Category: Finance

Gold
ArticlesFinanceMarkets

Why Gift Premium Bonds When You Can Gift Gold?

Gold


Becky Hutchinson, CEO at Minted, an investment platform which allows individuals to buy and sell gold bullion.

In light of the ‘new normal’, parents and grandparents are looking for new ways to gift, virtually or otherwise. But in a climate of stock market volatility and low interest rates, are traditional financial investments still a solid choice, and could gold bullion be a safer bet?

There’s no doubt about it, Premium Bonds have earned their reputation as a safe and steadfast savings option. First introduced by the Government in 1956, these tax-free bonds from the National Savings and Investments (NS&I) agency are now UK’s biggest savings product, with about 22 million people having over £86 billion invested in them. Every £1 Bond is given a unique number and all numbers are put into a computer called Ernie (which stands for Electronic Random Number Indicator Equipment), which draws monthly winners. For years, they have been popular to give as presents to children under 16. The parent or guardian named on the application looks after the Bonds until the child’s 16th birthday, when they are entitled to a gift that will hopefully keep on giving.

In December 2020, however, the prize fund was cut considerably and due to the drop in the Bank of England base rate, NS&I also reduced the odds of winning. As a monthly lottery, the closest thing Premium Bonds have to an interest rate is their annual prize rate, which currently stands at one percent. This is based on the average pay out, depending on the number of bonds owned and, while it isn’t completely accurate, it does allow for an estimated calculation to be made about interest gained in a year.

But winning may be harder than it seems. According to Money Saving Expert, only 30% of people with £1,000 in Premium Bonds win £25 or more per year. And, over five years, someone with £1,000 in Premium Bonds and ‘average luck’ is expected to win roughly £50. While that may seem a lot of money to a child who’s been gifted Bonds, any parent knows that £50 doesn’t go far in today’s society.

When it comes to investment options, however, Premium Bonds are as safe as they get. Operated by NS&I, which is backed by the Treasury rather than a bank, funds are easy to access and there is little-to-no risk of losing money – only a small gamble around any potential ‘interest’. However, while this level of financial security was once a significant perk, all UK-regulated savings accounts are now protected by the Financial Services Compensation Scheme (FSCS) under the savings safety rules. This extends up to £85,000 per person, per bank, building society or credit union – £35,000 more than the maximum deposit allowance for Premium Bonds.

So, is there an alternative safe-haven investment option, with a better interest rate and without a savings cap? There is and it’s far older than Premium Bonds. Gold was one of the first precious metals to be used by humans as a trading commodity and, to this day, remains a stable choice. Many children’s books tell stories of gold – from pirates to royalty – and, in sport, a gold medal has always been associated with winning. From a very young age, the intrinsic value of gold has been ingrained in most people’s minds.

Aside from the glitz and glamour, perhaps the biggest difference between gold and Premium Bonds is that gold is a tangible asset. Investors can handle their physical gold and store it as they wish or even liquidate an asset if needed. Gold doesn’t just sit pretty either; while its price may fluctuate, historically and over the long term, it trends higher. Currently, the average growth rate per year is nine percent, considerably greater than bonds or current interest rates. With this in mind, £1,000 invested in gold could be worth around £1,538 after five years.

With the popularity of the finite resource growing, more user-friendly and flexible tech-focused routes into gold investment are appearing, making gifting the precious metal much easier. Features such as reward points for referring friends and family also provide an incentive for parents to start building up points for their children. With investment platforms like Minted, people can either purchase gold with a lump sum or save set amounts every month, starting at £30. Once enough has been saved for a gold bar, the physical gold can either be stored in a secure London vault or withdrawn – something any child would be proud to own. 

Despite its high-class status, gold is much more than just a luxury good and can be a viable option for every investor, at any age. As markets continue to fluctuate and interest rates drop, the price of gold could remain on its upward trajectory for some time. No matter the state of the current economic climate, the metal will always be a must-have addition to anyone’s investment portfolio and, with growing options to transfer gold virtually, the best kind of gift.

Alternative Investment
ArticlesFinance

Why Choose Alternative Finance?

Alternative Investment


With retail, hospitality and leisure businesses opening again, and demand for suppliers, manufacturing and construction greater than ever, it is important that companies have the facilities to expand, grow and invest in the future. With cash flow becoming one of the main concerns for SMEs in the last year, it’s important to get the balance right, and with mainstream lenders come long waiting times, increased scrutiny and endless criteria, more business are seeing their applications for loans, finance and leasing being rejected than ever before. This level of scepticism has a significant impact on businesses and their operations

However, alternative finance is an option that cannot be underestimated, and has the ability to support suppliers, businesses and their clients in selling more and investing in their products and services. There are many reasons why businesses are turning to alternative finance, and will continue to do so.

 

Common sense

Mainstream lenders have different processes to alternative lenders, and therefore business plans and propositions with genuine strength and durability can be misunderstood or ignored. We specialise in being a common sense lender, listening to your story and finding out how we can make finance work for you, rather than the other way around. Common sense means decisions are made by people who understand your industry and what you want to achieve.

 

Competitive rates

This is, and should be, important for any business owner. It affects your bottom line and how your business operates financially, which is crucial to ensuring you succeed. By offering competitive rates, alternative lending is an attractive option for businesses who may be in doubt about the value for money they can get elsewhere. It’s important for us, and it’s important for you, that’s why we make it a priority to secure competitive rates for your business.

 

Quick

More so than ever the queues have been getting longer, processing time and waiting for decisions is not what you should be doing when trying to secure finance to improve your business. Our team work directly to ensure all necessary steps are completed in an efficient manner to give you the best chance of getting your funds quickly, as we understand how important every second is. Alternative lending means you have a dedicated team working tirelessly to help you and your business, your clients and your customers.

 

Experts in your sector

Knowing your sector and industry gives us alternative finance the edge, because we work closely with suppliers, customers and industry bodies to understand what makes it tick and what’s important. That’s why when you bring us some Quirky Kit that banks or lenders may not see as valuable, we make it our mission to help you secure it. There’s not much we haven’t seen, and it can be frustrating dealing with people who don’t understand why you need your equipment, what it’s for or how it can benefit your business. By specialising in this area of equipment finance, alternative finance has a significant advantage.

 

Improve cash flow

It’s important to keep on top of cash flow, and it can be a dilemma when you want to invest but don’t want to spend. Using alternative finance to secure a loan or equipment finance for your business you can improve your service or product, make it more cost effective, more efficient and increase revenue, allowing you to take care of overheads, bills, wages and other expenditures. This allows you to keep any cash you have for a rainy day, whilst also improving your business. You can find out more on how to improve your cash flow by viewing our guide here.

 

Freedom to grow your business

Another benefit of alternative finance is the freedom to grow your business. This means that we will support you in how you plan to use the loan or finance, as you know your business better than anyone, meaning you know how to make it succeed, and keep to your ongoing commitments. Compare this to mainstream lending which may require more detail and may be more strict with the delegation of your agreement, we want you to have freedom.

 

Whether you’re in manufacturing, engineering, hospitality, leisure, or any other industry, alternative finance can be a great option to support your business in its next stage, helping to increase revenue, decrease costs and improve service to your customers

ROI
ArticlesFinance

5 Renovations With the Best ROI in 2021

ROI


When remodeling your commercial property, one of the most important considerations is the return on investment (ROI). You want to make your property attractive to others so they’ll stop in or use your business. Plus, your clients and other companies see your building often, so you want to portray the right picture to them.

Any time you put money into your commercial property, you want to get that money back or even get more than what you put into the investment. Here are five renovations with the best ROI in 2021 to keep your business booming.

 

Remodeling the Kitchens

Most commercial properties have a kitchen of some sort or even kitchen appliances in a break room. Remodeling a kitchen in any building is bound to increase the property value. Freshening up the kitchen can be affordable, and it will have a great ROI in the end.

Add in some energy-efficient appliances and a new backsplash or countertop for a simple remodel. You don’t have to be fancy with it. Just keep it updated and modern.

 

Going Green

Implementing eco-friendly appliances and systems in your commercial property will lead to savings in energy usage. If your energy system is outdated, it’s time to take it out and invest in something newer and more efficient.

You can get a new heating and cooling system, install low-flow plumbing, put in a cool roof, and upgrade your windows. These investments will help you save money on utility bills and attract customers who have environmentally charged ideals.

 

Updating Safety Features

Older commercial buildings can be hazardous, especially if you haven’t renovated them for many decades. Safety should be your number one priority as the owner or operator of a commercial building if you have numerous clients and employees working there every day.

Safety features might include a fire alarm system, burglary alarms and even a designated shelter for inclement weather. Adding in new safety features will decrease the risk of a worker or visitor getting injured. Safety renovations will save you time and money overall.

 

Investing in Curb Appeal

The outside of your property is just as important as the inside when it comes to return on investment. Curb appeal renovations often bring in the highest ROI. Every time someone comes to your property, the first thing they see is the outside of your building.

Every year, take the time and money to invest in curb appeal. Add new mulch, keep the lawn looking trimmed and green, and add plenty of walking space for clients and customers. It will attract more people to your business when the outside looks just as clean and neat as the inside.

 

Upgrading the Cosmetic Features

Finally, you can boost your ROI by renovating the cosmetic features of your commercial property. For example, old flooring, chipped paint and fixtures that aren’t doing your building justice won’t bring you in as much money as possible.

Take the time to investigate your property and take note of things that could use improvement. Install new flooring, doors, lighting fixtures or anything else that needs to be updated. Keeping things fresh and modern will do wonders for your ROI.

 

Get to Work

Begin these renovations as soon as possible. Investing in your commercial property in these ways will bring you the highest return on your investment this year.

Homebuying
ArticlesFinance

Home buying: Is There Really a Financially Best Time to Buy?

Homebuying


Buying a home is one of the biggest investments we make in our lives. However, while the average house price in the UK is valued at £249,633, the cost of mortgages among other factors means that the total cost of the home-buying process can vary between individuals.

Even then, house prices continue to rise year on year. In England, house prices have increased by 7.6% in the past year. Competition spurred on by the housing crisis may mean that this increase is set to continue. This raises the question: when is the best time to buy?

‘Immediately’ is not always the answer. The true cost of a house will depend on your personal finances when you buy, and it can vary depending on which financial schemes you use to help you on your homebuying journey. Jumping into a sale too soon can cost more than it’s worth.

Here, we explore the options for buying your house, what schemes you can take advantage of, and when to buy your home.

 

Government schemes

On 3rd March 2021, Rishi Sunak unveiled his latest budgetary plan for the nation. Included in this were schemes for home buyers which may make the process of climbing the property ladder easier for many people.

 

Stamp Duty holiday extension

The Stamp Duty holiday extension reduces the tax paid when buying properties. Under this scheme, homebuyers will only pay stamp duty on properties above the value of £500,000. This scheme was set to end on 31st March 2021. However, the Government has extended this until 30th June 2021.

Buying a property within this timeframe could save homebuyers up to £15,000 before the tax break ends.

The sale of properties must be completed before the 30th June deadline. However, the opportunity to save on Stamp Duty could be extended based on your buying choices. One national housebuilder, St. Modwen Homes, has its own Stamp Duty holiday extension which is available on a selected number of homes until 30th September 2021. Buying a new build property with this company can help you save thousands beyond the Government’s June deadline when you buy houses in Eastwood or houses in Newton-le-Willows, among many other locations. The housebuilder has also launched a new ‘Mortgage Paid’ offer for those buying a new-build home. Available on selected homes at developments across the country, the company will essentially pay up to six months of your mortgage. So, if you’re ready to buy now, it may already be the best time! The offer is only available for a limited time, but being six months mortgage free could save you thousands.

 

5% mortgage deposit

A new mortgage scheme has enabled lenders to offer mortgages to more homebuyers with lower deposits from April 2021. The Government-backed 95% loan-to-value mortgage scheme means that first-time buyers and current homeowners will be able to purchase a home with just a 5% deposit.  

The scheme will run until December 2022. So, if you want to take advantage of this new offer, applying for a mortgage before this deadline may be the best time to buy. A lower deposit means that you will have more money in your pocket on moving day to help furnish your new home, or some extra cash to save for a rainy day.

The scheme is similar to the Help to Buy: Equity Loan which is solely available for first-time buyers who are buying a new-build home. So, if you’re a first-time buyer, there’s still plenty of time to save up for a mortgage deposit and buy your dream home.

 

First-time buyer?

As mentioned above, it’s now easier for first-time buyers to get onto the property ladder with help from the Government-backed Help to Buy: Equity Loan scheme. Similar to the 95% LTV mortgage scheme, first-time buyers can also use a 5% deposit to buy their home.

The key difference with the Help to Buy scheme is in eligibility and how the finances are organised.

Firstly, you must be a first-time buyer and be buying a new-build home, and you will need a 5% deposit of the value of the property. The Government will provide an equity loan of up to 20% of the property value (or 40% in London), which is interest-free for the first five years. This means you will only need to borrow 75% of the property value from a mortgage lender.

The total value of the property is capped depending on where you’re buying the house, but they’ll likely be above a first-time buyer’s budget. The regional caps range from £261,900 to £600,000:

 

Region

Price cap

East Midlands

£261,900

West Midlands

£255,600

South West

£349,000

Wales

£300,000

North West

£224,400

South East

£437,600

London

£600,000


This scheme runs between April 2021 and March 2023.

 

Best time to save

If it’s not looking like the best time to buy for you right now, it’s always the right time to save. For those buying their first home, Help to Buy schemes along with various ISAs mean that you can prepare for your homebuying journey.

Unfortunately, you can no longer open a Help to Buy ISA. But those with existing accounts can continue to deposit up to £200 each month. When you buy your first home, the Government will top up your savings by 25%. You can save up to £12,000 and receive an extra £3,000 from the government. This incentive gives you up until November 2029 to save and until November 2030 to claim the 25% bonus.

Another scheme that is open to new savers is the Lifetime ISA allowance scheme. You can put up to £4,000 into your ISA each year and the Government will top it up by 25% at the end of the tax year.

This isn’t a scheme for those looking to buy a home in the short term. The money must be in the account for at least one year. The money must also be used to buy your first home, otherwise, the funds are available to withdraw when you’re over 60. You’ll be charged a 20% withdrawal fee if you withdraw the money before you’re 60.

Remember, the higher the mortgage deposit, the lower the loan amount and, therefore, the lower the repayments.

It can be argued that this is an exciting time for those who are buying a home — especially for first-time buyers. New schemes mean that those with a proactive nose to hunt out the best deals can save thousands when they buy a home. But ultimately, there’s no set date for the best time to buy. It’s up to you and your finances. The new buying schemes will be useful for those looking to buy their home in the near future as thousands of pounds can be saved. But those who are planning ahead should aim to save as much as possible before they buy their home, as in the long term, larger deposits make the mortgage application and mortgage repayments easier.

