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A Beginners Guide To APR And Interest Rates On Loans

While most people know that the interest rate on a loan indicates the price of borrowing money many people remain in the dark when it comes to the ins and outs of interest rates. When terms like AER and APR are brought into play it isn’t surprising that many people start to get confused. This beginners guide from  TopLoanCompanies.com helps you to find out a;; the basics about interest rates so you can be more informed the next time you apply for a loan.

Interest Rates On Borrowing

If you’re borrowing a sum of money at an interest rate of 5% pa that means that you will need to pay an extra 5% of the total amount that you borrowed on top of the original sum you borrowed. If we take a simple example we can see how this works:

If you borrow £1000 and the interest rate is 10% per year and you repay it after 12 months you will pay back roughly £1100. If you pay it back in 6 months you will pay back roughly £1050.

This looks quite simple, however note the word “roughly”. That’s because compound interest comes into play. However, if you’re looking for a quick frame of reference for how much you need to pay back overall across the life of your loan, this is the easiest way to work it out.

Compound Interest

When you borrow money you don’t just pay interest on the amount you borrowed in the first place, you also pay interest on interest that has already accrued. This is where it starts to get complicated. This isn’t usually a huge problem if you’re only borrowing over a short term however if you’re borrowing for a longer period the faster your debt will mount up.

Let’s look at an example:

If you borrow £1000 at an interest rate of 15% over a 20 year period and make no repayments the amount you owe will end up being £16,400 due to compound interest (rather than just £4000 without it).

Working out compound interest roughly will help you to determine the overall value of your repayments and you can do this by dividing 72 by your loan’s annual rate of interest and the answer will tell you how long it will take for your debt to double.

APR – And Explanation

One of the commonly seen terms when arranging a loan is APR – or Annual Percentage Rate. This rate is calculated to include not only the cost of borrowing but also any fees which have been included. The APR is used to compare the various loan offers on the market and all lenders must let borrowers know their APR rates before any agreement is signed since they vary between providers. Although it can be confusing, it’s gives a more useful comparison tool since all lenders charge different fees and this standardises the system allowing you to see at a glance the value you’re getting.

Unfortuately, in practice, since rates change regularly, the APR often makes no sense. An APR is worked out by taking the entire cost of interest over the period of the loan plus any fees charged. However, even if the loan has an APR of 6.6%, for example, you might never get charged that rate if you are on a fixed rate deal or variable deal. The APR quoted will only represent the average loan cost which may not be very useful in the long term.

To confuse matters further, the APR which is advertised by the provider may not be the APR you receive. Only around half of successful loan applicants receive that advertised rate with others being offered a higher one depending on their credit score and financial circumstances.

The Flat Interest Rate Loan

Although APRs might be confusing, there is a worse form of measurement out there often used by car dealers to try to make their car financing offers sound more affordable. While the flat interest loan is less commonly seen these days, it can still be found so keep an eye out for it.

When shopping around for a car loan or personal loan check to make sure the letters APR follow the quote. APR means that the interest rate will be charged on outstanding debts so, for example, if you borrow a total of £5000 over a five year period with an interest rate of 6% APR, and by the final year of your loan you only have £1000 outstanding, the interest you pay will only be on that outstanding amount i.e. £1000 which amounts to £800 in total at a 6% APR.

In the case of flat rate interest, the interest will be charged on the entire original amount of money that you borrowed regardless of how much you’ve repaid. That means that even in the very last year of repayments when you only have £1000 left outstanding you will still be paying interest on all £5000 you originally borrowed. At a flat rate of 6%, you’ll be being a total of £1500 interest rather than £800 – almost double the amount.

While an interest rate of 6% might sound cheap, at a flat rate of interest it actually roughly equates to an APR of 12% – significantly higher. That means checking credit agreements thoroughly before signing on the dotted line is essential to make sure you understand the terms on which you’re borrowing. As it is illegal to omit the APR from a consumer credit agreement if you don’t see those three letters on your paperwork it means you’re paying interest at a flat rate and you might want to think again.


Although interest rates can be confusing, a lot of the problems that people encounter when trying to work out the amount that they will need to repay on their borrowing comes from the jargon used. This basic beginners guide should help your to navigate through the difficulties of arranging a loan so you get good value for money.


What should you sacrifice to buy a new home?

There are very few things in life that come with no price tag – and often, how we view that price tag relates to what we have to sacrifice to get it.

That new phone, bag, gadget or piece of furniture might be quite costly – but with a bit of cutting back here and there, you might be able to justify the spend.

But what about a house?

