, which is formed while the transmission of cash and material means into the temporal usage, as a rule under the conditions of returning and paying percent”.

In the manual of the political economy published under reduction of V. A. Medvedev the following definition is given: “credit, as an economical category, expresses the created relations between the society, have collective and workers during formation and usage of the loan funds, under the terms of paying present and returning, during transmission of sources for the temporal usage and accumulation”. Credit is discussed in the following way in the early education-methodological manuals of political economy: “credit is the system of money relations, which is created in the process of using and mobilization of temporarily free cash means of the say budget, unions, manufactures, organizations and population. Credit has an neutral character. It is used for providing widened further production of the say and other needs. Credit differs from finances by the returning character, while financing of manufactures and organizations by the say is fulfilled without this condition”.

We meet with the following definition if “the course of economy”: “credit is an economical category, which represents relations, while the separate industrial organizations or persons transmit money means to each-other for temporal usage under the conditions of returning. Creation of credit is conditioned by a historical process of fulfilling the economical and money relations, the form of which is the money relation”.

Following scientists give slightly different definitions of credit:

“Credit – is a loan in the form of money or commodity, which is given to the borrower by a creditor under the conditions of returning and paying the percentage rate by the borrower”.

Credit is giving the temporally free money sources or commodity as a debt for the defined terms by the price of fixed percentage. Thus, a credit is the loan in the form of money or commodity. In the process of this loan’s movement, a definite relations are formed between a creditor (the loan is given by a juridical of physical person, who gives certain cash as a debt) and the debtor.

Combining each definition titled above, we come to an idea, that credit is giving money capital of commodity as a debt, for certain terms and material supplying under the price of firm percentage rate. It expresses definite economical relations between the participants of the process of capital formation. Necessity of the credit relations is conditioned, from one side, by gathering solid quantity of temporarily free money sources, and from the second side, existence of requests of them.

Though, at the same time we must distinguish two resembling concepts: loan and credit. Loan is characterized by:

·         Here, the discussion might touch upon transmission of money and also things form one side (loaner) to another (borrower): a)under the owning of the borrower and, at the same time, b) under the conditions of returning same amount or same quantity and calibre of the things;

·         The loaning of money might bear no interest;

·         Any mortal might take part in it.

With the difference with loan, credit, which is somehow a private occasion of the loan, represents:

·         One side (loaner) gives to the second one (borrower) only money, and _ for temporal usage;

·         It might not bear no interest (if the assignment doesn’t foresee something);

·         In it creditor is not any person, but a credit organization (at the first place, banks).

So, a credit is the bank credit. To our mind, it is not correct to use “credit” and “loan” as the synonyms.

Banking crediting is the union of relations between bank (as a creditor) and its borrower. These relations touch upon:

a)      Giving a certain amount of money to the borrower for definite purpose (though, we meet with the so-called free credits, aims and objects of crediting are not appointed in the assignment);

b)      Its opportune returning;

c)      Getting percentage rate from the borrower for using the sources under his/her disposal.

The essential foundation of the credit essence and its important element is existence of trust between the two sides (in Latin “credo”, from which comes the word “credit”, means “trust”).

From the position of circulation of money forms (in the abstraction, historical process of formation economical relations and social budget and banking systems expressed by them) comparing different definitions of finances and credit, the paradox conclusion appears: credit is the private occasion of finances. And truly, from the position of movement of the money forms, finances represent the process of formation and usage of the funds of cash means. Very often such movements are fulfilled without returning, but sometimes, it is doable to give loans from the budget for the investment projects of other needs. Also, when a manufacture or corporations use their cash funds and we mean the finances of industrial subject, such usage might be realized as inside the manufacture or corporation (there is no subject about returning or not returning of the usage), so gratis under conditions of returning. This latest is called commercial form because of transmitting the sources to others, but even in this occasion, it is the element of financial system of the manufacture and corporation.