UK Budget
ArticlesBankingCash ManagementFinance

Budget’s ‘Super-deduction’ Capital Allowance Offers Logistics Sector A Golden Opportunity

UK Budget
By Tim Wright, Managing Director of Invar Systems
Chancellor Rishi Sunak’s Budget announcement of a capital allowance ‘super-deduction’ could be a game-changer for many warehouse owners and operators.
The super-deduction, which will apply for two years, allows firms to claim 130% of their expenditure on approved plant and machinery against their tax liability. There is no list of qualifying expenditure, but just about any equipment that one might install in a warehouse or distribution centre appears to be covered and, importantly, ancillary expenditure such as building alterations and electrical system upgrades to allow equipment installation are specifically included.
The Chancellor’s aim, beyond kick-starting the post-Covid recovery, is to address the UK’s chronic underperformance in productivity growth, which was less than stellar even before the 2008/9 financial crisis (2.3% per annum), and since then has essentially flatlined at 0.4% per annum. Discussing the validity and meaning of productivity data notoriously starts heated discussions amongst economists but in the warehousing sector the issues are very real and quantifiable.
The gorilla in the room is of course the inexorable rise of e-commerce, currently representing 30% or more of trade in many retail sectors, and with similar expectations for on-demand fulfilment of orders increasingly seen in business and industrial purchasing. Clearly, fulfilling two dozen orders for individual items is immensely more laborious than serving the same volume by shipping whole cases or pallets – by a factor of 15 according to one US study – inevitably driving down productivity per hour worked.
E-commerce has also driven up product variety, and, critically, the volume of returns to be handled. Yet this comes at a time when securing and deploying warehouse staff is becoming increasingly problematic: many businesses have been heavily dependent upon European labour, which is unlikely to be earning enough to qualify to work in the UK post-Brexit, while creating Covid-safe working in labour-intensive areas is a major challenge. Along with rises in the minimum wage, this is pushing labour rates up.
In addition, increasing capacity by adding more space is not an easy option – e-commerce operators, and businesses hedging against supply chain disruption are snapping up all the available space in what is generally agreed to be an ‘under-warehoused’ country.
These challenges, although increasing, are not new and nor is the obvious solution ­– automation. But apart from the ‘marquee brands’ such as Amazon and Ocado, who have been able to invest large sums in green-field developments, the warehousing sector has been slow to adopt automation, and where it has, the tendency has been to create unintegrated ‘islands of automation’ at particular pain points.
However, for real productivity improvement a warehouse or fulfilment centre needs to address all its many interdependent activities simultaneously:  KPIs in receiving, in put-away, in picking, in packing, labelling and dispatch, as well as, in health and safety.
Importantly, this means a complete rethink of how the warehouse operates. A particular focus will be a move towards ‘goods-to-person’ operations, rather than having people spending most of their time walking unproductively between locations.
It’s easy to understand why many businesses have been reluctant to commit to change. Until quite recently, warehouse automation was ‘hard engineering’ – it involved not only major investment all in one go, but installation caused disruption, even complete shutdown, and was considered inflexible. Any change in requirements could only be accommodated by further significant investment and upheaval.
Happily, these constraints no longer apply. The development of autonomous mobile robots (AMRs) in particular has been a game changer, as has been the creation of easily reconfigurable sortation systems, re-locatable or even fully mobile pick faces, smart automated packing stations, and a raft of supporting technologies such as pick-to-light, along with Warehouse Management Systems that are becoming ever more capable, yet easier to adapt and use.
Such solutions are scalable and can be introduced flexibly, as funds allow. What’s more, they can be readily reconfigured to integrate with subsequent investments, largely off-line through the software, rather than by disruptive re-engineering that requires shutdown. They are also genuinely scalable – in many cases, simply adding more AMRs to the system can accommodate future growth or extension.
Rishi Sunak’s ‘super-deduction’ capital allowance offers the logistics sector a golden opportunity to invest in performance enhancing automation, giving fulfilment operations the boost to productivity needed to cope with the surge in ecommerce orders. It’s an opportunity not to be missed.
Finance team
ArticlesFinance

Finance Risks Rose 20% Over Past 12 Months: How Finance Departments Have Been Impacted

Ray Welsh, Head of Product Marketing, FISCAL Technologies
Finance teams have been one of the most heavily impacted internal teams over the past year as the COVID-19 pandemic turned the way we work on its head. During this time finance departments in all industries have experienced immense pressure, with their financial priorities rapidly changing; the need to tighten the purse strings and shifting operational challenges becoming the most common changes. While successful businesses have always placed a firm focus on ensuring their finances are in order, this has never been more of a focus than over the past year, while also being more of a challenge.
The pandemic put further pressure on finance departments to ensure their controls were as strong as possible during a vulnerable period that saw existing checks effected by the move to remote working and an increase in fraudulent activity. Learning from these challenges will support the future requirements of greater resilience and agility.

 

The new status quo

While the impact in some areas has been clear to see, there have been other areas in which things may have begun to slip through the system. With this in mind, we recently analysed our UK customer data* from the last two years to understand the true impact the COVID-19 pandemic has had on finance teams. Through this research, we found that finance teams have witnessed a 6% increase in reported input errors during invoice processing and a slower rate in the reduction of other processing errors over the past 12 months.
Crucially, FISCAL’s analysis found that across all sectors, the number of risks detected rose year on year by 20% on average, with the highest rise being 37% in manufacturing. In terms of risk value detected and prevented, the average increase across all sectors was 70% – a total of £240million in the 12 months to 23rd March 2021.
When the first lockdown occurred last year, there was much speculation over what would happen – organisations were worried about processes without access to paper documents and were rightly concerned about how remote working would impact security. But we quickly saw that the finance team is more resilient than first thought and the knock-on impact of the pandemic wasn’t as huge as originally predicted.
However, our data analysis did find that the rapid changes resulted in an increase in invoicing errors. Furthermore, the reduction in other processing errors declined at a 6% slower rate in the 2020-2021 period, compared to the same time the previous year. These insights clearly demonstrate that the move to working from home and a change in processes as a result of the pandemic led to gaps in existing control processes.
 

Filling the control process gaps moving forward

With many organisations now considering more permanent flexible working policies post-pandemic, this is an issue that organisations must address: Protecting the bottom line is always of the upmost importance, and as businesses rebuild and recover following the turmoil of the past year, it’s essential that they have the best measures in place to help them achieve this. Because of the rapid changes that had to happen last year, there will be an element of acceptance of some errors, as the acceptable price to pay for continued operations during the most acute phase of the pandemic response, but now that teams have settled into the ‘new normal’ this will not be acceptable going forward.
Organisations now need to ensure that their finance teams have the right tools to empower them to continuously and proactively protect working capital, reduce costs, and protect their P2P processing efficiency, whilst providing assurance to the business that strong financial controls are in place.
Investing in secure, end-to-end payable assurance solutions is worth its weight in gold when tackling third-party and internal threats. Not only do these solutions identify invoice payment errors before it’s too late, but also offers greater transparency. By offering finance departments a clear picture on any weaknesses or reoccurring issues – businesses are then able to address any inadequacies within their compliance processes.
Forensically analysing compliance breaches or process changes to find risks and where they originate will strengthen a finance department’s trust it has within its procedures. When  tasked with processing thousands of monthly invoices – having continuous, automated checking to validate approved invoice payments prior to the payment run will ensure finance professionals can uphold compliance standards – as well as reducing costs.
Having an end-to-end risk management solution also allows customers to forensically analyse 100% of supplier and supplier transaction data before payment. This is done by applying hundreds of checks using financial logic and sophisticated algorithms to achieve a complex analysis, with AI playing a significant role in making this process more effective. With the analysis taking place in the background, alerting your team only to the high-risk suppliers or transactions, their time is freed-up for higher value-adding analysis and modelling work.
Investing in the latest P2P risk management solutions will help businesses manoeuvre through the months and years ahead which will continue to present challenges that originated during the past year. Doing so will increase flexibility – the ability to make future changes without having to accept an increase in risks as the price to pay. Now that businesses are through the initial period of uncertainty, it’s essential we continue tackling the challenges that lay ahead. This means continuing to adapt, innovate and adjust. 
The prolific risks and demands on the Finance department, and the greater emphasis on saving and protecting working capital, means that forensic insights and protection of finances have never been so important.
*Analysis of 104 anonymised UK customers’ risk detection data over 24 months
Bills
ArticlesFinanceFunds

South West Businesses Piling on Debt, Bills and Overdrafts Mounting During Lockdown


A year on from the start of the pandemic, business finances in the South West have been badly damaged, with many business owners increasingly reliant upon costly sources of borrowing such as overdrafts and credit cards, a Business West survey has revealed.
40% of the 550 businesses that responded to the survey reported a higher level of indebtedness than a year ago, whilst a similar number (43%) had 6 months or less of cash reserves remaining, laying bare the huge financial cost of coronavirus despite extensive government interventions in the economy.
With pressures on firms growing after multiple lockdowns, 28% of businesses seeking out finance opted to utilise the Bounce Back Loan Scheme (BBLS) – a government backed initiative offering favourable interest rates and flexible repayment terms, but this scheme has now ended.
Salisbury-based 365 Linen Hire, which provides tablecloths and napkins to the weddings and events industries, highlights how emergency borrowing has taken the strain for many COVID-19 impacted businesses. Its Manager Richard Gould said that as hopes were dashed of the economy unlocking earlier in the year, the business sought out BBLS funds to gear up for a summer reopening, having “held out as long as possible”.
The use of overdrafts and credit cards by local businesses is also relatively high, at 22% and 19% respectively, considering that these sources of finance are more expensive than government backed emergency finance. They are also more common than the formal government backed Coronavirus Business Interruption Loan Scheme (CBILS), which only 16% of respondents chose, typically larger businesses within the survey respondents. The percentage of businesses borrowing money from family and friends is also quite significant, at 11%.
Bristol-based marketing agency Feisty Consultancy was one of the businesses that complained of receiving a rough ride from their banking provider over the past 12 months.
“During the first lockdown at least, the banks were helpful in reducing/removing fees,” said Feisty Consultancy’s Managing Director Vikki Little. “But this stopped some months ago and hasn’t been reinstated, despite the fact that the situation is now worse for many businesses. I wrote to my bank regarding this and was told ‘tough’ essentially.”
If the increased prevalence of short-term borrowing wasn’t worrying enough for the state of business finances, it is particularly so for the self-employed. Two fifths of respondents identified credit cards as their main source of financing during the pandemic – a finding which suggests that the self-employed (many of whom fell through the cracks of government support schemes) were unable to access cheaper, alternative forms of borrowing.
Against this background, Business West is concerned at a potential ‘finance crunch’ coming for small businesses. With repayments starting on government backed loans and the level of (often high cost) debt from financial institutions and others, the burden of this debt is expected to act as a drag on business recovery.
Unsurprisingly, after a year of lockdown restrictions, almost half of the 550 participants reported a deterioration in their cashflow, taking this to the lowest point in the last 3 years, with responses consistent across both the services and manufacturing sectors. “It is dreadful,” said Val Hennessy of the International House language school in Bristol – one of the businesses speaking out. “Virtually no income and little prospect of a real increase in income in the near future as international travel is banned or the costs of travelling to the UK for students is too off-putting. We cannot risk borrowing anymore because the future is so uncertain.” she continued.
For businesses such as The Zoots band, government financial support has unfortunately done little to make up for the income shortfall of a year ravaged by stop-start lockdown restrictions. Its proprietor Jamie Goddard revealed that he is “currently in £30,000 debt” adding “with SEISS grants of only £2500 that covered about 1.5% of my usual turnover” and hopes they “will get something eventually” to address the situation.
Aside from widespread financial worries highlighted by the survey, the region-wide study also found that almost 40% of South West employers had experienced staffing issues as a direct result of school closures.
Stephen Sage, Managing Director of ACES Ltd – an electronics firm based in Bristol – said that along with school closures: “Social distancing measures have slowed our production along with…home working,” before adding “material shortages have also compounded the problem.”
The cumulative effect of rising debt levels and lockdown restrictions on business growth and performance across the region is plain to see.
Over half of respondents reported that their turnover, profitability and cash flow have been negatively impacted as a result of the pandemic. The percentage of businesses impacted in the retail, tourism, food and drink, and consumer services industries is even worse (over 60%), with many delaying growth plans and experiencing reduced profit margins.
Despite the pain of the past 12 months, businesses are remarkably upbeat regarding the future prospects of the UK economy, with business confidence also showing signs of lifting following government’s announcement of an irreversible roadmap out of lockdown in England. On both measures, this represents a marked uptick when compared to the last quarter’s results.
 
Providing his assessment of the survey findings Business West Managing Director Phil Smith comments:
“Whilst the UK’s successful vaccination programme provides genuine light at the end of the tunnel, it would appear that businesses will have to wait a little while longer before they are able to bask in the glow of a dawning economic recovery.
“There have been few winners and very many losers as a result of the pandemic, a good proportion of whom have taken on added debt to help see them through.
“In the best-case scenario, we will see pandemic related debts repaid quickly as business activity begins to ramp up and accelerate as lockdown restrictions are lifted. In the worst case, a mounting debt burden stymies business growth and proves a long-term drag on the region’s economy.
“To see businesses utilising the flexibility of the BBLS is pleasing. However, the fact that more and more businesses are turning to credit cards and overdrafts to solve cashflow issues is concerning. The reliance on friends and family may also be interpreted as a market failure that government and lenders would be wise in addressing.
“We are worried about small businesses and the self-employed’s access to suitable finance during the recovery period. At the end of March both BBLS and CBILS closed, and CBILS was replaced by the successor Recovery Loan Scheme. However, this is available via commercial bank lending and is only government guaranteed for 80% of the loan. Our findings highlight a looming finance gap for smaller firms, given the particular finance needs of smaller businesses, who appear to not be utilising CBILS, perhaps because it is harder to access this more formal bank form of financing. We think further government finance schemes for these smaller firms may be needed.
“After business’ most challenging year in living memory, it goes without saying that eyes remain fixed on the roadmap out of lockdown, as only then do we have the realistic prospect of healing the wounds inflicted by the pandemic and repairing business finances.”
Hospitality
ArticlesFinance

Post-pandemic Financial Concerns: How Hospitality SMEs Can Make a Change

Hospitality


There’s no denying that the hospitality industry has been detrimentally hit by the events of the coronavirus pandemic. With the UK’s continuous lockdown measures forcing the part-time closure of hospitality and entertainment venues, the economy is faced with the largest recession since records began. Other than being subject to tightening restrictions limiting the regular functioning of hospitality venues, business have also had to invest more into safety equipment such as PPE for staff, cleaning products, and staff training programmes- causing business revenues to be dramatically impacted.