With average house prices somewhere around £250,000 – it’s likely that you’ll need to do more than give up your Friday night takeaway to work a mortgage payment into your monthly outgoings… but the question is, what should and shouldn’t you give up in an effort to get the home you really want?

We’ll take you through some life expenses that fall into each category…

  • The ideal house

We’re starting with a sacrifice you won’t even notice at this stage – and it comes in the form of not buying the biggest and best house you can afford.

It’s easy to think about moving house in terms of finding a place that’s absolutely perfect – but does it really have to be? Would some sacrifices on space or location free you up to keep life comfortable financially?

There are always options for moving again in the future – or even looking at The Loans Department’s remortgage with bad credit options to make some home improvements when money allows. Just because a mortgage amount is available to you now, it doesn’t mean to have to maximise it and reduce your spending elsewhere

  • Lifestyle

If you’re a fan of nights out, eating out or luxury pass-times then this might be the item on the list you were dreading seeing.

People’s lifestyle often has to take a hit when they buy a new home – but that doesn’t mean that you have to give things up completely. Having a home offers a huge amount of security and good feeling on its own – and that’s sometimes enough to balance out the feeling that you might be missing out on doing quite as much of the things you love.

Enjoy nights out? Get a couple of bottles or multi-packs and invite people around to your new place instead. Are you a fan of good eating? Grab a great cookbook or arrange a ‘Come Dine with Me’ style of social eating with friends.

There are often great alternatives to expensive hobbies that free up huge amounts of cash for big life commitments.

  • Holidays

Holidays can represent £1,000s spent each year – and while we’re not going to suggest you’ll have as much fun camping in your new back garden as you would next to the pool at a luxury resort – it’s well worth asking yourself if you could cut back while still getting an important rest from work.

For many people, a holiday represents a decompression from the stresses of work – but could that be done with a week or two getting little jobs done around your new house? Or would getting away in the UK still represent some relaxation without big costs?

Again, it’s your choice – but if missing out on a suntan each year means you’ve got an ideal home every day, it’s might be a sacrifice worth making.

  • Savings

Now, what to do with your savings is likely to be a tough question – as they will have almost certainly already taken a hit if you’ve had to find a deposit for your new home.

It can be easy to think that your savings have done their job when you buy a house – but in a reality, emergency cash is needed for a lot more than just big purchases. In fact, around 75% of people will be met with an unexpected large bill at some stage during every year – whether that’s a home emergency like a plumbing or electrical repair, a car breakdown, a large utility bill – or similar.

The message is this:

Don’t give up on saving just because you’re buying a house. Keep some of your savings for the essentials that will crop up – and when you’ve moved into your new place, make sure you’ve got enough income left over to start that saving pot again – buying a house is great, but it can add to the list of unexpected costs you might happen upon each year…

  • Car

There’s a chance you’ll look at this and think there’s no way you could live without your car – and that’s fine, for many of us, having independent means of transport is the key to keeping a job, getting kids to school – and so on.

However, while many people are used to the convenience of having a car, life wouldn’t be impossible without one – and cutting a car out of the equation can free up £1,000s annually when you consider fuel, insurances, financing, taxing, services and other costs.

What would life look like without a car? How much would you save? And would the reduced convenience be worth it for your ideal home?

  • Spare time

Have you ever considered how much your spare time could be worth? Or who’d want to buy it?!

For many people, having a ‘side hustle’ is a very real way of adding some additional income to your monthly payslip – and the great thing is, you often only need time to get something moving.

Could you become an eBay or Amazon seller? Could you blog or vlog? Could you buy and sell items you know about? Could you sell your professional services on a freelance basis? There are ways of monetising virtually anything you can do – so why not forget about sacrificing things that cost you money – and instead find ways to earn more of it.

  • The spare room

How would you feel about waving goodbye to the spare room and having a lodger?

Okay, so it might not be the picture you had in mind when you thought about your next home – but with house prices increasing it’s becoming a more and more popular route for people to either buy the home they want – or for people who can’t afford their own home to find somewhere affordable to live.

By sacrificing your spare room to a lodger you stand the chance of making a large chunk of money that’ll help toward an overall mortgage payment. You’ll need to let your lender know what you’re planning as it will represent some of your income – but you may even be able to find something who’ll commit in advance, especially if you’re keen on renting to someone you know

Having an additional person around the house can offer more than just extra funds too – there’s always someone on hand to help with jobs and keep the place running smoothly…


Top 10 Forex Trading Tips for Beginners

Did you know that mankind began trading as early as 3000 BC? Considering that our ancestors have been engaging in this practice since early millennia, we should have been experts in all forms of trade-including Forex. However, the world has evolved radically since the ancient times and is changing at an accelerating rate every single day. With the advent of information technology and communication, access to real time data is merely a click away.