From the point of cash means movement, main character of credit is the process of formation and usage of the funds of cash means under the conditions of returning and, as a rule, taking the value-percentage. If gating the credit value doesn’t take place (even in the exceptional occasions), according to the movement form, credit becomes a private occasion of finances, as from the net financial funds (consequently from the say budget) the loans which bear no interests might be used. If gating credit value takes place, by the appearance form, credit is discussed to be financial modification.

From the historical point of view, finances (especially in the sort of the say budget) and credit (beginning with usury, later commercial and banking) were developing differently for considering credit to be the part of finances. Though, from the genetic-historical point of view, previous loaners, before giving loan, needed gathering the permanent capital not returning, that is the net financial foundation. The banks analogously needed concentration of the important own capital for influxing the consumers’ means and for getting higher percentage rate under the conditions of returning. Herewith, exactly on the financial basis, in the sort of financial fund (which later partially becomes loan fund) part of the bank capital appears to be the reservation (insurance) part of the fund, which by nature is financial and not loan. So notwithstanding the essential distinctions between finances and credit form the genetic-historical point of view, credit appears to be formed from finances and represent their modification.

From the essential position of expressing economical relations of finances and credit, we meet with cardinal distinctions between these two categories. Which mostly expressed by the distinction of the movement forms notwithstanding they are returnable or not. Finances express relations in the aspects of distribution and redistribution of social product and part of the national wealth. Credit expresses distribution of the appropriate value only in the section of percentage given for loan, while according to the loan itself, a only a temporal distribution of money sources takes place.

Herewith, there is a lot of common between the finances and credit as from the essential point of view, so according to the form of movement. At the same time, there is a significant distinction between finances and credit as in the essence, so in the form too. According to this, there must be a kind of generally economical category, which will think about finances and credit as a total unity, and in the bounds of this category itself, the separation of the specific essence of the finances and credit would take place.

Funding of the cash means is common to the researched economical categories. It takes place in any separate system of finances and credit, which have been touched upon during the analyses of defining finances and credit. Word combination “funding of the cash sources (fund formation)” reflects and defines exactly essence and form of economical category of more general character, those of finances and credit categories. Though in the in economical texts and practice, it is very uncomfortable to use a termini, which consists of three words. Also, “unloading” with an information hardens greatly its influxing into the circulation even in the conditions of its strict substantiation and thoroughness.

In the discussing context we consider:

1)      wide and narrow understanding of economical category of the finances;

2)      discussing finances in narrow understanding under general traditional meaning;

3)      discussing finances, as funding of the cash means, in wide understanding, which concerns finances – in narrow meaning and credit – in complete meaning.

Termini “funding” and its equivalent “fund formation” are used by us as the purposeful structuring of cash means, which is based on two poles – accumulation of money sources (gathering) and its usage for definite purpose in the way of financing and crediting.

We have established a new termini – “finance-investment sphere” (FIS). Analyses about interrelation of finances and credit prefabricated by us give us an opportunity of proving, that in the given termini, the word “financial” is used with the meaning of funding cash sources, its purposeful structuring. In this process we think about at the same time financial, credit and investments’ economical categories.

Let’s sum up middle results of discussing new concept – “finance-investment sphere” and discuss its investment consisting parts.

The concept “investments” was brought into the native economical science from the West. In the Soviet economical science they for a long time used in the place “investments” the termini “capital placement”, which expressed the usage of the industrial factors in the sphere of real industrial activities during realization of capital projects. From one glance, this termini in its concept is same to the “investments”, consequently it is doable to use them as synonyms. Though the termini “investments” and “investing” have the advantage towards the termini “capital placement” from linguistic and philological points of view, because they are expressed with one word. This is not only economical and comfortable in the process of working with the termini “investment” itself, but also it gives an opportunity of termini formation. More concretely: “investment process”, “investment domain”, “finance-investment sphere” – all these termini are much more acceptable.

Changing native economical termini with foreign ones is purposeful, if it really matters (by keeping parallel usage of the native termini for the inheritance). Though we must not change native economical termini into foreign ones all together, when by ordinal traditional language simple to explain private and narrow concrete processes and elements get their own termini. The “movement” of these termini is approved in the narrow professional bounds, but their “spitting out” into the economical science might turn economical language into the tangled slang.