However, with outdoor hospitality having now opened on the 12th April and all indoor from the 17th May, there is now some light at the end of the tunnel for many. In the wake of the darkest days of the pandemic, when the nation experienced several tough lockdowns, this only highlights the importance of SMEs assessing their financial situation during financial adversity and indeed, in preparation for it, should it happen in the future. It’s vital that finance departments recognise opportunities to increase revenues, save on costs, and forecast potential issues that could occur.

With this in mind, Wisteria Accountants take a look at how SMEs in the hospitality sector could transform their businesses finances.

 

Fiscal Control and Financial Planning

Throughout the pandemic, the hospitality sector has learnt that they must prepare for every circumstance. Sudden decisions to protect the public are understandable during these adverse times. For example, last year hospitality venues had been restricted by a 10 pm curfew, further reducing footfall in bars and restaurants. This emphasises the importance of financial planning.

Functioning on an operating budget is expected for hospitality businesses. These budgets include the cost of wages, rent, and products. However, with the volatility of 2020, this budget type may not be thoroughly effective. Businesses have had to find additional money for cleaning equipment and staff training.

To help spark ideas as to how expenses could be saved, borrowing budget templates from other industries could help with this. For example, zero-based budgets create an optimistic perspective on cost-saving processes. Instead of looking for where cuts can be made, this budget allows finance departments and managers to argue why they should spend. In a zero-based budget, department leaders must justify every expense based on their utility and potential to drive revenue.

A 91 per cent majority met or exceeded their financial targets using this approach, according to one survey. The money saved by zero-based budgeting is often reinvested for growth. However, businesses may want to consider saving for future financial adversity, especially considering the pandemic. Each new period requires a new budget, allowing finance departments to understand the effectiveness of each approach and where further investment can be made.

 

Purchase management and cost control

For most sectors in the UK, the pandemic has caused revenue losses. However, this is especially detrimental to hospitality industries. The gross profit margin of a business in the hospitality sector is usually 30 per cent, making it one of the lowest profit margins compared to other industries. Even industries with lower profit margins, including construction and car sales, can alleviate the low margins with higher gross profit. Hospitality businesses cannot do this.

With this said, understanding the balance between a reflective cost and a fair one for your products and services is important. While most businesses will want to offer customers a fair price for food and drink, the finance department should identify the true cost of your service. A reflective cost breaks down expenses.

For instance, it would be important to consider the processes that are used to create your service and how much they cost when setting rates for a hotel room. This includes:

  • Staff wages for receptionist and cleaners

  • Electricity and water

  • Breakfast services

  • Interchange fee

  • How occupancy is affected during different seasons

  • How it may be impacted by the continuing pandemic

It’s a given that other expenses could be discovered too. But understanding how these costs are reflected in your price makes it easier to maintain a healthy profit margin.

To help reduce costs that ensure contracts are reliable and effective, a purchasing manager is advised. Finance departments should negotiate on your business’s behalf, with a quick understanding of how each contract can affect revenue and profitability. For example, some drink suppliers may provide free glasses but may be more expensive overall than suppliers who don’t. How the cost of glassware affects this profitability should be considered.

 

Reviewing your payment methods

When it comes to private sector employment, the hospitality sector is the third-largest sector in the UK. It employs 3.2 million people, producing £130 billion in economic activity and £39 billion in tax for the government. However, it’s important to remember that the sector is broad and variable. Many industries offer different experiences with the unified aim to deliver good entertainment, service, and reception.

However, it’s the expenses and how consumers pay that highlight how the industries differ. For example, you may expect a hotel to receive credit card payments more than a restaurant, who may primarily process more debit cards. A licenced bar or pub may accept more cash than the other examples. These differences have a large effect on your finances. As we move towards a cashless society where card payments are more accepted due to their low contact and hygienic nature, it’s important to understand how your finances may be affected.

For instance, it is a priority that your business reviews if the correct interchangeable fees have been paid after using VISA or Mastercard processes. Interchange fees represent 70 to 90 per cent of all fees paid by merchants to banks. For a sector that has relied on cash, it is clear how the pandemic has changed spending habits and how the increase of card payments will affect your finances.

To help gain a better understanding of the best practices in the sector and to find out what other businesses are paying, companies should speak to their audit accountant.  While auditors will not breach other company’s confidentiality, they will be able to aggregate their knowledge of what is going on in the sector and assist you immensely.

It’s vital that SMEs re-assess their finances since there is so much uncertainty as to how the hospitality sector will financially recover from the events of the pandemic. They need to assess the most effective ways to increase revenue and profitability. Finance departments can be a useful business partner in creating business strategy, whether they highlight future adversity or give a reflection of current expenditure. Your finance department should at the forefront of your business, guiding it through this difficult period.

Businesses reopening
ArticlesFinance

Reopening of Retail Could Create Perfect Conditions for Economic Growth Over Summer

Businesses reopening


Despite Lockdown restrictions and post-Brexit trade disruption, February saw the UK economy grow by 0.4%, according to the ONS. Although not quite a boom, this minor growth in economic output is an important foundation for the months to come, and brings ever increasing optimism that the reopening of the economy through April will bring with it an even better performance. “We’re looking for a 4-5 per cent bounce in GDP in the second quarter,” said James Smith, economist at ING. 

February’s improvement from January’s slump was in large part due to the construction sector, which increased by 1.6% thanks to both new work and repair and maintenance on existing rooms and structures. Lockdown has both provided an opportunity for home improvements, as well as new challenges for the building sector as it adapts to Pandemic restrictions and safety requirements, although Ben Dyer, CEO of Powered Now, added that “restrictions seemed to have had a negligible impact on the construction sector so far.”  

As of September, Santander estimated that three in five (61%) of homeowners carried out a DIY or renovation project during lockdown. To add to the economic activity caused by these home improvements, Powered Now CEO also noted that “the Stamp Duty extension has been a house building bonanza, so growth in the industry is no surprise”.  

Now shoppers can visit their local high streets, it is hoped that the construction sector can pass the torch to the retail and hospitality sectors in driving Britain’s GDP growth. Research by Cornerstone Tax, a property tax firm working with small businesses, illustrates this highly positive consumer sentiment – with 53% of the UK wanting to spend their money at local, independent stores. 13% even want to start their own business. This is backed by PwC, which charts the highest consumer confidence since their records began. At +8, it is an incredible 34 points higher than at the start of the pandemic 

This shows that through the restrictions we have all faced, our tastes have changed. It seems the British public want not just to shop physically, but also want to shop at more specialist and independent stores, hinting at a shift in sentiments. We are now more sympathetic and supportive towards independent stores that are part of a community, rather than part of a corporate chain, and the intrepid entrepreneurs behind them that have survived so far through the Lockdowns. 

We have also seen a trend of deurbanisation in the UK – as people leave major cities to look for cheaper properties, rent and more living space now they can work from home. This has obviously effected house prices, with rural areas seeing the biggest rise and inversely London prices falling. However, it has also distributed more consumers throughout more of the UK, which means more spenders and saving stimulating economic activity throughout more of the UK, and crucially, to regions that have long needed it. 

Discussions around saving the high street are nothing new, and have been a part of the British political landscape for years, cropping up at particular moments of difficulty such as the 2008 recession, and now the Pandemic. It is not just good news for the traders themselves, or the shoppers who get to experience something more special, but also the economy as a whole. SMEs account for two thirds of employment, and half of national GDP; meaning this new focus on the high street is good news for everyone. 

David Hannah, principal consultant at Cornerstone Tax, discusses the optimism felt by business leaders in the UK: 

“It has been a tough year for many, but the light is truly at the end of the tunnel for a nation of shopkeepers who can finally serve the public. The 12th April was a vital first step towards reopening the economy safely, and it has come just in time for many – particularly the hospitality and physical retail sectors that have struggled so much through various restrictions on economic life. 

The news that the economy grew in February, even if only marginally, is welcome news for business leaders throughout the UK. This growth is only expected to go one way: up. If the UK can keep infections low, and the vaccine rollout continues uninterrupted, April should be a month of elation as pounds head to the high street.” 

Property investment
ArticlesFinanceFundsReal Estate

Top Tips to Raising Property Investment Finance in 2021

Property investment


In the UK, property remains one of the most resilient asset classes. From first-time buyers to portfolio landlords, getting established on the property ladder remains a popular way for many to grow their wealth. Depending on an individual’s circumstances and ambitions, Arbuthnot Latham, Private and Commercial Bank, explains the various routes to securing finance for property investment in 2021 and beyond.

 

Property finance for individuals

Many individuals, who have enough capital, will look to supplement their income by acquiring a second or third property on top of the one they live in. This will almost always involve a personal investment of capital and additional funds secured via a loan or mortgage.

The appeal of becoming a buy-to-let landlord is not just the relatively good performance of the UK residential property market, but the fact that the value of the asset can be increased with a proactive approach to property maintenance and improvement. Until now, property has been a very stable asset class, and is one that empowers the owner to increase its value over and above standard market movements. It is important to note, with any asset class, that previous performance is not an indicator of future performance.

If an individual is looking to make this sort of investment, any finance they are able to secure will be contingent on their own circumstances. For example, will they be able to show how they would personally cover a shortfall if rental income doesn’t cover interest payments?

 

Other factors banks consider with individual buy-to-let mortgage applications

Credit rating

Whether they are entering the property investment market for the first time or expanding their portfolio, a clean credit score is an essential part of the puzzle. Small issues like missed payments might not make a huge difference, but County Court Judgements or missed mortgage repayments will be a significant barrier to securing the finance they need.

Minimum income

Most lenders in the UK require a minimum income to consider eligibility, but there are options for those with a lower income threshold, and there are even options available that have no income requirements.

Existing portfolio or assets

What lenders are willing to offer will change depending on if the individual is new to property finance or already own properties. Some lenders won’t consider landlords who own several properties, but this varies across the UK.

 

Property finance for portfolio landlords

Individuals who own four or more mortgaged properties become what’s known as a ‘portfolio landlord’. When they pass this threshold, there are certain expectations on banks regarding due diligence. From here, it’s not just about their own personal circumstances. For example, a bank is required to know the status quo of the rest of their portfolio. They need a deeper understanding of how the assets might interact and will also want to gauge their understanding of the market they’re operating in.

 

Factors banks consider with buy-to-let applications

  • Do they keep accurate records? There are many conditions to satisfy buy-to-let properties (fire safety certificates, guarantees for electrical items, insurance, etc.) More important still for HMOs: annual gas certificates. If they’re disorganised, cannot produce documentation when asked, or their business approach obstructs a bank’s due diligence, this is a red flag when considering a finance application.

  • The bank wants to know that a buy-to-let landlord is competent: aware of their obligations and best practice

  • A portfolio landlord should understand the market they want to operate in. Banks look for investors who have a good handle on their local area. A speculative application – not rooted in a comprehensive business plan – means more risk for the bank and a higher rate of interest.

Portfolio landlords should make sure they chose a lender who is right for them. If the individual are vastly experienced, cheaper rates found on the high street can be the right approach. A note of caution here is that as different lenders’ appetites change, it could result in an ongoing dynamic of regular refinancing to achieve the cheapest rate.

Other investors might move away from -the potentially lighter touch relationship approach of the high street, and opt for a longer-term relationship of consistency where their banker understands their circumstances, has years of sector expertise and can tailor solutions to meet their needs.

This is particularly helpful when circumstances change. The pooled collective knowledge of a real estate finance team can be particularly valuable to help a portfolio landlord adapt when circumstances change.

Start Up
ArticlesFinance

Financial Tips For Starting Your Own Business

Start Up
Stuart Clark, Managing Director at Russell & Russell Business Advisers
If one positive emerges from the miserable pandemic year, we have all endured, it is that the number of people in the UK who want to start their own business – to take control of their own destiny – is on a strong upswing.
And it is not just a case of people who have lost their jobs casting around for alternatives. Recent research shows that one in five adults are planning a start-up, a figure which rises to 34 per cent among 18 to 34-year-olds. Only 6 per cent said it was because they had become unemployed.
So, it would appear, the entrepreneurial flame has not been dimmed by the ravages of Covid, but while the ambition to branch out on your own is admirable, it is only prudent to be aware of the pitfalls as well as the pinnacles of being your own boss.
What kind of business is for you? Where does my reward come from? What about tax? How do I price my services? How do I find new business?
These are all valid questions, and it is vital to set out your stall correctly right away, as getting it wrong at the start can prove very costly.
First, it might pay to dispel misconceptions aired in the national press that self-employed people enjoy more tax advantages than employees. This is just wrong. The self-employed have no option as to how they pay tax on profits. That potential benefit applies to owner managers of limited companies.
And it should be remembered that while directors of their own companies may pay slightly less tax, they also contribute a lot more to the economy through corporation tax, VAT, and employee PAYE – and they enjoyed little Government support during the pandemic.
Here are some fundamentals to consider:
 
STATUS: Limited company or sole trader
Sole trader status may be fine for one-man-bands, but businesses seeking investment will want to be a company. There are also potential benefits that companies are thought to be bigger entities than sole traders, though this is not always the case, with customers and suppliers alike.
In addition, whichever structure you choose will affect how you can treat losses, how you pay yourself and how you are taxed.

 

REWARD: How do I pay myself?
Sole traders are taxed on profits. If you make £50,000 profit and take £2,000 a month in remuneration, you are taxed on £50,000, not £24,000.
In a company, profits are taxed at a flat 19%, then shareholders are taxed at different rates on dividends they may take. Roughly speaking, salary plus dividends will result in greater tax savings than salary alone. In the example of £50,000 profits before tax which are fully distributed to the shareholders, this equates to approximately £6,000 extra cash in hand / cash in the business to reinvest each year.

 

What about VAT?
You need to register for VAT if you have sales of more than £85,000 in a rolling 12-month period, whether you are a company or a sole trader, though there are some exempt sales such as medical services.

 

TAX: How much do I pay?
How long is a piece of string? Everyone’s circumstances will differ. What to remember is that paying tax should be a positive – it means you have a successful business. There are ways that you can reduce your liability.
Also, be aware that the first year you do a personal tax return, you will have to pay 150% of your liability, as HMRC will want you to pay 50% upfront for next year. Sole traders and directors need to complete personal tax returns.

 

ACCOUNTANTS: Do I need one?
Yes. That is the simple answer. Accountants are professionals who are trained to make your business more tax efficient and help you manage your finances. They are impartial, scrupulously fair and, above all, on your side. They should also be an investment NOT a cost. They should help you to save money or grow your business.