As with any novel trading platform such as elliott wave theory , you may be wondering where to start from. After all, the realm of Forex is an intricate place that you can conquer with the right knowledge and tools. The most vital tip we can give you is to pace your learning and to find a mentor who can guide you. There is a plethora of material available on this subject matter and it may confuse you. We hope the following top ten Forex tips will not only build yet strengthen your base.

  1. Have the Right Mindset

Becoming a Forex trader means owning the right frame of mind. A large degree of patience is required as this is not a short cut and will not make you rich overnight. With time and experience, you will commence earning profit margins that will make you pocket-happy. It is crucial that you remain open to unanticipated market performance, economic events, and much more.

  1. Learn the Forex Fundamentals

It is imperative to educate yourself with the methodologies that run the Forex marketplace. How can you do this effectively? By taking a comprehensive, certified Forex course that will prepare you for all aspects. It will familiarize you with the jargon and language utilized. Also, you will comprehend its mechanics such as leverage, spreads, chart, correlations, external occurrences etc. The importance of educating yourself before entering the Forex avenue cannot be stressed enough. Surely, you do not wish to rake in significant losses before investing in a Forex course.   

  1. Find Your Trading Strategy

In order to classify the trading strategy that may work for you-you need to know your Forex related goals.  What do you wish to achieve here? Have a conversation with yourself (perhaps include your family) to outline your objectives and take into account your lifestyle. Will you be a full-time trader? Is this a secondary revenue stream that you are tapping into? How much time can you spare to monitor the markets? What is the level of risk that you are willing to undertake for each individual trade?

Once you have the answers to your questions, then you can move on to studying variant trading strategies and select one based on your requirements. One tip is to choose a trading technique that functions on the basis of price actions. This will assist you in creating a buffer for managing potential risks and losses. You will need to dive deep into its inner workings and surface with a powerful grasp of its subject matter. Of course, you have to test the waters before committing to a single one. Don’t alternate between your trading strategies in case you start experiencing a few losses-it is all part of the trading cycle and will come full circle in your favour.

  1. Have Realistic Expectations

Who doesn’t want to retire at the age of 40, buy a yacht and sail around the world? We all do! It is good to dream big, but let’s attach a time frame to it as well. As shared earlier, Forex trading is not a “get rich quick” scheme. It’s a long, arduous journey where you will encounter high volumes of pressure. Remind yourself that time is a strategic variable to be considered and patience is key when dealing in this arena.

  1. Maintain a Trading Journal

To become a Forex guru, why not keep a journal? It will serve as a snapshot of all your trading transactions and provide a record. You can go an extra mile by adding notes whilst allocating funds to a particular trade. This will not only help you ameliorate your future deals but will allow you to track the thought process involved. Your chances of prosperity will rise considerably as you will be able to review your journal if any errors are made.

  1. Stay Positive

If a trade starts going against your favour, do not overstress or lose hope. Trading is a complicated ballgame that may require a bit of faith from time to time. It is a standard occurrence in the world of Forex and can swing in any direction. We advise you to let the market do its job and to not over-think the trade in question. Go have a cup of coffee, a round at the gym or dinner with a friend. Wake up fresh and rejuvenated in the morning, then take a look at the market and check the status.

  1. Slow and Steady

When you begin dipping your toes in the Forex trading pool, do so slowly. Conduct a few transactions and observe the reward/risk. This way you can test out the trading strategy you have chosen and discover what your comfort zone is along the way. Holding on to your capital will also increase your overall success rate as you can diversify (if need be).

  1. Concentrate on the Daily Chart

Another open secret is to focus your energies on the daily chart. When you have mastered the art of interpreting it, you will be able to make timely, informed decisions as you will understand the relevant price movements.

  1. Allow Higher Time Frames

When trading with higher time frames, you can identify the most optimal setups. A better knowledge of price movements can be gained as well and a lucrative trade region can be identified. It is recommended to trade on the 240 minute, 480 minute and daily chart time frames.

  1. Select the Right Broker

As a beginner, you will set up a virtual account with a broker. Scour the marketplace and do your research to choose the software that is renowned for its reliability. Make sure it is registered with an associated regulatory body and presents a strong security framework. It must also provide key, up-to-date market knowledge and is customer-oriented. You will feel more confident in their service if there is a direct point of contact.