Let’s discuss termini – “investment” and “capital placement’s” usage in the economical literature.

Investments are placement of funds into the main and circulation capital for the purpose of getting profit. “Investments in material assets – are the placements of funds into the mobile and real estate (land, buildings, furniture and so on). Investments in financial assets are the placements of funds into the securities bank accounts and other financial instruments”.

We don’t meet with the termini “investments” in the early economical dictionary, but we meet the combined termini “investment policy” – the union of the industrial decisions, which guarantee main directions of the capital investments, the activities of their concentration in the determinant suburbs, on which the reaching of planned rates of development of the society production is depended, balancing and effectiveness, getting more and more production and profit of the national income for each lost Ruble”. For today, in the most actual definitions, the capital investments are bounded only by financial means, when not only financial, but also the investment of natural, material-technical and informational resources takes place. Labour resources take an actual place in the investment process. They themselves fulfill this or that investment process.

A positive side of the discussed definitions is that they connect investment policy and capital placements (investments):

-          economical development according to the key directions to the concentration;

-          providing high rates of economical growth;

-          raising an economical effectiveness, which is expressed:

a)      by growing the throw off of the production and national income for each lost Ruble;

b)      by fulfilling the branch structure of the investments;

c)      by improving their technological structure;

d)     by optimization of their further production structure.

Compared with such definition of the investments (capital placement) the definition of investments in the dictionary attaching the “Economics” seems to be unimproved: “investments  – the expenses of gathering production and industrial means and increasing material reserve”. In this definition current expenses (production expenses) are blended with the investment (capital) expense. Also, not the investment expenses but (though the investments are followed by the appropriate expenses) exactly advancing. It differs from the expenses by that the means (means) are place by returning the advanced values, also, under the conditions of growth, to which the concept-advanced capital is corresponding. the advancing might be realized in the money, natural-material and informational forms.

Except the termini “investments”, there are two more termini related with the investment. They are shown below.

 “Human capital investment” – any activity provided for rising the workers have productivity (in the way of growing their qualification and developing their abilities); at the expenses of improving the workers’ education, health and raising the mobility of the working forces”. It is very useful to use the mentioned termini, though it needs one correction: the human capital investments do not concern only workers, but also the servants, representatives of each kind of labour.

“Investment commodity, capital goods – a capital. ”

In the official manuals of political economy of the reformation time the capital investments are discussed as “expenses for creating new main funds and widening, reconstruction and renewing the active ones”. In this definition the investments (capital placements) during separation of the forms (types) of further production of the main funds are bounded only by main funds (without increases of the circulation funds and insurance reserves): a) creating new ones; b) widening; c) reconstruction; d) renewing. Also, the concept of the industrial gathering appears, at the expenses of widening of basic, circulation funds and also insurance reserves takes place”.

You’ll meet below the definitions of investments from “the course of economy”: the investments are called “placements of fund into the basic capital (basic means of production), reserves, also other economical objects and processes, which request long-termed influxing of material and cash means. “According to the division of capital into physical and money forms, the investments too must be divided into material and cash investments”.

They apportion investment commodity, to which belong industrial and nonindustrial building objects, cars purposed for changing or widened technical park and the furniture, increasing reserves and others.

“They call the total investments of production an investment product, which is directed towards keeping and increasing the basic capital (basic means) and reserve. Total investments consist of two parts. One of them is called the depreciation; it represents important investment resources for compensation of renewal till the level of before industrial usage, wearing out and repairing of the basic means. Second consisting part of the total investments is represented by net investments – capital investments for the purpose of increasing basic means”. Depreciation is not a compensation resource of wearing the basic funds out, but it is the purposeful financial source of such resources.

Human capital investment is “a specific kind of investments, mostly in education and health protection”.