 

PRICING: How do I get it right?
Beware of discounting. Doing less work at the right price instead of lots of work at the wrong price can have a positive and healthy effect on margins. You need to know who your ideal customer is and what your ideal price point is. This is where a good accountant can make all the difference.
If you buy something for £70 and sell it for £100 then your gross profit margin is 30 per cent. To make £300 you need to sell 10 units. If you gave a 10 per cent reduction in price this would mean your gross profit per sale would drop to £20.
So, to make £300 you need to sell 15 units. A 10% discount means you need to do an extra 50 per cent more sales to make the same amount of money.
 
BUSINESS: How can I keep it coming in?
You can never make it too easy for your customers to do business with you. Get to know them, understand your ideal customer and where they “hang out” so you can target them, either online or at networking events, and consider partnerships with other businesses and use referral schemes.
Marketing is like a little wheelbarrow. You can put all you want in it, but unless you push it you don’t get anywhere!
 
ANYTHING ELSE?
Insurance. As a sole trader you are personally liable, whereas a limited company’s liability is, yes, limited.
Wills and power of attorney. With luck, your business will become an asset and therefore part of your estate. And without power of attorney, money could be trapped in the business in event of personal misfortune, leaving employees and suppliers unpaid.
Remember, accountants think about all the matters above so that you can concentrate all your energies on building the business of your dreams.
Success is there for the taking. Good luck.
Fintech purchase
ArticlesFinanceMarkets

Fintech Platform Butter Raises £15m

Fintech purchase


Butter, the London based fintech platform that started life as the UK’s first Buy Now Pay Later (BNPL) travel agency, has just closed a £15.8m funding round to accelerate the rollout of its responsible open-banking based BNPL shopping app.

 

Who has invested?

Butter has raised £15.8m via BCI Finance, the credit arm of London based venture builder Blenheim Chalcot, as well as a number of other private Angel investors in order to expand Butter’s offering.

 

What is Butter?

Irritated by the lack of flexible payment options whilst planning a holiday, co-founder Timothy Davis was inspired to build the UK’s first buy now pay later travel agency, enabling travellers to spread the cost of travel arrangements over time, with full payment not due until after the trip.

Together with co-founders Stefan Hobl and Nik Haukohl, Butter achieved full FCA regulated status in 2017, and 4 years later, Butter has evolved into a British fintech platform with over 100,000 customers, offering instalments across every consumer vertical and flying the flag against other sector giants such as Klarna.

Butter quickly established a firm foothold in the travel and tourism industry as the UK’s first BNPL travel agency, providing a flexible, cost-effective way to book travel, with full payment not due until after the trip. A ‘layaway for getaways’.

When the pandemic brought the travel and tourism industry to a grinding halt two years later, Butter adapted fast, launching the UK’s first BNPL shopping app alongside their travel offering, enabling customers to spread the cost of any purchase from any online store.

 

What makes Butter better?

Unlike other BNPL providers, Butter’s unique “over-the-top” (OTT) solution enables customers to spread the cost of purchases with every store on the internet, without requiring merchants to support Butter via a technical integration. Instead, Butter’s in-app universal checkout takes care of paying retailers, with customers then able to repay the costs over 2, 3, or 4 monthly payments.

Popular stores in the Butter app include Amazon, Argos, BooHoo, ASOS, H&M, Zara, Hugo Boss, Sports Direct, AirBnB, Currys PC World, Ao.com, IKEA and more.

As the UK’s first FCA regulated BNPL provider, Butter has successfully developed a unique credit decisioning process with affordability at its core, utilising open banking and machine learning to ensure that lending is responsible and that customers are only able to borrow amounts based on what they can afford.

Timothy Davis, Co-Founder and CEO of Butter, commented: “Our goal at Butter has always been to provide consumers with a simple and responsible alternative to credit cards and loans, enabling them to instantly spread the cost of anything from a takeaway to a holiday over a simple and transparent instalment plan, all within one easy to use account.

We want to remove the stigma surrounding the buy now pay later offering and empower consumers by allowing them to budget and spend intelligently and in a manner that suits their individual financial needs.

We’ve set out to achieve this by building a platform focussed around transparency, responsible lending and the ability to transact on bigger ticket items compared to other providers, whilst also offering more choice to customers through our unique over-the-top solution, which enables consumers to shop any online store in existence with Butter.

The funding that we have secured via BCI will help facilitate the scale-up of our business as we continue to pioneer innovation in the buy now pay later space.”

 

Paul Maurici, Investment Manager at BCI, commented: “Our mission at BCI is to be the funder of choice for UK Fintech’s looking to scale.

Butter is a young and ambitious company, which combines a tech-enabled approach to lending alongside impressive customer delivery capabilities.

With its FCA authorisation already in place, the business is well placed to continue strong growth while assisting its customers in managing their money better.”

Tech company investment
ArticlesInfrastructure and Project FinanceMarkets

Why Investment in Small UK Technology Companies Could Provide Sustainable Returns

Tech company investment

By Andrew Aldridge, Partner at Deepbridge Capital

The UK is widely regarded as one of the greatest places to start an innovative tech company. This shouldn’t come as any surprise given the world-class academia we have to offer, the legacy of innovation and, importantly, the funding opportunities available to entrepreneurs. Of course, we also have a language advantage for global businesses which shouldn’t be underestimated.

There can be a temptation to look to the USA and the glamour of Silicon Valley, and indeed this may be where some companies ultimately end up in order to achieve their ‘Unicorn goals,’ but that doesn’t tell the whole story.

At Deepbridge Capital, we are fortunate to work internationally and all of the aforementioned points are regularly raised as reasons for growth-focused tech companies wanting to be involved in the UK ecosystem, as well as the other sector-focused appeals of the UK.

For example, for medtech companies, the rubber stamp of having the globally-recognised NHS trialing or adopting a device can be of massive significance. Such a testimony opens doors with healthcare providers elsewhere and the scalability that offers.

To a similar degree, fintech can find a natural home in the UK, as a global financial hub, with initiatives such as the FCA Sandbox providing a test bed which can empower fintech innovators to prove concept and showcase innovation.

I could continue by looking at legal tech, biotech, agritech and many more. Indeed, the UK has developed a number of ‘hubs’ across the country to provide opportunities for collaboration and innovation in specific fields of tech. Often these hubs are associated with academia and other influential partners. Outside of the ‘golden triangle’ of London, Oxford and Cambridge, examples of such hubs, include Liverpool as a gaming and virtual reality hub (indeed our investee company vTime is at the forefront of this); Manchester as a digital hub but also the home of graphene (again, we have helped a great company in this sector, Flex-G, create a Manchester base); Edinburgh and Bristol as digital innovation hubs, and numerous less well known areas such as west Wales (working with the likes of the University of Aberystwyth) focussing on agritech.

Naturally, our excitement in all of this is centred on the investment opportunity. As highlighted earlier, the funding ecosystem in the UK is a big reason for the success of tech companies here. This is particularly true in what is often the most difficult funding stage, being the first commercialisation funding or early Series A funding.

The first funding a company received is usually self-funding, or the attraction of funding from friends, family or a supportive business angel. This is usually based on a ‘good idea’ and goodwill towards the founder. This funding tends to be relatively small ticket and, in reality, is an investment ‘punt.’

When you then get to later funding rounds, later Series A and Series B, tech companies are usually expected to have significant recurring revenues and there is no shortage of funding opportunities both here in the UK and elsewhere.

In both of these examples, the UK has a strong track record of funding, but where the UK really excels is at the stage ranging from ‘seed’ funding to early Series A. At this point, a tech company is likely to be beyond the cheque-size which can be offered purely on goodwill, but is unlikely to have the revenues to support interest from the VC, PE and institutional funds looking for a de-risked opportunity.

Historically, this funding gap has been described as the ‘chasm of death,’ as it is often where a company will choke due to lack of funding. However, this is an area where the UK has a significant competitive advantage on international peers; the Enterprise Investment Scheme.

The Enterprise Investment Scheme (EIS) provides the incentive to investors to support growth-focused companies through unparalleled potential tax reliefs. Over recent years, between £1.5bn and £2bn of funding each year has been availed to growth-focused companies under EIS. Founders and investors globally regularly remind us of their jealousy of the UK in this regard – it is important that UK investors and financial advisers are aware of this global envy and the fortunate position they are in.

The tax reliefs offered under EIS provide a degree of risk mitigation for investors, with early-stage investments naturally being high risk, but it is critical that investing at this stage is undertaken with due care and in conjunction with a sector-experienced investment manager.

This stage of investing has great growth opportunities and taking a company from proof of concept through to a significant annual rate of return, can be a significant value inflection journey. At this point of investing, we are looking for companies which have used their initial funding to prove concept and develop initial market traction, with our funding then empowering the commercial growth to subsequently attract large-scale co-funding for corporate growth and then an exit for investors.

There has never been more technology innovation around us and in a digital world it is natural that this is where investment opportunities will lie. If investors are looking for growth, then UK tech is a great place to be and arguably the growth point is exactly where EIS funding is applicable.

We have already seen the shift of tech companies becoming the world’s largest, so it is not a surprise that tech is at the heart of most investment portfolios. However, the long-term growth opportunities often lie at an earlier stage and the UK is a great place to empower this, thanks in part to EIS. And, why wouldn’t investors want tax reliefs, CGT free growth and potential loss relief?

Retail investor
ArticlesFinance

The Rise of the Retail Investor and Armchair Financial Analyst

Retail investor

A perennial gamechanger ever since its influence reached into households, the internet continues to upend industries, disrupt cultural norms, and challenge the status quo. Name your sector – media, retail, finance, etc. – and the internet age has had a lasting impact.
When it comes to finance, nowhere is this more apparent than the rise of the “retail investor” and the armchair financial analyst. Often one and the same, these individuals are determined to make money in the markets and manage capital gains wealth without going through the traditional channels.
With that said, it would be inaccurate to claim these “average joe” investors and analysts are doing it all by themselves. The power behind the Secretlab chair is the myriad of online firms providing reliable financial advice and services at affordable prices and with minimal commitment.
One-stop-shops for financial services seem to be the most popular starting point. Financial service firms like Strategic Consulting offer a range of products and services that customers can evaluate with their specific situation in mind. Virtually everything can be done digitally, which is a significant selling point to those interested in protecting their finances while uncertain about handing the keys over to a fiduciary firm.
The next step for today’s retail investor is to find a user-friendly brokerage firm. The recent drama involving Gamestop and AMC Theater stocks involved an army of these investors utilizing app-based Robinhood broker services, which melted Wall Street several days before pressure forced company leaders to pull the plug.
As a result, users flocked to existing brokerage firms such as TD Ameritrade and E-Trade. That transition was made possible by the user-friendly updates these old school firms have made in recent years.
Despite the backing of qualified services and the demonstration of informed decision-making, today’s retail investors and armchair analysts continue to be considered second class compared to the more traditionally accepted financial professionals. It’s a slight that isn’t lost on these upstarts, many of whom are ex-industry insiders who – for one reason or another – are now hellbent on upending the status quo they once considered the standard of success.
It’s worth noting that amateur investors and hobbyist financiers are nothing new. Lacking the wherewithal to avoid financial ruin, their reckless investment choices were partially responsible for the infamous stock market crash of 1929. Over decades, the difference is the amount of influence this faction has on the overall health and destiny of the markets.
The role of low-rung investors and financiers was almost entirely sidelined in the decades after the Second World War. It was only with the advent of the internet that their significance and influence regained momentum. Setbacks, such as the 2008 crash and ongoing pandemic-related recession, are the only signs of distress when examining the situation in its entirety.
One thing is for certain: retail investors and armchair analysts are here to stay. It’s just a question of how much sway they’ll have over the markets in the months, years, and decades ahead. If the past is prologue, the influence will ebb and flow.
Build credit
ArticlesFinance

How to Get a Jump Start on Building Credit

Build credit


You may not be entirely happy with where your credit score is. However, there might be a few quick ways for you to bring it up a bit. It depends on why it’s down, but you may have the ability to add as many as 100 points relatively quickly. Let’s take a look.

 

Making Payments

Maybe you went on vacation – to Las Vegas, or anywhere really. Say while you were there, you got one of those Las Vegas loans. If you can make a few small payments, known as micropayments, throughout the month, that can assist with keeping those balances down and can lead to a few additional points on your credit score. Making a few payments throughout the month affects what’s known as credit utilization. After your payment history, this particular factor highly influences your overall credit score.

 

Credit Limits

If you get an increased credit limit on your credit cards, yet your balance remains the same or lower as you pay it down, this instantly lowers your credit utilization, and this can lead to a higher credit score. Call the issuer for your cards and ask if they can raise your limit without performing a hard credit inquiry, as this can temporarily make your score go down a bit. If you’ve had an increase in income or added a few years of positive credit history, you may have a good shot at getting your limit raised. 

 

Pay Your Bills

There isn’t a strategy out there that has the power to improve your credit if you’re late paying even just your utility bills. You see, your payment history is the single largest factor that affects your credit score, and making late payments can actually appear on your credit report for as long as seven years. If you make a payment 30 days or more late, call your creditor as soon as you know you’ll be late. Make payment arrangements, and ask them if they’ll consider not reporting the late payment to the credit bureau. The worst they can do is say no. Then, do all you can to bring the account current as quickly as you can.

 

Dispute Errors

Even if you’re making weekly payments on your credit cards, a mistake on one of the credit reports can pull your score down quickly. By the same token, repairing this can quickly make your credit score go up. Everyone is entitled to a free credit report each year from each one of the credit bureaus. Request these reports and make sure there aren’t any mistakes, such as late payments or even negative info that (due to age) should no longer be listed. Dispute any errors you see and make sure they are removed.  

 

Keep Cards Open

If you’re in a hurry to raise your credit score, you need to know that closing any credit accounts can actually make your mission a bit more difficult. Closing even a single credit card will mean that you lose the credit limit on that particular credit card when taken as a part of your overall credit usage. This can actually bring your score down a bit. Keep your cards open and use them periodically so that the card issuers won’t close them on their own.

Finally, mix things up a bit. If you only have loans or credit cards, think about getting a different type of credit that you don’t already have, if only to raise your score. If you improve your mix of credit – say, having both revolving credit and installment accounts, you’ll be giving your score a boost. 

Personal finance
ArticlesFinanceSustainable Finance

Answering the Nation’s 10 Most Common Personal Finance Questions

Personal finance

By Annie Charalambous, Content Manager at ETX Capital

The pandemic has drastically impacted our lives and our savings. Research shows that while lower-income households across the UK have had to dip into their savings to stay afloat, higher-income households have grown theirs.

It seems everyone is looking for new income streams and ways to get more bang for their buck – including navigating the often-complex world of savings and investments – and they’re turning to the internet for advice on where to start.