It’s Never Too Late – Getting Life Insurance Later On In Life

Finding the best life insurance for over 75-year-old people might seem like a pointless endeavour at first. While it’s true that getting life insurance while you’re younger is usually going to be the best option it doesn’t mean that older people can’t get insurance.

That’s a common misconception and while it might sound cliché it’s true that it’s never too late to get life insurance. And although there is in general fewer options available for people aged 75 and over competition between insurers is still rife so you could get a good price on your policy if you shop around.

Don’t be afraid to get quotes from a lot of different insurance provides and remember don’t fall into the trap of overbuying. Anyone regardless of age can fall into this trap so make sure you know exactly what you want cover for and don’t get caught up getting insurance for things you don’t need.

So, while it’s true that there are more policy options now for people aged 75 and over that does mean it can’t be tricky finding out what insurance policy is best for you. You won’t have all the options a younger person would have but there are still quite a few different options available to you.

To help you find out what the best insurance plan/ policy is for you let’s take a look at the main options you have in more detail. Remember this is just a general look at the policy types every insurer will have their own premium prices, but this will give you a better idea of what type of life insurance would be best for you.


Whole and Term Life Insurance

Life insurance comes in two main variants, whole life insurance, and term life insurance, these policies have very different criteria to how they work. Let’s take a closer look at how they work and compare their differences.


Whole Life Insurance

As the name probably makes clear this type of insurance will cover you for your whole life and while this is generally the type of life insurance you should get while you’re younger it is still a viable option for older people as well. So, how does this type of life insurance work?

Whole life insurance is designed to accumulate in value which is why it’s ideal for you to get it while you’re younger. So, because you’re getting it when you’re older it will usually have higher premiums, but on the positive side you won’t need to renew the policy (in the majority of cases) and it offers larger coverage.

Whole life insurance is also seen as the safer option for many people because it covers you for your whole life as long as you pay your premiums. This means that you aren’t boxed into a time-frame like with term life insurance and if you are willing to pay extra you can sometimes get this insurance without a medical examination.


Term Life Insurance

The main alternative to whole life insurance is term life insurance this is generally seen as the more attractive option at first because its premiums are much cheaper than whole life insurances. However, while term life insurance is the cheaper option it does have some downsides that you need to consider.

Term life insurance can only be bought for a specific length of time like say 5, 10 or 15 years. And it will only provide death benefits if you die while the policy is still in effect now the policy can be renewed and extended but this will cost extra.

And while term life insurance is cheaper it does become more expensive the older you are so that’s why scouting different insurers for quotes is so important. If you do want term life insurance, then you will almost always need to submit to a medical examination as well. 


Universal Life Insurance

Universal life insurance may not be one of the two main types of life insurance, but it is a popular alternative and one that I believe is worth mentioning. This type of insurance can be thought of as a hybrid of whole life and term insurance. It offers the lower premiums of the latter and the whole life coverage of the former.

With universal life insurance, you get death benefits as standard but can also build-up more cash value over time. It’s slightly more complex and getting it once you’re older can be difficult but it is still available and worth considering. The more flexible design of this type of life insurance makes it very appealing especially to people aged 75 and over. 


Which Is Best?

There’s no easy answer to that question it all really depends on what you’re looking for and your own individual circumstances. In general term life insurance is easier to get if you’re elderly but that doesn’t mean getting whole life insurance is impossible you might just have to shop around a bit more.

Whole life insurance is more expensive in the short-term but offers more money. Whereas term life insurance is usually cheaper in the short-term but offers less in the long-term and some people find the “ticking clock” nature of it a little morbid.

However, if you do try term life insurance many insurers do offer the option to convert it to a whole life policy instead, they may not do this straight away though, so you may need to wait a while. And while these are the main two types of policy don’t worry if neither seems like great options to you because there are other variants available and policies can be altered.

If you’re still unsure what type of insurance is best for you then talk with an advisor or insurance agent because they’ll be able to help you break down what you need and explain what you can afford. Don’t rush into getting insurance if you’re unsure about something take your time so you can be sure you get the policy that is right for you.

Getting out of debt – 4 steps you can take today

Do you feel that getting out of debt is like climbing a mountain but never getting to the top?

If you do, you’re not alone – millions of people in the UK are in exactly the same situation – but fortunately, with the right advice, you can work toward being back in control of your finances.

We’ll take you through 4 easily achieved first steps that you can do today – each one taking you closer to resolving your money problems by tomorrow.


1. Open your letters

If you’re anything like millions of other people in the country, the idea of opening your letters from creditors is one that fills you with dread. However, it’s important to understand why ignoring them can leave you in an even more dire situation.