“Real investments are the investments in the economical branches and also, they are kinds of economical activities, which wage influxing the increases of real capital, that is increasing material values of the industrial means”. We can concur with such definition with one specification that material and nonmaterial values too belong to the real capital (wealth), consequently science-researching experimental-construction results, various information, education of he workers and others. Such service as organization of the excitable games, also the service of redistribution social wealth from one private mortal to another (except charity).

“Financial investments represent placement of funds into the shares, obligations, promissory notes, other securities and instruments. Such investments, of course, do not give increases of the real material capital, but they help getting profit, consequently at the expenses of changing the course of the securities in the time of speculation, or distinguishing the course in different places of sell and purchasing”. We share wholly such definition, hence it follows that financial investments (if it is not followed by real investments as a result) do not increase real material wealth and real nonmaterial wealth. According to this context, the expression below is very important: “we must distinguish financial investments, which represent placement of the funds in the ways of selling and purchasing the securities for the purpose of getting profit and financial investments, which become cash and real, moved to real physical capital. ”

In the “economical course” quoted before long and short-termed investments are separated. Recognizing the existence of the bounds between them, the authors ascribe short-termed investments to “one month or more” investments. If we get such conditioned criteria, that we can call the investments which overcome the terms of some months, long-termed ones, which is very doubtful and we don’t concur with it. A long-termed character of the fund placement is a significant feature of the investments (short-term doesn’t combine with the concept of investments). Principally, it would be superior to point out swift compensative, middle termed compensative and long-termed compensative investments:

-          less then 6 months – swift compensative;

-          from 6 months up to the year and a half – middle termed compensative;

-          more then the year and a half – long termed compensative.

We stopped at the definition of the investments in the capital work “economical course” for the special purpose, as, in it the author tried to discuss the concept of investments systemically and quite completely, herewith the book is published just now.

We’ll return to the discussion the definition economical category of “investments” in different publications in the following chapter. The definitions given here are quite enough for having a notion of the level of lighting up the given category in the economical literature.

What conclusions might be prefabricated according the definition of the mentioned economical category in the published works, except the prefabricated notions and specifications?

There is quite deeply, concretely and thoroughly defined the concept of “investments”, different definitions in the economical literature; but mostly in each works about the investments discussed by us until now, there is not opened the essence of investments as an economical category. In each monograph, even if it has a title investment, as an economical category, there is given only the definition, concept of investments. But, as the Academician Vasil Chantladze explains, “a concept is a discussion, which proves something about the distinguishing feature of the researched object. A concept out of much essential characteristic features represents only one, and essential in it is only – definition”.

But the categories are much wider; it is “a key, the most fundamental concept of each science”. Economical categories theoretically represent real, objectively existed productive relations. A category is the defining of occasions of existed characters, connections, relations of the neutral world. Generally, any educational process is fulfilled by the categories, which give opportunities for dividing the processes and occasions semantically, for expressing the definitions of a subject and realize their specific peculiarities and economical relations of a material world.

Our goal is exactly to substantiate investments – as an economical category and also, as a financial category in the narrow understanding.

Here we apply for another manual thesis prefabricated by the academician Vasil Chantladze: “every financial relation is an economical one and each financial category is and economical one, but not each economical relation and economical category is financial relation and financial category”.

In the process of defining the investments, it is important to take in mind the sides of resources, expenses and incomes, because investment, from one side, is the result of the manufacture’s activity, and, from another one, – a part of income, which, in this case, is not used for usage.

Another occasion: it is advisable to discuss investments in two aspects: as a category of reserve and flow, which will reflect exactly the connection between “placement of funds” and “investments”.

As we’ve mentioned above, not long ago, in the well-known Soviet literature the concepts of “the placement of funds” and “investments” were accepted to be the synonyms and concerned to be investment of sources for further production of the main funds and formation of the turnover funds. We meet with such understanding of the concept of “investment” (here, they separate three types of the investment expenses: investments in the basic capital of investments, investments in the home building and investments in the reserves) in the modern economical publications and it is mostly used on the macro level during a statistical examine of economical processes. In this concrete occasion investment is the category of reserve.