That’s why we’ve filtered through the noise to give you the nation’s top 10 most commonly asked questions around personal finance – and answer them too.

 

Which shares should I buy (49,500 monthly searches) and how? (9,900 monthly searches)

The shares you choose to invest in will depend on various factors, including the level of risk you’re willing to take, the overall market climate, and much more. Before you do buy (or short) any shares, you’ll want to do your homework on both the company and the industry at large.

For example, if you see ABC Manufacturers’ stock price is up this year, before buying in, you may want to look at how their performance stacks up against competitors like XYZ Manufacturers or view their most recent quarterly report.

There are always opportunities in the market to suit every budget and experience level, but much like picking the winning lottery numbers, there is no winning formula for what to invest in, or when.

 

Which companies are in the FTSE100? (40,500 monthly searches)

The FTSE100 is made up of the 100 largest (qualifying*) companies (by market cap – available shares multiplied by current share price) listed on the London Stock Exchange. The index acts as a major indicator of the UK stock market at large. Its 3 largest constituents are Unilever, AstraZeneca, and HSBC.

*To qualify, a company must meet requirements set out by the FTSE Group.

 

What is an ISA? (12,100 monthly searches)

An ISA, or ‘Individual Savings Account’, is a savings account available to anyone in the UK over 16, without taxing the interest earned on it. Considered a lower-risk investment, the drawbacks are that you can only hold one active ISA per year, and you are capped on how much you place in it (currently at £20,000).

There are two kinds of ISAs: a ‘cash ISA’, whereby you pay into it like you would a traditional savings account to earn interest, and a ‘shares ISA’, where your money is invested in stocks and bonds and neither the interest – nor any profit – is taxed. While the latter has more potential for greater returns, being tied to the stock market also means a greater risk of losing money.

 

What are bonds? (8,100 monthly searches)

A bond represents a loan, typically given to a body like a government or large company, by an investor. Governments may opt to issue bonds to raise money, and then agree to buy these bonds back at a later (agreed-upon) ‘maturity’ date. Bonds are considered a low-risk investment and can be a good way to diversify your portfolio with minimal exposure.

 

What is an ETF? (6,600 monthly searches)

ETFs, or ‘Exchange-Traded Funds’, are an asset type similar to index funds, in that they comprise of different stocks – usually representative of a particular sector – and are typically managed by larger companies (Vanguard, iShares, etc.). However, index funds are connected to exchanges and correlate more with that country’s economy and stock market.

 

What is a hedge fund? (5,400 monthly searches)

A hedge fund is an aggregated pool of money from different investors that is managed by an institution or individual. The hedge fund manager closely monitors the investment and is able to react and adjust accordingly (as per their strategy).

 

What is pension drawdown? (5,400 monthly searches)

Pension drawdown occurs when you continue to invest into a pension whilst simultaneously withdrawing money from it, essentially giving yourself a steady ‘income’ out of your own pension pot.

 

What are dividends? (4,400 monthly searches)

Dividends are a portion of a company’s profits that are distributed among its shareholders.

For example, if you buy 10 shares in ABC Manufacturing and they pay an annual dividend of £5 per share, you’ll be eligible for £50 back in your pocket that year – if you’re still holding those shares at the ex-dividend date.

 

What is cryptocurrency? (4,400 monthly searches)

Cryptocurrencies are digital-only currencies held on the blockchain. Unlike regular ‘cash’ currencies, cryptocurrencies aren’t tied to any central bank and are therefore unregulated, volatile, and considered a high-risk investment.

Those are coincidentally the same reasons for the relatively mass adoption over recent years – as more institutions accept and even integrate the likes of Bitcoin, XRP, Ethereum, and countless others, these assets risk becoming a part of the very world they were created to challenge.

Alternative Investments
ArticlesFinanceTransactional and Investment Banking

Beginner’s Guide to Alternative Investments

Alternative Investments

Alternative investment assets like collectibles, art, cryptocurrency and loans are attracting an increasing number of retail investors by offering low buy-in, high returns and efficient diversification options

Every few years the line between traditional and alternative investment opinions is re-drawn, as many alternative investment options become more and more mainstream. Everything outside the traditional investment options that are typically accessed through traditional financial institutions –  falls into the category of alternative investments. They do not include, what is now considered traditional investment options: ETFs, gold, bonds, pension funds, and others.

Alternatives category may include both physical and virtual assets, spanning real estate, art, fine wines and aged alcohol, rare items, cryptocurrency, loans, private company debt or ownership, and collectibles. There is no limit to collectible investments, as value can be found in designer sneakers, baseball cards, or even Barbie dolls.

Alternative investments can create both long-term appreciation and immediate income streams. One of the most active investor groups in alternative investing is retail investors – in other words individual investors, who want to take an active role in propelling their own financial success.  One of the most active groups, drawn to alternative investments is a millennial cohort, who exert skepticism about the power of pensions to really secure their retirement, as well as a propensity to learn to operate an alternative portfolio. Technology now allows to ensure sufficient diversification with only a few clicks, and to branch out into immediate passive income or short-term high-return opportunities. 

Five most popular alternative asset classes

1. Real estate. Part of the real estate investment market can be considered a traditional asset class – after all, even banks own real estate and hold on to it as a long term investment strategy. It’s an all-time classic to store value and a potential tool to expand earnings during positive market cycles. The biggest disadvantage of real estate are the big upfront costs and relatively low liquidity, if ownership is outright. That said, the modern – alternative investment options have become available in the real estate market, including real estate investment trust (REIT) and partial or fractional ownership ventures. Retail investors can now invest in various real estate projects by owning a part of its development and then receiving interest once it is developed.

2. Art, valuables, and collectibles. Once again, just like property ownership, some collectibles like fine wine or paintings are quite traditional – accessible to exclusive investor circles, with very high-buy in cost. The alternatives that are accessible to a wider audience, like baseball cards, or designer sneakers are easily researched on online marketplaces, like eBay. Some items can be owned outright in physical form, requiring some care and protection. But it is also possible to fractionally own any of the collectibles, including in-game items and virtual goods with residual value. This asset class has unpredictable returns with relatively difficult average appreciation, but can outperform other asset classes as an insurance. Companies like Masterworks and Otis are allowing retail investors to purchase shares in fine art pieces or unique collectibles. 

3. Crypto-assets. A hot and highly volatile asset class, which allows for both passive buy-and-hold strategies, and for trading. The chief advantage of cryptocurrencies is the relatively easy entry, with the potential to operate and hold the assets in a personally protected wallet, instead of relying on brokers or other third parties. Challenger banks, like Revolut, or  payment platforms like Paypal have integrated digital asset trading on their platforms – making it even more accessible. With recent cryptocurrency popularity, a new alternative investment asset class became popular – NFTs (Non-fungible tokens) – which are centered around collectibles, such as digital artwork, sports cards, and rarities. One trending platform would be NBA Top Shot, a place to collect non-fungible tokenized NBA moments in a digital card form.

4. Loans. Interest-bearing investments in packaged loans can bring transparent, predictable returns that outperform traditional investments. While investing in loans gives short-term returns, loans should be viewed as long-term investments. This asset class has a low entry point, while some platforms, like Mintos also sort potential investment in loans with a risk tolerance profile. It is important to diversify investment in this asset class in order to achieve stable income over time.  Investing in loans is also accessible to multiple economic areas.

5. Private company investments. Private equity and company loans are asset classes sometimes reserved for accredited investors. Because of the risky nature of private companies, some of the investments are only available to accredited buyers. Private equity is also off-limits to most retail buyers, due to its riskier nature and the higher barrier to entry. Loan investments can sometimes circumvent this limitation, by offering business loans for partial ownership and relatively low sums. More accessible option, albeit not very liquid, would again be fractional investment, or crowdfunding, which is available through platforms like Crowdcube.

Final thoughts 

Alternatives are bound to grow. Research by Prequin shows robust growth of alternative investments, to as high as $14 trillion in 2023. The Prequin report covers private wealth managers, but alternative investments are also open to retail owners, due to their variety and enhanced technological access.

The growth potential of the alternative investor sector also means adequate liquidity and price discovery will happen as more buyers join in. Fees are one of the hurdles that diminish the real returns of investment, but the more apps and investment hubs pop up, the more competition to offer low fees, increase service quality benchmark and attract investors.

Money mistakes
ArticlesFinance

Don’t Make These Money Mistakes

Money mistakes


Paying your bills and having a little leftover each month to contribute to savings can be challenging. Even working in a well-paying career, it can be difficult to feel like you are making headway with your financial goals. If it doesn’t feel like you are progressing as you should, take a look at these common money mistakes and see if any sound familiar.

 

Paying High-Interest Debt

If you have credit card debt, there is a good chance you are throwing money away. Unless that debt is tied to a zero-interest promotional offer that you know you will pay off before the promotional period ends, you need to look at getting rid of this expense. Cutting expenses and focusing on paying off credit card debt is one way to attack the problem, but there are other options. Consider taking out a personal loan. Check online to see what rate you qualify for and choose an APR that works best for you. Unless you have a great deal on your credit card, you are sure to pay less interest by taking out a personal loan to pay off your cards.

 

Mindless Spending Stemming from a Lack of Planning

If you find that you are frequently stopping to pick up takeout on the way home from work, paying late fees on your bills, and purchasing items to replace something you know you have somewhere, you could easily save money by dedicating some time to planning. Look at your bank statement to see where you regularly spend money on your discretionary income. Pinpoint holes that are easy to plug, like fast food lunches. Packing your lunch saves money and is also generally a healthier choice.

Other questionable expenses may not be as noticeable. Do you regularly throw food out at your home? Make adjustments to your menu to reduce food waste, and you will lower your grocery spending. Do your utilities seem high? Look for easy fixes, such as hanging drapes to block drafty windows and turning your thermostat down a few degrees. Comb your bank statement for subscription services that you don’t use and cancel them. Cancelling can be a hassle, but spending a few minutes doing so can save you money each month.

 

Not Prioritizing Savings

Consider your savings account a bill like any other. If you only contribute money that you have leftover, you are sure to find that your savings aren’t growing very quickly. Instead, transfer a specific amount from your checking to your savings each pay period. Prioritize retirement savings as well. It is tempting to put saving for retirement off when you are young. Your income may be low, and you feel like you have plenty of time to contribute.

All of that is true, but the earlier you start saving, the more time the money has to grow. Your retirement savings will be much greater if you make regular deposits during your 20s and 30s. If, after examining your budget and making changes, you still struggle with having money left to save, consider taking a part-time job. Don’t think of it as a permanent move, just a chance to get out from under debt and boost your savings.

Insurance
ArticlesFinanceInfrastructure and Project FinanceWealth Management

This Is What You Need to Know About the Insurance You Didn’t Know You Needed

Insurance


There is no end to the questions and misconceptions people have about insurance. One of the most common misconceptions is that insurance is intended to be a discount for needed services. Indeed, many people never have reason to question this idea. After all, a visit with the general practitioner costs about $150 without insurance, and $5 or less with insurance. They measure the quality of insurance based on the perceived discount they gain.

However, this confusion drives many people to make bad decisions about insurance due to the fact that they are fundamentally wrong about what it is. Insurance is not a discount service. It is a risk management service. No one sells you insurance for events they know will occur. They sell you insurance for events they believe are less likely to occur. Insurance companies need you to pay them more money than they pay you. The house always wins. When it doesn’t, it goes bankrupt.

That is why life insurance generally costs less for people who are young and healthy. Coverage for lightning strikes is inexpensive in places that don’t have many electric storms. But in Tornado Alley, you might not find a company that offers it at all. It is primarily about risk management. Here are some other factors that will help you decide what insurance you really need versus that which you can do without:

 

Car Insurance

You know you need car insurance because most places require a certain amount of it before you can legally drive. But what about insurance for a car you have that you don’t drive? Do you need insurance on a car that doesn’t run? The answer might surprise you. It is more of a maybe than a yes. But it is more yes than no. Confused? Good. It is a confusing issue.

What happens if your undrivable car is stolen? Do you still expect it to be covered? If so, you are definitely going to need insurance on that parked car. What happens if it gets whisked away Wizard of Oz style? It might not be an act of any god you believe in. But insurance can still cover it. If you don’t want coverage for those things, it still might not matter. If you are paying for the car via a loan, the loan holder determines whether you can end coverage. Hint: You are going to need to keep that coverage. Remember, insurance is about risk management. The loan holder will not be taking a risk on that even if you want to. There are things you can do to reduce your insurance burden on a car that doesn’t run. But at the end of the day, you are probably going to have to carry some type of insurance on it in most states.

 

Renters Insurance

Everyone has heard of homeowner’s insurance. It is advertised in TV commercials. Not everyone knows about renters insurance. Only 41% of renters opt for renters insurance despite the price of renters insurance hitting average lows of $15 per month. It is clearly a type of insurance people don’t think they need. They will have a very different notion of what they need if they find themselves a victim of burglary. Your neighbor can set the building ablaze leaving you holding the bag for losses. Renters insurance might even cover accidental damage of items like smartphones and laptops.

 

Life Insurance

It should go without saying that everyone needs life insurance even when they are young. The problem is that young people feel invincible. So they never consider what will happen to their family if they died unexpectedly. It is even more of an issue if children are involved. When young couples get together, they blow the budget on elaborate rings. Instead of an expensive ring, insist that your partner buy life insurance instead. That is a much better sign of love and responsibility than jewelry.

Insurance is complicated and confusing. The thing to remember is that it is less about discounts for things you know will happen and more about risk management against things you don’t expect. Whether it be auto, renters, or life insurance, ask plenty of questions. And don’t stop until you get the answer you need to make a good decision. 

Consumer spending
ArticlesFinance

Self-Sufficiency Set to Influence Consumer Spending in 2021

Consumer spending


In times of sudden and dramatic change, people tend to react in one of two ways. They either tense up and resist the inevitable for as long as humanly possible or take a deep breath and adapt to the new normal.

Generally speaking, the coronavirus pandemic has forced many of us to decide which way we’re going to react. While many people have chosen to live in denial, others see the pandemic as an opportunity for self-improvement.

For most folks, 2020 was the year when they realized they weren’t nearly as self-sufficient as they thought. In the absence of products and services we took for granted, it became apparent to many that achieving some sense of normalcy would require self-sufficiency.

With most experts anticipating another year of mask-wearing social distancing, it’s safe to say the self-sufficiency trend will continue through 2021 and beyond. With this in mind, investors and wealth management professionals will want to get on board before it’s too late.

Investing in the self-sufficiency industry opens up hundreds of possibilities. That’s because, as a result of the pandemic, the push for self-sufficient living permeates through every aspect of our lives. For example, due to working from home, many people are learning how to make coffee for the first time. Previously, they made a daily stop at Starbucks or Dunkin Donuts on the way to work. Since that’s no longer a feasible option, they opt to brew gourmet coffee at home.