Debt doesn’t go away, no matter what tricks people say exist – and actually, the companies you owe money to are likely to be far more understanding if you talk to them.

So, step one needs to involve pulling all those letters out of the drawer and opening them. If you feel too anxious to do it alone, ask a trusted and non-judgemental family member to come and support you while you do it, it always feels good to have someone on your side.

Make a note of all the companies you owe money to, the most recent amount they’ve requested and any account numbers you have. It might not feel like it, but facing up to the problem is an enormous part of the battle.


2. Work out a budget

No one expects you to go without paying your rent, mortgage or other important outgoings to clear your debt – which is why it’s really important that you work out what your incomings and outgoings look like every month.

Working this out is a little time consuming – but you only need to do it once – and when it’s done, you can add and takeaway the numbers to get a good understanding of your spending.

Start with a piece of paper and a pen, make a list of everything you have to pay in the month. To begin with it’s important just to focus on the ‘essentials’, rent, mortgage, bills, payments and food and clothing costs.

Then make a note of all the money that’s brought into the household. That could be your salary, partner’s income, benefit payments… and so forth. Total up both of these lists. By taking the essential outgoings amount away from the overall income amount, you get the remainder that you’ve got to work with for the month.

Now, it might look like a lot, it might look like a little – but you’re not finished with it yet. Start a third list, adding up everything that you spend money on that isn’t an ‘essential’ – that might be nights out, hobbies, smoking – and so on.

It might shock you what these things add up to. Creating a budget like this is useful in two ways – first to give you an idea of how you really spend your money – meaning you can make changes if you like, and secondly, creditors and debt management companies might want to get an understanding of how much you can afford to repay – so doing it now shows that you’re willing to start working on the problem.


3. Talk to someone who can help

Now, it’s easy to just tell you to start calling all your creditors and negotiating amounts of repayments with them – but in reality, this can be an extremely difficult process for an individual to manage.

Generally, the first company you speak to will want you to repay them as much as is possible – but where does that leave you with other companies that you owe? It’s very difficult to balance your repayments and make sure every company is satisfied.

For that reason, it’s worth talking to a company who can help you negotiate your position with all your creditors.

For an in depth view of what a company like this will do for you, have a look at this 2017 National Debt Relief Review (Recent Update). Essentially, you’ll have someone on your side who’s working with all your information and negotiating repayments that suit your budget – and satisfy your creditors. What’s more, they’re specially trained to negotiate with businesses, meaning they’re likely to get you a better deal than doing it yourself.

If you want to take the anxiety and logistical planning out of the picture, a company like this can be a massive help.


4. Evaluate how you spend your disposable income

When you worked out your budget you got to a figure that was left after you took your outgoings from your income – this is generally referred to as your ‘disposable’ income.

Digging deep into how you spend this might give you a few shocks – especially when you add things up over the course of a month or a year. The best place to start looking at amounts of money that you don’t realise you’re spending is direct debits, recurring card payments and subscriptions.

Companies can be quite crafty in how they take your money – for example, you’re less likely to miss a small subscription payment when it’s taken just after your payday – whereas that extra small amount could be really helpful when it comes to paying bills toward the end of the month.

Look at on-demand TV packages, phone bills, gym memberships and magazine subscriptions and ask yourself “do I really need these things?” – sure, they might be a luxury, but if you’re watching a couple of movies every month – is it worth subscribing the channels?

After that, look at habitual spending – even take away coffees and lunchtime meal deals all add up.

No two people’s lifestyles are exactly the same – and we all need different things to get us through the day – but it’s really important to consider what you spend your money on – and whether it’s hindering your ability to pay off nagging debt. A series of small sacrifices now can mean you get a better night’s sleep when you don’t have debt to worry about further down the line.

Image source: financialwellness.org

What should you do if your Business is in Debt?

Debt of any kind can feel like a dark fog surrounding and engulfing you. Not only does it feel dark and lonely, but it can stop you from being able to see just a few metres in front you. This can feel even worse if this debt is attached to your business – your main, and often only, source of income. You can feel particularly vulnerable and working may even begin to feel futile as everything you earn just disappears into repayments.

But, don’t worry, you aren’t alone, and there is something you can do. This guide will hopefully help you understand some solutions, and give you some well-deserved peace of mind.


Personal Debt and Business Debt

The first step to understanding your debts is to understand that there is a huge difference between personal debt and business debt.

Personal Debt, sometimes known as Consumer Debt, is essentially debts which are taken out by an individual to support themselves (and their loved ones). This could be anything from credit card debts to mortgages, although these are very different. People take out personal loans to cover living expenses, such as medical expenses, or even to fund Christmas.