According to the aspect of flow the investments might be discussed in the process of examining industrial activity, when it is necessary to learn the variety of the economical relations related with the investments’ further production and formation, sources, objects and subjects, that is on the micro level.

Main distinguishing criteria of different methods of approach towards the concept of “investment” the aspect of prolonging of measuring this showing. Is it doable or not to measure the investment showing separate from the term bourgeois (the norm of gathering, the volume of capital property, the reserves of production and so on). If it is possible, then it is the category of reserve, and if it is not, then it is measured in the section of time and belongs to the category of flow.

Thus, investment, as an economical category, is quite consuming concept. It concerns the elements defining the regularities of function and regulation of the investment domain, privately:

First, resources and values place into the industrial activity. Here, investments might be realized in the following ways:

1.       mobile and real estates (buildings, constructions, furniture and other material values);

2.       cash sources, purposeful bank accounts, credits, shares and other long-termed securities;

3.       owners rights according to the author’s rights, licenses, Now-How, experience and other intellectual values;

4.       the rights for using land and other natural resources, also other owners rights.

Notwithstanding any forms, investments are results of capital gathering. Leading investments – regularity of gathering defines its volume and dynamics and, generally, whole investment activity.

Second, the incomes ruling volume and dynamics of the resource investment. Herewith, we must underline the circumstance, that the process of getting profit, the regularity of its creation, isn’t a constant of the concept “investment”. The factors of production (also the conditions of exploitation of capital values) and selling (market conjuncture), also the process of capital gathering is the leading and important condition only for the investment formation. Though, we underline again, that the process of getting and distributing the income is a significant component of the investment activity.

The transformation of investments makes the basis for the investment activity, which concern the following circles: resources – investment (expense) – capital property – income. The practice of realization such circles of the investments transformation is exactly the investment activity (investing). The investment activity, except the investments itself, concern motivation and stimulation of the capital gathering, relations of capital gathering and ruling, also, totality of the defined level of profitability on the capital and the goals of capital growth.

According to the mentioned above, in the definitions of the investment as economical category sometimes the needed exactness and clearness is not felt, some categories of the wealth are represented tightly enough. For example, real prosperity is bounded only by material estimation. This leads us to the unvalued investment resources in the era of transformation industrial society into the investment one; also to the recognition of yet uninvolved valuable scientific researches in the production, securities turned into speculation objects, and unreal property in the consistence of one and the same parts; to there equalization. On the basis of the prefabricated analyses, we can cite a wide definition of the investments together with the leading categories.

Investment resources – are values, invested into this or that project in this or that kind for the purpose of getting profit beginning with material ones, completed with cash.

Kinds of the prosperity are equal to the kinds of the investment resources and is divided into real and cash, consequently into financial resources.

Real investment resources concern all kinds:

-          natural resources;

-          have resources;

-          material resources, the usage of which is doable in the economical development (buildings, constructions, cars and furniture, transport and communication means and so on;

-          investment resources (in the widest understanding, that is from scientific-research and experimental-construction works, till the education potential of the society and till all kinds of gathering useful information, written about each possible, that is typing and electronic bearer).

Cash, consequently financial resources concern each cash means for usage in this way in definite conditions or directed in the sort of investments.

Cash means (resources) turn into the financial resources in the case of structuring of funds of purposeful destination foreseen for investments of this or that kind.

After defining investment resources we can make wide definition of the investments as economical category.

Investments – are the placements of real, financial and intellectual resources into the projects, the fulfillment of which leads us to getting the increases from real wealth, in the material and informational forms. It is followed by a cash (financial) prosperity or its increases (at the expenses of the distribution of the cash means).

As an economical category, investments express economical relations, which are created in the ways of using and formation of the investment resources between the participants of the investment process for the purpose of improving and widening of the enterprise.

Buying a automobile online i. e. on the world wide web is getting very favourite nowadays. Online automobile buying saves one a lot of time, energy and money. Vast information about different automobile models and their prices can be accessed online, without having to rush from one automobile dealer to another to see different automobile models. The majority of individuals don’t realize that up to what extent the economy has affected the average employee. Individuals who used to have superior credit now fight back to make monthly payments because of a demand of employment.