If you’re an investor in early 2021, do you buy stock in one of the nation-wide coffee shop chains or online services sending monthly boxes of gourmet coffee to homes across the country? While the question assumes a false dichotomy (you could hedge your bets and invest in both or invest in neither), it highlights the gut-check security of investing in any business that’s currently selling a do-it-yourself alternative to things we outsourced before the pandemic.

However, investors must know the difference between a gimmick and a pot of gold. Do-it-yourself baking kits? That’s a winner. Do-it-yourself foundation repair kit? That’s probably not something people will want to tackle on their own in any circumstances.

With that said, the current trend towards self-sufficient consumerism doesn’t mean investors need to give the cold shoulder to big business mainstays. While so-called disruptive industries have been the topic du jour among investors for years, the prevailing pattern suggests industry giants will adapt to the new normal. If the new normal is more consumers choosing to DIY things they previously paid others to provide, it won’t be lost on those in control of the world’s largest companies.

2020 was a year to remember for all the wrong reasons. With that said, the pandemic and events surrounding it have led many to make changes to the way they do things. On the consumer side, individuals take on more responsibilities, while businesses are tasked with adjusting to changing consumer trends. While the overarching circumstances are unique, this pattern is business as usual. Investors should take note.

 

Finance software
ArticlesFinance

Improve Your Business and Finances with Software

Finance software


It doesn’t matter if you’re a business owner or an individual simply looking for a way to boost your financial standing, there are steps you can take to move in the right direction.

One of the first things you should do is consider the benefits of software.

There’s a software application for almost everything, ranging from budgeting to building your credit score to managing your debt. On top of this, there are advanced applications, such as master data management software, that are more inclined to help you maintain control over your company finances.

If you’re wondering if software is the right solution to your financial problems, you’re in luck. Here’s a list of five benefits of implementing software into your financial strategy:

 

1. Accuracy

Take for example a budget that you track with a basic spreadsheet or pen and paper. While it’s possible that you’re able to maintain accuracy, it’s also more likely that you’ll make a mistake.

But with software, this is never a concern. You’re relying solely on the application to maintain your accuracy, so the only thing you have to worry about is the inputs. Proper budgeting takes accuracy. 

Without accurate numbers, you can’t expect your finances to be in order. 

 

2. Time Savings

Who wants to waste valuable time managing their personal finances? Not most people!

If you continually find yourself wasting time and wondering how to speed up, the answer is likely to be a software application.

Pinpoint where you’re losing time, find a few software solutions that make sense, and give them a try.

As you save time, you’ll come to realize that you have more time for tasks that have a greater chance of moving the needle. 

Tip: if you find that a software program is costing you time—not saving you time—you should think about moving on. It’s counterproductive. 

 

3. Money Savings

Even if you have to pay for a software program, there’s a good chance you’ll save money in the long run.

Sticking with the example above, imagine a situation in which you make a budgeting mistake because you weren’t using software.

By the time you catch this mistake, it’s already cost you money, such as in bank fees or a client that’s upset with you and canceled their service.

If you want to save money—and everybody does—consider the way that software can help you do just that. 

 

4. It’s More Fun

At first, you may not agree with this. After all, you have to learn a new way of doing things. 

Even though there’s a slight learning curve in many cases, you’re likely to have more fun over the long run.

There’s something cool about using an app that allows you to maintain efficiency and save you time and money. It makes you feel good about the steps you’re taking. It makes you realize that you’re doing your part in making the most of your financial circumstances. 

 

5. It’s Easy to Use

There’s no doubt about it. Many people shy away from using software because they don’t want to deal with the learning curve. 

It’s 2021 out there, so this is no longer a problem. When you choose a high-quality software solution, it’ll be easy to learn and use. So, you can get up and running within a matter of minutes.

Adding to this, most software providers have robust learning centers and customer service teams. There are answers to be had and people who can provide feedback in a timely manner.

Tip: don’t just ship if you’re facing an early learning curve. Stick with what you’re doing. It’s likely that you’ll eventually catch on. And when you do, that’s when the real benefits start to flow in. 

 

Final Thoughts

So, there you have it. This should give you a better idea of how you can use software to improve your business and finances.

If you’re ready to take action, choose a few solutions and implement them in your daily life. This will allow you to see what works, what doesn’t, and where to go next.

What are your thoughts on using software to assist you with money management related tasks? Have you done this in the past at work? How about in your personal life?

Financial stability
ArticlesFinance

Becoming Financially Stable

Financial stability

Do you feel like you are always going through ups and downs with your income? Unfortunately, riding a financial roller coaster won’t allow you to achieve wealth or even hit your long term goals. 

Thankfully, you no longer have to live life that way. 

 

Consolidating Debt

An excessive amount of debt can make you cash poor regardless of your income. Consolidating credit card debt will free up money from your budget. Applying for credit cards that offer balance transfer interest-free or finding low-interest refinance mortgage loans are a few options to help you get out from under the debt.

 

Eliminating Reckless Spending

Many people mismanage their money. They see something they want and buy it giving no thought to repayment. Unfortunately, spending money on impulse is a sure way to remain financially unstable. There are a few preventative measures you can put in place to reduce your chances in the future. 

First, if you can’t browse, don’t visit stores unless you have things you need. Second, pay with cash. You’ll get a genuine sense of how much something costs and only have a set amount of money on hand. Finally, when you do shop, bring a list and stick to it. 

 

Invest in You

One of the best ways to achieve financial stability is to earn to your full potential. If you accept less than you’re worth, then you could be cheating yourself out of comforts in life. If you took a job without a college degree or left college with a bachelor’s degree, take some classes and earn your master’s. The higher your education, the higher your earning potential. 

 

Promote Health

While genetics may put you at a greater risk of contracting a disease or illness, it doesn’t mean that you have to drain your finances to experience a good quality of life. Promoting a healthy lifestyle is something you can control. 

Eat foods high in nutrition and avoid saturated fats and excessive amounts of salt and sugar. Kicking bad habits like smoking, drinking and drugs is also beneficial to a prolonged life. Getting regular exercise will prevent weight gain and costly health issues. 

 

Create a Budget

Budgeting your money teaches you how to save and spend it wisely. Without a budget, you might not have funds set aside for a vacation, to buy a home, pay for emergencies or your retirement. 

A budget also keeps spending under control. You know what you owe and to whom it goes. This allows you to make changes that benefit your finances. 

 

A Good Credit Score

Having a good credit score is essential to your finances. A high score opens the door to financial opportunity. You have access to the best interest rates when buying a home or a car, or taking out a personal loan. You can rent a property and avoid deposits for utilities. 

A good credit score also means you can apply for credit cards offering the best perks and the lowest interest rates. Today, a high score also provides access to the best insurance companies and can even play a positive role in securing a good job. 

 

Retirement Funds

You may think that retirement is far into the future. However, it comes along quickly. Having money set aside for your golden years will ensure you maintain the same quality of life. 

If you want to invest in the stock market, find a qualified broker. If your employer offers a 401(k) or other pension benefits, enroll. 

 

Find Ways to Spend Less

Spending less on the things you need such as food, transportation and living expenses will increase your net worth without sacrifice. Use coupons and perks stores offer to reduce costs for everyday living. When shopping for big-ticket items, compare prices and wait for times throughout the year where prices are lower. 

The good news is you can become sound with your finances and reap the benefits of a good quality of life. 

Salespeople
ArticlesFinanceSustainable Finance

The Five Key Financial Services Sales Skills

By Lars Pedersen, CEO, Questionmark

Many financial services firms rely on the effectiveness of their salespeople to drive revenues and growth.

But many salespeople may not be maximizing their performance. As a result, they may be hindering the firm’s performance.

To unlock potential, financial services firms should assess the top behaviors and skills of their best-performing salespeople. They can then replicate these skills across the broader salesforce through relevant training and support.

 

What’s the problem?  

Financial services firms depend on making sales. But half of financial services salespeople expect to miss their annual target.

Regardless of this, many salespeople believe that the targets they were set were reasonable.

So, while some salespeople may be performing well, many may be underperforming, despite the investment in training them.

 

Five key skills

The most successful salespeople have clear behaviors and skills that enable them to sell more than their peers. 

By measuring the skills of the best performing workers with staff assessments, employers can get a good understanding of what works and what doesn’t. Firms can then train other salespeople in these skills.

There are often five key skills that firms look for in their salespeople.

First, digital marketing. Some 82% of customers look up salespeople or their companies on LinkedIn before responding to their communications. A strong digital presence will help with lead generation.

Second, first-class knowledge. Customers know they can get basic information online.  During a conversation with salespeople, they want to go to the next level of detail.

Third, consultancy. A would-be customer expects a salesperson to understand their business and their challenge and identify products that are right for them. Customers want advice on how to use products effectively.

Fourth, qualifying leads accurately. Some salespeople waste too much time pursuing leads that are unlikely to convert. They should be able to spot a future opportunity early on and be ruthless in ignoring those that are unlikely to bear fruit.

Last, communication. Both speed and quality of communication are essential. Calls must be returned. Emails have to be answered quickly. 

 

How assessments help

Assessments, which measure progress by testing skills, help employers to understand the skills that their people have. By measuring such progress, employers can help improve it.   

Regular skills assessments give employers reliable and accurate information on the strengths and weaknesses of their salesforce. 

They can then introduce training to address weaknesses, and to replicate the skills and behaviours of the best performers. They can also test the effect of training with further assessments.  

That’s why one in six US Fortune 100 companies use Questionmark’s enterprise-grade assessment platform.

 

Providing a competitive advantage

When the financial services industry is changing as rapidly as it is, firms must know their people have the skills they need to maximize performance and their potential. 

Getting a clearer picture of why some salespeople perform well, and others don’t, is crucial.

Building this picture through robust skills assessments could make a difference to performance and drive both sales and revenues.

National debt
ArticlesFinance

Study Reveals UK Among World’s Worst For Its National Debt – Equal to £40K Per Person by 2025

National debt

Government debt could be as high as £2.75 trillion by 2025, nearly £40K per person

The COVID-19 pandemic has been financially challenging for tens of millions of Brits, but none more so than for the UK Government who has borrowed billions so far to fight the Coronavirus and keep the economy afloat. 

 

Just like businesses, governments have balance sheets and competing priorities for their money. And a new study by investing platform Stockopedia.com, comparing national debt across the globe during the pandemic, has found the UK is among the worst in the world for its rising debt levels. 

 

According to the study, the UK’s net national debt was £2.02 trillion in the final months of 2020. To put this into perspective, that’s £30,042.05 for every person living in the UK (67.3 million of them) and ranks the UK in 7th place globally for the most debt per person.

The UK’s net debt is up from £1.67 trillion at the end of 2019 (or £25,020 per person), before COVID-19 had reached our shores.  

 

Out of the G20 and EU countries, the UK has seen the 3rd largest impact on national debt during the pandemic, up 22.75 percent, behind Spain (+25.58 percent) and Italy (+25.8 percent). 

 

Net debt takes into account a country’s financial assets like gold, currency and deposits, debt securities, insurance and pensions to give a truer figure of what’s owed. Of course, this isn’t debt that the public has to pay back; rather, it’s a reflection of the financial hole in the UK economy that will affect everyone in one way or another.  

 

In order to start getting its finances under control, the UK Government announced a public sector pay freeze in November, despite this workforce playing a frontline role during the pandemic. This will affect the income of 5.5 million people, although NHS staff are exempt.  

 

It’s also expected that the Chancellor will increase income tax, National Insurance contributions and VAT in the coming months to raise what could be an extra £19bn of revenue a year, further squeezing the finances of tens of millions but helping to pay off some of its debt. 

 

What’s more, the IMF is projecting the UK’s debt could be as high as £2.75 trillion by 2025. That’s equal to £39,905 for every person living in the UK – estimated to be 68.88 million in four years’ time. 

 

This means the UK is set to become the 5th worst country globally for its amount of national debt per person, overtaking Italy and Ireland. 

 

The UK isn’t the only country globally facing spiralling national debt. The study reveals Japan is in the most debt, with its economy hit hard by the global recession in 2008/9, as well as the catastrophic earthquake and tsunami in 2011, and subsequently the COVID-19 pandemic.  

 

Calculated proportionate to its population, Japan’s net national debt of over 932 trillion Yen (roughly £6.5 trillion) accounts for a staggering £52,758 per person.  

 

The United States follows closely in 2nd place with a net national debt of almost £50k per person, totalling over $22.2 trillion. Meanwhile, closer to home, Ireland is in 3rd place with debts of over £36k per person (totalling over 204 billion Euros).  

 

At the other end of the rankings, there are only four countries who are debt-free: Lesotho, Kazakhstan, Luxembourg and Norway. While it’s true they all have varying amounts of gross debt, this is completely offset by their valuable financial assets. 

 

You can explore the full data from the study here.

 

Ben Hobson, Markets Editor at Stockopedia.com commented on the findings: 

 

National debt is a reality of the modern world. But few could imagine the impact the COVID-19 pandemic would have on major world economies, as well as smaller nations. 

 

While it can be difficult to predict how the situation will change in the coming year, what’s certain is that there’s a long road ahead for financial recovery, as highlighted by the IMF projects up to 2025. What’s clear is that we’re likely to see the situation become worse before it gets better.” 

 

Plan A-B
ArticlesFinance

How to Know When to Use an Alternative and When to Stay the Mainstream Course

Plan A-B

At some point in your life, you have been encouraged to think outside the box. In the simplest terms, it means to consider something that stands outside the mainstream. However, that advice needs a lot more nuance to be truly useful. You don’t want to take a hostile view toward the mainstream solution. Most of the time, the mainstream solution is the best one. After all, that is how it became the mainstream in the first place. It is the thing that works most often.

That said, the typical solution does not work all the time. There are reasons for that. We are all different and have different needs. Some situations are outside the norm so they need outside the box thinking. It is not always obvious which situations require an alternative solution.

Some things are obvious. You don’t want alternative pilots who did alternative pilot training. That is clearly a very bad idea. You don’t want alternative electricians who went to alternative electrician school. You only need to try alternative food products to know you don’t want alternative food.

You also want traditional term life insurance. You need an insurance company that is going to be there over the long term, and will cover you in predictable and comprehensive ways. You can find non-traditional value if you shop around. Get your term life quotes to find a plan that’s right for you. There is no alternative to good insurance. Here are a few things where alternatives are more appropriate:

 

Alternative Business Financing

Right now there is a lot of interest in alternative business financing. It is not easy to find financing for startups from traditional sources. This is especially true for tech startups. They are often founded by people who had an idea, a dream, and some space in their mother’s basement. What they didn’t have was money. They also lacked the ability to get a bank loan.