Business Debt, which is often called Commercial Debt, is, as you might expect, is the debt which is accumulated by a business. The types of debt may appear very similar; there may be secured debts, which are tied to an asset, such as the equipment you needed to start your business, or unsecured debts, such as credit cards or bank loans. The biggest difference is that it is much more common, almost inevitable, for a business to have needed loans from day one, to create working capital. This may include hiring people and paying their salaries, purchasing your stock, and paying operation costs such as bills.

Another important difference is the way that debts are collected. Debt collectives are less restricted when going after business debts because it is believed that business owners should be much more capable than the average person. This can mean more contact with your creditors, which can, unfortunately, often mean more stress for you.


Manage your Debts

Now that you understand the differences between personal and business debt, it is important that you understand, and learn, how best to organize your debts.

First of all, if you have personal debts, as well as business debts, you need to separate them out. After you do that, managing them is largely the same. But you must do it for both, separately.

  • Step One: Pay Off Your ‘Priority Debts’

These are your debts that would result in serious, and drastic, ramifications. Mostly, these are tax, rent, or utility arrears, or secured loans. You can’t hope to pay back your other loans, if the equipment you need is seized due to lack of repayments, then you won’t be able to pay off your other debts as your income will be affected.

  • Step Two: Try to pay off more than your minimum payments

Your minimum payments are the absolute smallest amount that you can pay monthly to pay off your loans. Some people think that this means they can just pay that amount and not get into trouble with their creditors, and this is technically true. But, it is also not the best action to take. Interest and charges are still working on your debts, making them bigger and bigger. If you only make minimum payments, then you will be making payments for a very long time, and, ultimately, the total cost of the loan will be considerably bigger than the original loan. Calculate your non-priority debts, here.

  • Step Three: Organise a budget

This step is a little more of a pain for those with business debts, because you need to create a strict personal budget, so that you know how much money you actually need to survive, and a business budget, so you know how much your absolute essential business costs are. While you are making this budget, you should also work to cut down these costs, so that you are able to use as much of your profits as possible to pay off your debts.


Debt Solutions

After you have understood and organized your debts, there are some more formal debt solutions that you can turn to, if you are still really struggling.

The best-known debt solution is that of liquidation. Any creditor who is owed £5,000 or more can start liquidation – this is called ‘Compulsory Liquidation.’ In this case, an Official Receiver takes control of the company’s finances and can sell assets, and control profits to pay off as much of the debt as possible. Directors can also opt to do ‘Creditors Voluntary Liquidation,’ however. This allows directors to have the opportunity to purchase the business assets to re-open the business as another company, after liquidation.

Another solution is to go into ‘Company Administration.’ It takes a year and involves the sale of a business and its assets to restructure it for future profitability. An Insolvency Practitioner assesses to what extent a business will be fit for trading in future if they agree that it has potential than they are appointed as the company’s Administrator, and they have financial control. If they don’t believe there is potential, liquidation is the usually the next solution.

One final option is to opt for a ‘Company Voluntary Arrangement.’ In this process, over a period of up to 5 years, an Insolvency Practitioner organizes repayments to creditors after having interest frozen. This allows the company to survive and for directors to retain control of the company. There is an equivalent personal debt solution called an ‘Individual Voluntary Arrangement.’

Five Great Tips for Financially Managing your Business

This might not be what you want to hear, but starting your business is, in many ways, the easiest part of being an entrepreneur. After all the struggles you had getting financial support, finding suppliers, and reaching your market, you now have to keep your business going, and become a success.  But don’t worry, to help you do this, we’ve come up with some tips:


1. You can never learn enough

If you learn nothing else from this article, I urge you to learn that you can never learn enough! In other words, educate yourself on all financial matters and keep educating yourself as you go along. Find out how to budget, find out about the best bank products, find out about stocks and shares – anything you think could be useful, will be useful!

Hopefully, this article will kick-start your education, but there is much more to learn! There are all kinds of resources that can help you do this. You can look around and find your own, but here is a list of three that we recommend:


2. Keep Your Personal Finances Separate from Your Business

When you are self-employed, it can be very tempting to mix your personal finances with that of your business. It can feel more convenient, particularly if you used a lot of your own money and savings to start your business. But, this will cause huge problems in the future when you try to sort out your bookkeeping and taxes.

The key aspect of keeping your personal and business finances separate is to make sure you have separate bank and credit card accounts. This means you will be able to see what your revenue, expenditure, profit, and all your other key indicators are at a glance, and this is very useful for recording, and understanding, how well your business is doing. You don’t want any nasty shocks!