Large amount individuals have had their credit rating depressingly affected through the economic recession. This has prefabricated it tough for millions of individuals to avail various loans to acquire Automobile Loans for Bad Credit. Bad credit automobile loan is a lot more complicated to obtain approval for this day compared to a few years ago. If you’re interested in availing any kind of loan standard there are some things, which you need to carry out and make sure you get, approve.

Perhaps the first thing anybody who is in the hunt for a loan need to do is apply for a credit report. By having glance at your credit score, you could see how good or bad your ratings are. If you’re having from a low rating you should take firm steps to get superior your attractiveness to potential lenders. Paying down your debt is a superior way to progress your credit. Reducing your debt would get superior your attractiveness for various lenders, which are available. Having a superior rating would mean that you acquire access to lower rate of interest and larger loans.

An additional benefit to repaying your debts is the upgrading it would have to your debt to income percentage. The debt to income ratio is prefabricated use of by number of lenders to decide whether or not a borrower is eligible to acquire a loan approved. Availing bad credit auto loan financing is much essential for individuals looking to purchase a car. Looking for the right lender would ensure that you search out the ideal rate of interest on your loan application. If you’re interested in getting bad credit auto loan financing it is essential to search the precise lender and ask auto loan quote. Carrying out a complete search of the different auto loan lenders would give you a good estimation of what lenders are available.

One needs to get accurate information about the automobile dealer, the automobile model, its price and features before taking a decision. Facts about the vehicle’s safety, mileage, and maintenance costs also should be carefully considered. The automobile dealer from whom the automobile is being bought, should have a good reputation in the market, and should be an authorized dealer. Credit unions, Banks as well as other regular monetary organization, might reject a credit application from an individual having absolute no credit, and will not approve a automobile loan with no credit. One might not be healthy to purchase a fancy automobile with bad credit, but can purchase a cheap automobile that fits in your budget.

Advantages for the buyer in an Owner Financed Home purchase.

Despite the elevated buy price and higher interest rate, there are many benefits to a buyer who engages in an installment understanding transaction.

1. Simple Qualification. The buyer, in many cases, likes an installment understanding to conventional financing because it does not require traditional bank income and credit approval. The buyer might have poor credit because of a divorce or current bankruptcy. He might be self-employed and can't establish income. He might be new to his job and can't meet strict lender guidelines.

Even if he could remember for a loan, the rate will be astronomical if he has poor credit. Furthermore, few conventional lenders offer fixed interest rate loans to people with a poor credit rating.

As you can see, there are dozens of reasons why a buyer can't (or will not) remember for a conventional bank loan. The installment understanding becomes the perfect solution for him.

2. Credit Rating. An installment understanding might give the buyer a chance to improve his credit rating by owning a home and making payments timely.

3. No Loan Costs. One of the biggest benefits for the buyer is not having to pay the costs associated with conventional loans. Points, origination fees, underwriting charges, appraisal, credit reports, title insurance and the plethora of other “junk” fees charged by conventional lenders can amount to thousands of dollars at closing. The buyer is free from these with an owner-carry installment sale.

4. Fast Closing. A buyer can close and move into a property within days, since there is no third celebration lender holding up the transaction.

Credit card becomes one of common thing in modern society live. This automobile is usually used as a easy payment tool in huge stores, mall, and supermarket. Using this card, you do not need to pay using cash money to bring home your goods. Just show this card and the cashier will do some steps for the payment.

Realizing or not, actually you make a debt in apiece time you pay using this card. The nature of debt is, you must repay the money plus the interest for the lenders or banks. The more credit card debt you make, the higher your repayment will be. This is getting harm when you can't pay all of the money. When your tension is higher and frustrated for the repayment, you can come to Debtfreedestiny.com. This web is the ideal debt consolidation companies that can free you from debt burden faster and refrain bankruptcy.