Fortunately, they had their idea during a time of angel investors and crowdfunding. some of the most interesting products have made their way to market with the help of alternative financing. Fitbit is one such example. It was able to survive long enough to be a real competitor to Wear OS and was eventually purchased by google. For many startups, the alternative financing route is the better first choice.

 

Alternative Diets

All special diets are alternative diets. You have the USDA guidelines. Then, you have everything else. Such guidelines are a good general rule for the general public. But if you are diabetic with special needs, you need an alternative diet. This applies for all sorts of situations such as food allergies. Celiac disease is no fun and requires a diet without gluten. Peanut allergies can be life-threatening. Peanut products are in more ingredients than you might think.

When it comes to what you can and cannot eat. You need to listen to your doctor. They might even refer you to a dietary specialist. Some people respond best to well considered, highly curated meal plans. You can’t just eat like everyone else. And you can’t take the well meaning advice of your friends and family. When it comes to your special needs diet, you have to think outside the big box supermarket advertising and look to alternatives more tailored to your needs.

 

Alternative Tech

Many people suffer from RSI because they use a computer all day. We interface with the computer via keyboards, trackpads, and mice. The keyboard as we know it was not designed for comfort or ergonomic health. The good news is there are alternative keyboards you can buy that can give you a better chance of avoiding RSI. The same is true for pointing devices. You have to look beyond the mainstream to find them. But they are there. Millions swear by them.

Don’t despise the mainstream. It is mainstream because it works most of the time for most people. But you are not most people. You are uniquely you. Sometimes you have to walk a different path. If you are looking for business financing, a special diet, or special tech for special needs, think outside the box. Many brilliant alternatives await.

Businessman
ArticlesFinance

How to Gracefully Exit the Business World and Move to the Next Phase of Life

Businessman

There is this little thing called retirement. It is held up as the prize for a life well lived with time and resources left to enjoy. Not everyone wants life’s golden parachute. Some prefer to work all the way up to the end. They never want to slow down. They always want to be in the mix. Those who have risen to the top of their field don’t necessarily look forward to the day when they are no longer in charge. Being in the middle of things and riding the wild wave is what gives their life meaning.

Then, there’s you. Your goal might be to get out of the rat race as early as you can and spend as much time with your family and money as you can, while you can. The most interesting things to do in life still on your list have nothing to do with business, work, or making money. You want to see the world, have a few adventures, and tend the farm. You are ready to cash out and find the sunset where you will eventually head off into. This is how you get out gracefully and move on to the next adventure:

 

Get Top Dollar for the Sale

Walking away from a business without selling it for a good price is as unthinkable as walking away from a house without getting a good return on your investment. Make no mistake about it: Your business is not just something that supports you and your family during the time you have the business. It is a lifelong investment that can be cashed out just like a whole life insurance policy. The only question is how best to cash it out.

You already know you can sell your retail business ventures. You might not have been aware that you can also find people to buy Amazon FBA business ventures. Though based on Amazon services and infrastructure, it is still your business. You have built up that business to be more valuable now than when it was started. That is like equity in a home.

In the case of your business, you have equity. You don’t have to go through a lengthy process to find a buyer and negotiate a deal. You can close the deal in as little as 45 days. If you are ready to walk away from your business and enjoy the next phase of life, don’t just get rid of it in a fire sale. And don’t go through years of headaches finding the perfect buyer. There are better options available for you to get a profitable return on your life’s work.

 

Tie Up Loose Ends

Is it time to get off the investing roller coaster? Are you tired of waiting around to learn the next lesson Covid has in store for you? You are not wrong for seeking an off-ramp. If you have been considering retirement, now is an excellent time to actualize that consideration.

What you want to do before leaving the business world is simplify your life. There are a lot of strands to untangle when moving away from business. You need to work with an accountant to make sure your tax responsibilities are taken care of. You need to give your employees plenty of time to find new work and prepare personalized, glowing letters of accommodation. If you don’t want to deal with complications later, tie up all the loose strands in advance so that you can put it all behind you.

 

Start Something New

There is a good case to be made against early retirement. The biggest danger is not retiring from business, but retiring from meaningful endeavors. Don’t walk away from your business to sit in a rocking chair. Never put a rocking chair on your porch. You still have things to do.

You can walk away from the rat race without walking away from meaningful pursuits. This is the time in your life when you are free to try something new without needing to worry about it being profitable. You can do something just because it is important to you. That is the perfect exclamation point to a life well lived.

It is different for everyone. When it is time for you to walk away, you’ll know. Just be sure to get the best possible return from your business investment. Tie Up Loose Ends. And start something new. 

Afghanistan Currency
ArticlesBankingFinanceForeign Direct InvestmentIslamic Finance

Securing Stability & Success in Afghanistan’s Economy

Afghanistan Currency

As the largest commercial bank in Afghanistan, it may have also proven difficult for Azizi Bank to simultaneously ascertain the title of best commercial bank. Yet, that is exactly what this outstanding financial institution has done, and has rightfully been awarded that title of 2020’s Best Commercial Bank, Afghanistan in this quarter’s issue of Wealth & Finance International Magazine. Join us as we find out more about what the bank has to offer, what makes it so unique, and why it is deserving of this international recognition.

Azizi Bank is the largest commercial bank in Afghanistan, and it has been maintaining that position since its inception in 2006. Being the country’s largest banking group, there is a Pan-Afghanistan presence that stretches across more than thirty provinces and a headquartered office in Ankara Square in Kabul. The work of Azizi Bank started with the professional and entrepreneurial commitment of its founder, Mr Mirwais Azizi of the Azizi Hotak Group & Family and is presently under the leadership of a young and dynamic Chief Executive Officer Dr. Prof. Mohammad Salem Omaid. What makes Azizi Bank unique is the fact that its professional customer service and the sense of belonging that every client and customer has. Each and every employee carries with them this sense of welcoming and belonging, and strives to ensure that all interactions with customers are done so in a way that makes them feel like they are a part of the family feel that the bank presents. In addition to this, there is a wealth of digital innovation and product excellence on show here also. Azizi Bank has invested significant time, money, and manpower into ensuring that every product is designed to suit a client requirement, and this commitment distinguishes the bank to be the most distinctive and superior bank across Afghanistan.

For almost fifteen years, Azizi Bank has been managed under the governance of a very competent and effective Board of Supervisors, who brings a vast repertoire of knowledge and experience in their various fields, and are internationally acclaimed in their respective work. At the management level, there is a brilliant mix of youth and experience, which leads to both innovation and stability across the board. Today, Azizi Bank has more than fifteen hundred employees, and with a fifteen percent female work force, it is playing a quietly effective role in women’s emancipation and empowerment across Afghanistan. Aside from Azizi Bank, there are another eleven banks in the country, including two banks from Pakistan. The total banking deposit is approximately USD 3.2 billion, with all assets totalling approximately five billion USD.

As a country, Afghanistan has witnessed strong economic growth and developing in banking systems when compared to the previous two decades. Growth in the financial sector, specifically within the banking sector itself, was considerable. Thus, national income increased, and there was massive promotion in many of the other macroeconomic factors, including exchange rates, inflation, balance of payments, government revenues, investment, international trade, industrial production, and employment levels. Azizi Bank has always played a pivotal role towards each and every reform of the Central Bank of the country, and has marked itself out as a pioneering force of financial inclusion programs and branchless banking. Recently, in a bid to further bolster these initiatives, Azizi Bank has signed an MOU with the Afghan Postal Service to provide branchless banking through their more than four hundred and fifty post offices covering the country and some of its most remote locations.

The team at Azizi Bank is also made up of the bankers of choice for some of the major UN agencies, such as UNICEF, WHO, and WFP, who are present and working in Afghanistan. Azizi Bank is all about enabling these agencies to make their payments and disbursements to the far and rural areas of the country. Furthermore, this outstanding bank is the only bank in the country to have a mobile wallet solution, called AZIPAY, for all types of payments, including paying utility bills, education fees, groceries, and airline tickets. There is even excellence with the more comprehensive financial inclusion initiatives, with Azizi Bank having converted one of its subsidiary banks into a full-fledged Islamic Bank in the country. This is the first and only full services Islamic Bank in the country to date. With Afghanistan having more than 99% of its population being Muslims, such a change will definitely pave the way for more people coming into the banking fraternity, thereby improving the financial inclusion ratio of the country.

Since its inception, there have been several core founding values that have been the focal point of the bank and its championing of sustained financial growth in Afghanistan. Azizi Bank has always believed in innovations, and has never stepped back away from investing in innovative technological initiatives. The bank also has the best in class management board and senior management in the country, comprising of experienced bankers with an averages of more than two decades’ experience from the United States, India, Pakistan, Africa, and Europe. Azizi Bank has also always believed in the learning and development initiatives towards capacity building, and have built a comprehensive policy on the same. These structural reforms have brought in change within the bank to a large extent, and have always made it unique compared with other peer banks working in the country.

As has already been conveyed above, Azizi Bank prides itself on being a technology-driven back that makes full use of some of the latest technological innovations from across the world. With society moving towards more digitalization than ever before, the customer’s perceptions have changed on what they can access and want from their banking services. Afghanistan in particular is a country where more than half of population has a smart phone, and there is greater opportunity for banks to invest more into technology than ever before. Azizi Bank has foreseen this opportunity prior to its competitors and peers, and is now in a position where it can adapt to the ever-changing present and future. One of the ways in which the bank has taken the initiative and seized the day regarding innovative technology is by being a prominent voice on several developmental projects aimed at meeting financial customers’ expectation all across Afghanistan.

Providing technologically-savvy services banking services is the goal for many institutions, especially now that the world is moving towards an increasingly digital society. With the gradual transition towards advanced digital banking, there comes a greater need for traditional banks to keep up with modern systems and innovative ways of doing things. Azizi Bank has also initiated different tailor-made products for both deposits and advances meant for different levels of society, including accounts for children, students, women, senior citizens, retail businesses, small and medium enterprises, and entrepreneurs to name just a few. Despite the wealth of innovation on show at Azizi Bank, there have also been challenges presented by the COVID-19 pandemic.

The arrival of the pandemic meant that Afghanistan, which is a predominantly import-driven economy, witnessed a surge in the cost of commodities, thereby affected the normalcy of life and common people. Industries of all sectors and types were affected, and so was the fate of the financial sector as well. In essence, the economy and economic growth of the whole country took a massive hit. There has been some impact on Azizi Bank amidst the pandemic, which has sustained itself almost a year and still counting. With the initial lockdown in place for the first few months of 2020, business was seriously hampered, though there was no significant decline for deposits. Where Azizi Bank really was affected was new business. Overall trade finance and the recovery of loans has been another key area affected by the pandemic, although the Central Bank of Afghanistan did come out with a detailed recovery plan to aid the situation and get the country back on its feet as soon as possible.

Pandemic or otherwise, Azizi Bank did have a strategic business plan in place, as well as a disaster recovery plan considering the geography of operation. The bank is always prepared and ready to face any sort of adverse situation, including this current crisis. As a bank, Azizi Bank also took steps and made plans even before the government made any sort of official announcement in terms of business contingency, staff contingency, and operational contingency initiatives and operations. Azizi Bank took immediate steps to ensure total safety and stability for itself and its staff, even before the lockdown was announced. All mediums of communication were used to reach staff and the public, and the bank stopped all meetings, conferences, customer gatherings, and training. In the immediate aftermath of the announcements made by many world governments, including Afghanistan, Azizi Bank formed a committee to analyse and make plans to curve this emergency situation.

Safety precautions including complete sanitization, thermal meters, face masks and gloves, and more were initiated at all the branches for both customers and staff alike, whilst plans were also made to rotate the staff so as to avoid close proximities. Expatriate staff members were also encouraged to work from home where possible, thereby minimising the risk of transmission and infection. Armed with these various safety measures and initiatives, life will eventually return to normality for Azizi Bank. However, with the ongoing political uncertainty still prevailing and international donors reluctant to pump in additional funds, this latest COVID-19 scare will definitely affect the overall growth of the Afghanistan economy. Stability will take time, but Azizi Bank will see it through.

Outside of the financial work carried out by Azizi Bank, there is also a deep-rooted and ever-present commitment to charity work and community-based initiatives. Azizi Bank is the only banking institution in Afghanistan that has a sustained CSR Policy and Responsible Banking. For the team, they consider CSR as one of the most important aspects of growth, and the institution also supports the important cause of the government in terms of sustainability initiatives. Supporting society as a whole is equally important, and there are a great many ways in which Azizi Bank does this too. The bank’s involvement on CSR initiatives has made a great impact across society and for the brand of Azizi Bank.

In working on these initiatives, the bank has been quite active for the last five years on various initiatives across the country and has therefore received considerable amounts of appreciation from the government and wider society. From a community service perspective, Azizi Bank has supported multiple hospitals and homes in terms of providing medicines, essential utilities, infrastructure development, food materials, stationeries, and organising blood donation camps. The team at Azizi Bank have also focused their time on various environmentally sustainable and green initiatives. Working in this area, the bank has endeavoured to stand out by starting a green initiative that involved planting thousands of trees across Afghanistan. Alongside this, there are also campaigns on saving water and pollution control, two of the most prominent environmental sustainability issues faced by many all over the world.

Azizi Bank has recently partnered with the National Environmental Protection Agency (NEPA) of the government of Afghanistan, and this partnership will surely lead to collaborative work on various other initiatives aimed at increasing environmental sustainability. Finally, the last core area that Azizi Bank works in outside of its own four walls is that of community support. Azizi Bank has always sought to provide free training sessions to local college graduates and management students alike, with topics ranging from banking and finance, to the inner workings of an economy, and much more. Whilst this is a community support initiative aimed at giving finance students the best possible knowledge around, it also doubles as the perfect recruitment opportunity. Qualifications is one thing, but Azizi Bank also encourages fresh graduates to push their way to the forefront of the industry and make an impression with their dedication and commitment to understanding finance.

Ultimately, Azizi Bank is far more than just an exceptional institute of finance. Rather, it everything a country could possibly want from a bank that seeks to be innovative, be a unifying force that invests in the future, and delivers outstanding financial services to everyone in the country. Azizi Bank is constantly redefining its own success, and is fully deserving of this latest success from Wealth & Finance International Magazine as being recognized as 2020’s Best Commercial Bank in Afghanistan.

Few Words about the bank’s CEO – Dr. Prof. Mohammad Salem Omaid

A result oriented proficient starting his professional journey with Azizi Bank in 2006 as a Finance Officer and successfully ascending the steps to become the President and CEO. In his career span of more than 14 years, Dr. Omaid handled diverse roles having rich & extensive experience in Finance & Accounting, Corporate Accounts Trade Finance, Corporate Credit Financing, Operational Banking, Investment Banking and Retail Banking. Initiated several measures, Bank Products, Technological products aimed at promoting the bank and its objectives. Dr. Omaid’s contribution towards refining the banking structure in the country earned him appreciations & accolades not only from the Govt. & Public body within the country but also from the international agencies worldwide.