3. Hire a professional bookkeeper

Another great tip, which will help you stay on top of your finances, is to hire a professional. They will prevent you from making any mistakes, but, most of all, will save you tonnes of stressful hours of sifting through paperwork. This may not be possible for every business because it does, obviously, cost money, but, even if it is not currently possible, you should prioritise this as your next financial goal. They are great because you can also learn from them through your journey to become a financial genius.

When you are looking for a bookkeeper, the first thing you will want to look for is someone you trust. It can be difficult to do this on sight, however, so don’t be afraid to move-on and try out another bookkeeper or firm if you find the relationship with your first choice isn’t working out. Some people prefer a close relationship with one, specific, bookkeeper, who they know well by name. Whereas, others are happy with a reputable, but large, firm. It really depends on your personal preference and situation which bookkeeper you settle on. However, the one piece of advice that I would recommend is to go fairly local. With the rise of the internet, many argue that you could hire bookkeepers anywhere in the world. But, this often requires significant effort on your part to scan, or send, large amounts of documentation, and it can mean you don’t have easy access to your own documentation. If you choose to work with someone who is just down the road – dropping off, and picking up, files becomes significantly easier.


4. Make a Budget and Plan for the Future

You probably feel like you already did this when you started your business, as a great budget is really the only way to convince financiers to back you – they won’t trust just anyone with their money, after all. Unfortunately, this first budget isn’t enough, and it’s about time you make a new one (and then another, and another, and another…).

A good business will work at constantly adapting its budget to suit its circumstances. This means reviewing your budgets on a regular basis. You don’t need to make more than four a year (one per financial quarter), and even this may be too much if your circumstances aren’t changing often. But you need to be aware of how you plan to spend your money to be as sustainable as possible. After a while, you may get used to a regular cycle of ups and downs, such as increased orders at Christmas, but, in all honesty, if you are aiming for a constantly improving business, it may be in your best interest to hope that you don’t.

If your business is constantly growing and developing, like most people hope theirs will, then you will need to continue this practice of budgeting, and re-budgeting, all throughout your career. Who knows? You may be budgeting for £50,000 per annum of supplies today, but, in ten years’ time, you might need four times as much, just to keep up demand!


5. Make mistakes!

The last piece of advice I have for you is to make mistakes and, more importantly, plan for it! I can almost guarantee you that you will budget incorrectly at some point or another. Maybe you mistake a temporary increase in demand for sustained growth, and budget for too much stock? Or, maybe you need to hire more people than you planned for? No matter what the mistake, the earlier you make them, the better, and the more you plan for them, the less of a problem they will be.

Try setting aside money every quarter and put it into a ‘Emergency Fund’, and then hope you don’t have to use it. Once the emergency happens, you will be cushioned from any problems, and you can learn from the mistake and add this to all future budgets. Don’t ever stop doing this, even if you become a very successful ‘expert’. Like your budgets, hopefully your business will continue expanding and changing, which means the problems and mistakes that you may face will also change. Today, you may be facing a crisis over an order of hundreds of units of stock; in 10 years, you may be facing working with international markets who need thousands!

Infographic by: sage.com

Five Financial Warning Signs which People tend to ignore

Most of us would assume that when financial problems hit, we can at least count on being able to see them clearly. Unfortunately, this isn’t always the case! The complexity and business of modern life can often distract us when problems rear their heads, and it can be surprisingly hard to tell the difference between getting by and needing help. Denying problems may seem like a way to avoid them but, in the long run, they will catch up with you, so it is always better to stay in the know. Below are five common warning signs that your personal finances might be in trouble.


One – You never know how much is in your Bank Account

If you find yourself surprised when you come to check your bank balance, you probably have at least minor issues with financial planning. Never knowing what funds you have available can be dangerous, and lead to unwittingly dipping into your overdraft. Not regularly checking your bank balance also makes reckless spending easier, since you can temporarily shield yourself from the consequences. One outcome of our dwindling use of physical cash is that it is more difficult than ever to see the immediate impact of your spending. Luckily, the emergence of online banking, and banking apps, have provided an alternative way to stay on track. Making it a habit to check your account balance every day is one simple step you can take to curb unnecessary spending, and keep in control of your finances.