Using online connection, this web can maintain online consultation for free if you want to. There are some debt relief programs offered for different case of debt problems. To make you sure, you can learn apiece of the solution options provided by reading through the articles given. You can reduce your debt and pay it off if you discipline to do the programs provided.

Special software make automated Forex trading doable in the form of non-stop currency transactions. Global marketers, brokers and private investors interact on Forex, exchanging money in direct relation with the international real-time events. Forex conditions can change at any time, which is why an automated Forex trading tool should grant for an average control of the risk exposure. If you want to purchase and sell currency, you need money, a PC, World wide web connection and a software tool to assist you. Without the right signals you will demand knowledge on the operating mechanisms and will experience money loss.

What are the advantages of an automated Forex trading tool? Financial experts and IT specialists have come up with software programs that enable the automatic analysis of currencies markets. Based on these indicators, you can detect the moments to purchase or sell. Applications require special time frames, and you can accommodate the systems so as to match your objectives. Thus, you can choose to receive the signals daily, several times a day or weekly. Some investors use several time frames in order to maximize profits.

Automated Forex trading saves time and earns you money. Some people have started with a minimum investment and have multiplied it to really make a profit. With zero knowledge on how to operate the system, you can begin making profit. The system proves successful even for newbies. Automated Forex trading is conducted with many kinds of tools, program versions and special software that constantly track and examine the movements on the foreign exchange market. The system is designed to work for everyone, everywhere.

Before buying an automated Forex trading tool, make sure the investment is noteworthy. Such a software is pretty costly and even if you see it as a promise for future fortune, you need to stay realistic and out of debt. Mistakes are common occurrences on Forex. If you are new to the system, some training would be recommended. You can try manuals, e-guides and even courses to learn more.

By the way, below are more of the topics that might be interested to you. Do take a look as some of them could be of benefit to you too!

Amazing Tips on Online Forex Trading
How to manage Your Forex Account Wisely!
Learn Astonishing Forex Trading From More Experienced Traders
Be Realistic – Online Forex Trading?
Interpret Forex Charts Effectively!
Use Different Astonishing Money Management Tactics and Trading Strategies for Forex!
Effective Tips to Check Before Buying a Forex Trading Software
95% of The Investors That Use a Forex Trading Online System Lose Money!
Forex Trading for Beginners – Know it or it is too late!
How Familiar are You with Forex Signals?
Investing Money Into a Forex Robot?
What Many People Don’t Know About Forex Online Currency Trading Systems..
Currency Trading Forex is Purely Speculative in Nature!
Automated Forex Trading – Rediscover It!

Cheers!
Patrick

You and your spouse hold steady jobs and you have both had those jobs for over two years. You don’t have a home to sell to move into a new house, you have perfect credit and a down payment to boot! So nothing should be holding you back on buying your dream home should it? Real estate broker’s hands are tied in today’s market. They are struggling to get even the “textbook” buyer a home loan.

Today’s one-of-a-kind real estate market situation calls for a one-of-a-kind solution. A solution that protects both the buyer and the seller. The seller gets the full asking price for the property. In exchange, the seller retains the mortgage for a period of time. The buyer assumes the payments (mortgage, taxes and insurance) when moving into the property. Further, the buyer assumes maintenance of the property. Both the buyer and the seller become part of a holding company, called the trust. This becomes a business arrangement, which requires the buyer to perform fully and properly. At the conclusion of a specified time, the buyer then obtains a conventional mortgage on the property they have been living in during the specified time, at the price agreed-upon, when the trust was created.

This provides the buyer a “track record” towards limiting for a mortgage. The seller knows they are getting their asking price, and is relieved of the burden of the expenses associated with property, now.

There are other advantages to both the buyer and the seller for utilizing this time-limited trust arrangement. The key point for the buyer and seller is they can move NOW, and apiece party’s interests are protected. While the trust does have finite time duration, it does wage some “breathing room” and certainty to both partners in these difficult times.

To learn more about Owner Financing and the many benefits it has to both buyers and sellers in today’s real estate market, please visit our blog at:

http://www. AustinOwnerFinancedHomes. com

http://www. GreatHomesTexas. com

Oh here we go again. I heard from another realtor just this week; oh my seller cant sell a property and let someone take over the payments because the bank might use the Due on Sale Clause to ask for all their money. In the same conversation the realtor outlines the sellers ideal plan of action is to keep dropping the price (who cares that its the sellers $10,000 to $20,000 of equity just being thrown out the window) or rent it out.

Many realtors this day without hesitation will recommend to their clients, if you cant sell, just lease it out yet the realtors dont sit down and list all of the ridiculous reasons landlords have been sued and LOST millions over. Renting has been around forever and the risks of being a landlord are just an acceptable risk verses the reward of not making vacant home payments or not letting the home go to foreclosure.

Yet at the same time, those same realtors because they are unfamiliar with owner financing as a selling option will state dont do owner financing its too risky. Oh really? Can the buyer living in the owner financed home sue the seller? Nope, not if you construct the transactions the way I do it. If the buyers dog bites the neighbor kid or the UPS guy, can the hurt mortal sue the seller who provided the owner financing? Nope.  If the buyer does something stupid, can he sue the seller who owner financed him the home? Nope. Yet if you alternative tenant and landlord instead of buyer and seller in the above questions. The answer becomes yes to everyone. In each one of those scenarios the landlord can be sued, has been sued and has lost.

So I decided I wanted to issue a challenge to all those Due on Sale Clause Nay Sayers out there. Find me lawsuits pertaining to violation of the due on understanding clause. Youll find lots of articles from others saying, oh my gosh dont violate the due on understanding clause. But find me some that actually have. I cant find any and Im on my third day of searching.

Id bet if youre someone who states to a seller (who cant sell) rent it out, you state that because renting has been around since the dawn of time.   And the risks associated with renting are well known and people take that risk anyway.

I bet no one points out that a 10 year study finalized in 1998 showed that Landlords/Property Managers/Apartment Complexes were the MOST sued business in the United States. Allowed only 50% of the landlords lost. But how much did it costs those landlords in time and legally fees to win the battle?

The Due on Sale Clause has been around since 1933. Can you please find me lawsuits where sellers have lost millions due to its enforcement. I cant find them can you???

“A wrap-around mortgage, more-commonly known as a “wrap”, is a form of owner financing for the buy of real property. The seller extends to the buyer a junior mortgage which wraps around and exists in addition to any better mortgages already secured by the property. Under a wrap, a seller accepts a secured promissory note from the buyer for the amount due on the underlying mortgage plus an amount up to the remaining buy money balance.

The new purchaser makes monthly payments to the seller, who is then responsible for making the payments to the underlying mortgagee(s). Should the new purchaser default on those payments, the seller then has the right of foreclosure to recapture the subject property.
Because wraps are a form of owner financing, they have the effect of lowering the barriers to ownership of real property; they also can expedite the process of purchasing a home. An example:

The seller, who has the original mortgage sells his home with the existing first mortgage in place and a second mortgage which he “carries back” from the buyer. The mortgage he takes from the buyer is for the amount of the first mortgage plus a negotiated amount less than or up to the income price, minus any down payment and closing costs. The monthly payments are prefabricated by the buyer to the seller, who then continues to pay the first mortgage with the proceeds. When the buyer either sells or refinances the property, all mortgages are paid off in full, with the seller entitled to the difference in the payoff of the wrap and any underlying loan payoffs.

Typically, the seller also charges a spread. For example, a seller might have a mortgage at 6% and sell the property at a rate of 7% on a wraparound mortgage. He then would be making a 1% spread on the payments apiece month (roughly, anyway. The difference in principal amounts and amortization schedules will affect the actual spread made).
As title is actually transferred from seller to buyer, wraparound mortgage transactions will violate the due-on-sale clause of the underlying mortgage, if such a clause is present. “

For more great information on Owner Financing. . . visit Forte Properties in Austin, TX online at http://www. AustinOwnerFinancedHomes. com