Two – You don’t have Savings

If you’re getting by on your wages day-to-day, not having savings set aside might not seem like a problem. However, it’s pretty much inevitable that, at some point, you are going to have to make an emergency purchase. This might be new tyres for the car, an essential house-hold repair, or something more benign such as a wedding or birthday gift. Not having money set aside to deal with this kind of spending can leave you with no other choice but to borrow when your monthly income won’t cut it. In the long-run, borrowing money for expenses like there can put you in a much worse financial position. The solution is, although it can be challenging, setting aside a small amount of money on a weekly or monthly basis and ear marking it for emergencies. Setting up a separate bank account to do this is a good idea, since it will be more difficult to accidentally spend it on non-emergencies.


Three – You depend on Credit

Relying on credit cards or payday loans to top up your income from month to month may seem normal for many people, but it actually suggests that you might need some help organising your finances. The more money you borrow, the more you will have to pay in interest, meaning that this kind of short-term borrowing can be a slippery slope, getting you further and further into debt. If you find yourself struggling to stretch your wages over the entire month, short-term lending solutions can seem like your only option, but these tend to have the highest interest rates and, ultimately, do you the most damage. A good alternative might be to ask your friends or family if you can borrow from them for a short period – this can be embarrassing, but it is far better than paying exorbitant interest rates. Alternatively, using an overdraft might be a cheaper way to borrow, so it is worth checking with your bank.


Four – You don’t have a Budget

Another financial practice which can help you avoid relying on credit from month to month is to create a budget. Even a very basic budget is the single best change you can make to the way you spend. Like having a shopping list when you go to the supermarket, having a budget gives you spending targets, so you will never be unsure if you are overspending in a certain area. The Money Advice service has a helpful budget planner tool which can be a great place to start.


Five – You avoid opening Bills and Statements

Avoiding opening bills and account statements addressed to you is a sure sign that your personal finances are not in prime health. Putting off opening these letters clearly demonstrates that you are experiencing some anxiety when it comes to your financial situation. As with most problems, putting off dealing with it does more harm than good, so the solution is to set aside some time to open them all, and figure out exactly how much you owe and to who. Getting in touch with creditors and explaining that you are struggling to pay is also a good idea. Believe it or not, in many cases creditors are sympathetic to your honesty and intentions to pay them back, and will adjust your repayment programme to one which you can afford.

Although admitting that there is an issue can be tough, it is always better to acknowledge it sooner rather than later. The sooner you recognize a problem, the sooner you can get help with it – and help is out there. Click here to learn more about debt, and how you can beat it.

Tips for Starting Your Own Business Venture

How would you like to envision yourself ten years from now? Have you ever thought of starting your own business because you are tired of working on a daily basis? Well if you have doubts yet if you can do it or not, or you have a lot of questions in your mind, this article will guide you the process on how to start a business from the comfort of your home. For some reason, the majority of the people wanted to start their business for the reason that they want to increase their finances. Well, it is true that you will get rich if your business is successful but what if not? That is why when you start a business venture you need too carefully study and ask yourself many times the real purpose of doing such a big step. Starting a business and make it work doesn’t happen overnight it takes a lot process and courage to make it income generating.

To help you decide here are the following tips to start your own business


Are you a risk taker?

Not everyone is capable of starting a business; there are certain skills and personality those successful entrepreneurs have in common such as self-confidence, good communication skills and much more. The path to becoming a successful businessman is not an easy as what you think, it is like a rollercoaster ride, it’s not always up and most of the times is depressing, as only a few people can understand what you do. Even your friends or family will find you different.


Creating the Plan

Now that you have already determined, if you are one of them, you are now ready to create the business plan. Before quitting your job, you have to think of possible products and service which you think can create a steady stream of income in the future. You have to base it on your experience, expertise and most of all your passion as well. The secret to a successful business is to make money out from your passion.


Support System

Support system involves back up plan such as money, family, and people who can relate to you through ups and down. With regards to money, you can perhaps prepare a backup funds and money to start the business; lending companies are also welcome to help you. Of course, you cannot do it alone, and most of the time it will be depressing for you so having someone who can support you emotionally is helpful to you. You can also get close to the likeminded person or perhaps entrepreneurs to have gone through the same pathway.


Look to the Future

Many of the entrepreneurs who have started the business nowadays have only last for two years, so you’ll have to find ways on how to adopt change for you to make your business going. You can attend some business events around you to keep the business working and make it last.  As we all know the world is changing as well as the market in different parts of the world, so you need to have a solid plan, adapt to new business tools, sales, and a strong foundation so in case there is a problem the business will not collapse.

So here are just a few of the most important tips to help you start a business, you can always ask from successful business who have been in business for years. Having a successful business will pay off all the hard work and time you have rendered so let the business planning started now.


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