Dr. Omaid’s experience and knowledge for a sustainable growth earned him several international accreditations and he is also the only afghan conferred with the honorary professorship of Academics, Oxford. He is also the Member of the Europe Business Assembly, UK, The World Confederation of Businesses, USA and an active member of BAFT, USA. He is also associated with the ICC, Banking Commission, Afghanistan and is the Chairman of the Afghanistan Banks Association.

He is also the recipient of the Asian Banker “Young Banker” Award in 2017, being the only one from the Central Asian Region till date. In 2020, Dr. Omaid is conferred with the Professional Doctorate by the European International University, Paris for his endurance, commitment and leadership in shaping a bank in Afghanistan as per international standards.

A visionary leader and a highly respected citizen in the Islamic Republic of Afghanistan.

For more information, please contact Samrat Dutta at www.azizibank.af

gold money investment
ArticlesFinanceFundsTransactional and Investment Banking

Why People Are Going Gold As An Investment

gold money investment


Gold is one of the safest investments available, apart from a savings account. This is because of its stability, even in uncertain times. In the past, owning gold was quite controversial because of the worries surrounding its price fluctuation and potential instability. Now, however, more people choose to invest in gold as part of their overall assets because of its many benefits. For one, investing in precious metals is a good way to protect your savings.

When you hear about the benefits of investing in gold or buying gold products, most people associate it with investing in jewelry. While this is certainly a key component to any well-rounded portfolio, gold itself is a much broader asset. Gold can be used to buy or trade almost anything – bonds, mutual funds, stocks, commodities, and even estate. If you’re looking for a way to diversify your portfolio but are worried about your investments in gold being exposed to more risk than other assets, then look into investing in precious metals as a part of your portfolio.

Here’s why people are turning to gold as one of their investment options:

1. You Can Start Even With Only A Small Amount

One of the greatest advantages of investing in gold like Oxford Gold is that you don’t need to have a substantial amount of money to start. You can begin, even with only a small amount. Hence making it a very accessible option even for those with limited funds to start with at the moment.

Even if you start small, the key is for you to slowly increase your investment, so you can stabilize it in the long run.

 

2. It’s A Very Safe Investment

Gold is considered to be a safe investment. As an investment, it won’t lose its value unlike other stocks and bonds, which are very susceptible to the volatile market.

It’s highly unlikely that you’ll encounter any problem with the value of this precious metal. You can easily earn a lot of money with your gold investment and even increase your wealth within a short time.

 

3. It’s A Stable Hedge Against An Unstable Market

Gold is one of the most stable assets that you can choose to invest in. Even when the stock market goes down, gold continues to retain its value. Therefore, you can consider it as a very safe investment choice.

The thing with gold is that it’s a very limited asset because it’s a precious metal. This stays the same, even if the demand does increase. Because of this, the price continues to go up. This situation makes it a very stable hedge against an unstable market.

 

4. It Gives You A Good Return On Investment

One of the other reasons why gold is also becoming a very popular investment form is that it guarantees a very good return on investment.

There are several factors that influence the rate of return that a precious piece of metal can offer. First, it’s very easy to mine and sell the metal. Second, it doesn’t require too much investment capital to start off with. You can simply start selling jewelry and coins to get started.

With these two factors alone, you can rely on a faster ROI. This means you can start paying back whatever capital you spent on your gold. The profits will also come in faster than expected. It can bring your financial status a sense of security.

 

5. It Protects Against Inflation And Economic Fluctuations

If there’s a dip in the value of currencies around the world, owning precious metals such as gold or silver is a great way to protect yourself against the fluctuations in the value of money.

Because of its value being tied to the U.S. dollar, precious metals are usually the safest investments out there. They don’t depreciate like other assets. This protects you against inflation, as you know the value of your gold investments stays stable, at least.

This makes gold a good form of long-term investment. You don’t have to worry about it losing its value over time. It’s something that can keep increasing in value on a regular basis, so you have great security in knowing they are protecting your wealth.

It also increases the likelihood that if you do sell your assets, you will receive a high enough amount to cover your losses, if you incur any. This can also help provide economic stability for you, particularly when you’re going through big changes, such as newly starting a business, for example.

 

6. It’s Easy To Diversify

The last benefit to investing in gold, in particular, is that they’re easy to diversify. There are so many different investments you can make with them. You can invest in fine gold jewelry, gold coins, ETFs, gold bars, bullion, and coins, for instance.

Gold bars are smaller than bullion coins and are less susceptible to theft. If you want a simple, low-risk investment, invest in gold bars. You can purchase them at banks or from online brokers, and you can store them in safety like a safety deposit box or a bank safe.

Diversification is a great way to increase the value of your investments and protect yourself in case of a crash. Investing in just one gold investment can diversify your portfolio significantly, and you don’t have to sell your holdings to take advantage of these diversified investments.
In the past, investors used to get along just fine without diversifying their portfolios. However, the world’s economy has changed, and most investors have had to deal with the global recession. It’s thereby imperative for investors to start diversifying their portfolios to protect themselves from these negative indicators.

 

Conclusion

Investing in gold is a very good choice for you, even if you’re a newbie investor. These reasons above are precisely why so many have gotten into investing in gold as their choice. The key is for you to just learn more about it and make sure that you understand everything there is for you to know about gold investing. You can learn so much more about it and comprehend it in totality, depending on your risk tolerance, liquidity, and risk level. In doing so, you know that you’re on the right path towards the proper way of investing in gold.

Businessman investor
ArticlesFinanceTransactional and Investment Banking

“The Modern Investor” Setting New Investment Rules

Businessman investor


Retail investors have made quite an impact on the stock market recently, although several seasoned investors deem them as amateurs set to make wrong decisions and lose their wealth. Other experts believe modern investors are becoming a force to be reckoned with.

There is a lot of focus on addressing the modern investors, who are mostly millennials and became a more visible investor group in 2020 by investing heavily in tech stock, seeing the opportunity to hedge against the potential inflation and at the same time exploring alternative investment asset classes. Some seasoned investors are saying the modern investors are just chasing a trend and playing with fire, while others believe the cohort should be taken seriously.

Who is the modern investor?

Modern investors are predominantly millennials, both in age and spirit. Though most of them, especially in the US, have yet to acquire more wealth than their predecessors, baby-boomers, millennials are a growing power in the investment world, already influencing the current industry.

The driving force behind modern investors’ ability to change the industry is technology. From robo-advisors to gamification, tech-savvy investors are increasingly relying on and using apps and the internet. When once investing was a privilege accessible only to well-off citizens, now technology has made it only a few clicks away, presenting a plethora of opportunities to invest not only in the traditional assets like stocks or bonds, but also alternatives like arts, wine, loans, and others. 

Contrary to the general view, modern investors are well-informed. A survey by Accenture revealed that 90% of financial advisors believe their millennial clients are more aware about their investing options than they were five years ago, indicating that the interest and engagement in investing is nevertheless growing.

Alternative investments – crucial part of modern portfolio

Blackstone research on new investor behaviour also shows that alternative investments are rising in popularity as investors are seeking alternative investments to find yield, some for higher returns, or protection from rising rates, or a haven against market volatility.

As modern investment portfolio changes, adapting to potential market changes may require a search for new sources of funding. One of the growing alternative investment asset classes— popular with millennial investors—is investment in loans. Their biggest advantage is higher returns in comparison to passive income instruments, in addition to being a more predictable alternative to growth stocks. As a debt-based product, investment in loans is also less volatile.

“Modern investors have shown everyone in the past year that they are a force that needs to be taken seriously,” said Martins Sulte, CEO and Co-founder of Mintos, the leading alternative investment platform for investing in loans in Europe. “We have worked closely with this investor segment, with over 370 000 retail investors on our platform, who give us feedback that they turn to alternative investments, and investing in loans in particular, as a means to manage their savings or create them.”

Mr Sulte also added that modern investors are more prudent than the industry might think, seeing diversification and alternatives as a way to future-proof their portfolios. 

“We see a trend towards diversification even within our platform, which indicates that modern investors are not reckless as some make it out to be,” he said. “With pensions funds or bank accounts offering low savings rates, we see people search for better options and find passive investing as a solution for higher returns. While we cannot compare investing in loans to savings accounts at a bank due to both being entirely different forms of financial service and risks involved in any form of investing, we do understand and lately witness in greater amounts the interest for making money work much more for oneself.”

Conclusion

For many modern investors, especially those using trading apps, a retail portfolio may include a rather random selection of assets. That said, the retail investors are quick learners and are not as naive as some observers deem them to be. Undoubtedly, there are those that follow the trend, but the modern investors are making their moves and the market is responding accordingly. 

flexible payment
ArticlesFinanceFundsRegulation

Flexible Pay: Could it Become a New Trend Amid Pandemic?

flexible payment


In the light of the pandemic many are experiencing financial difficulties and are feeling the pressure of waiting for payday. Research carried out by Money Advice Service has previously discovered in the UK there 8.3 million adults who have found meeting monthly bills a “heavy burden” and have missed more than two bill payments in a six-month period. With the current economic climate and new research performed by EY, the weight of financial commitments is now at the forefront of people’s minds, as a result employers are exploring ways to alleviate the financial pressures currently felt by many.

 

What is flexible pay?

Flexible pay is a new concept whereby employees are paid with an on-demand option. This means if the employee requires their pay early, they can call their earnings to date to fulfil their financial needs removing pressures.

Flexible pay provides an on-demand solution to overcome financial difficulties without the need to ask for an advance from the employer which, in itself, is a daunting task. Flexible pay provides employees with on-demand access to their salary without cause to provide reasoning to why they need access to their salary early.

 

What employees needs it can address

In a study performed by EY, 73% of UK workers find it a challenging to meet everyday expenses or worry about not being able to meet them. In the report EY found 58% of people who have experienced financial difficulties have also reported a material deterioration in their health and wellbeing. Additional pressure stemming from financial difficult can cause mental health issues if long term strain of finances is not addressed.  The stresses associated with these financial burdens can impact other aspects of people’s lives from health and mental wellbeing to work life and personal life.

Flexible pay provides employees with a solution that does not result in additional borrowing and interest associated with borrowing.

 

The benefits it can generate for employers

Flexible pay is a solution that benefits the employer as well as the employee in several ways.

  • Cash flow neutral option for employers
    • Unlike other benefits often provided by employers, flexible pay is a cash flow neutral option. This means employers are not having to factor an upfront payment before the work has taken place.

  • Seen more favourably by employees
    • As with other employee benefits, flexible pay offers the opportunity for employees to look favourably upon their employers. This is a benefit that is designed to help remove a common factor that triggers stress, where work life can also be a contributing factor, flexible pay helps remove stresses outside of the workplace.

  • Attract Talent
    • When recruiting employee benefits can often sway talent to choose to work with a specific employer. Flexible pay demonstrates the employer is not only aware of the employee needs but also shows they are looking to support the employee with benefits designed to provide solutions to employee’s needs whether short or long term.

  • Improve Productivity
    • With many working remotely as a result of the pandemic, mental health and wellbeing has been a focus for employees as it can often impact productivity. By alleviating financial strain that often negatively impacts the employee’s mental health and in turn, their productivity the employer helps prevent their employee’s productivity from being affected.

 

How to roll it out in your business

Part of the challenge when introducing new benefits to employees is how to integrate it within the business. With flexible payment it requires set-up, training and rolling out to employees.

 

So what are the initial requirements?

  1. Flexible pay requires integration with the employer’s payroll system to enable a proportion of the employee’s salary to be available to call upon at the rate it is accrued.

  2. Employees will be required to measure the time worked; this could be through some form of a timesheet to record what has been worked when. This measurement will help calculate the accrued earning.

If payroll is performed in-house, training your finance team is vital to ensure only the salary accrued is available to the employee and any changes to payroll processing processes with particular attention to your payroll software. Training will need to focus on how employee accrued salary data is collected and processed as part of your payroll solution whether outsourced or not. 

Once the changes to your payroll is available to your employees it is important to educate them on what it means for them, what is changing for their payroll and, of course, how they can use flexible pay to call their salary early if need be.

 

IRIS FMP UK is an international payroll solutions provider that is able to offer bespoke payment solutions to businesses to reflect the employer and employee needs including flexible payment options. We are supporting thousands of international and UK based SME organisations. With over 40 years’ experience, we are committed to providing our clients with the very best service, offering transparency, reliability and honesty.

cryptocurrency
ArticlesFinanceFunds

Examining the Pros of Stablecoins

Stablecoins are a form of cryptocurrency that differs in one key way to the likes of Bitcoin and Ethereum – they’re stable, hence the name. Rather than experiencing volatility on the markets, those who purchase stablecoins can relax knowing that their investment won’t fluctuate in price. This makes them beneficial for not just individuals, but businesses that accept cryptocurrency as well.

The main type of stablecoin that we are going to look at in this article is centralized stablecoins. These are backed by fiat currencies 1:1 and so you often see them referred to with the currency next to their name – for example USDT (Tether) and GUSD (Gemini USD). The reason they are classed as centralized is because they are backed by a central organization, such as a government, a bank, or a company.

Let’s take a look at some of the benefits of centralized stablecoins.

 

Easy to Purchase

Opting to buy USDT and other stablecoins is very easy, and can be done by anyone with an internet connection. Platforms like Paxful make it easy for anyone to sign up, open a wallet, and buy USDT in whatever amount they want. You can purchase stablecoins using your debit card, PayPal, gift cards, credit cards, Western Union and more. It has never been as easy as it is today to get started.

 

Allows You to Use Fiat Like Crypto

When most people get started with cryptocurrencies, they can find it hard to understand just how much of a particular cryptocurrency they’re getting for their dollar. However, because stablecoins are pegged to a Fiat currency, it’s not quite so difficult to understand. Looking at Tether again, we can see that one USD equals one USDT. Tether experiences the exact same price movements as the USD, making it easier to understand and invest in.

 

Low Fees

Because of the peer-to-peer nature of stablecoins, and the lack of intermediaries, transactions tend to be a lot cheaper than with traditional finance. Credit card payments and bank transfers, for example, both charge a fee and commission, which can be exceedingly high when transferred abroad. This is not the case with stablecoins. Also, as mentioned above, due to them being pegged to a Fiat currency, it’s possible to transfer your USD to USDT, transfer the USDT to a friend, and then have them transfer it back to USD to save on transaction fees.

 

They’re Not Volatile

The main advantage of stablecoins over other types of cryptocurrency is that they’re not affected by the same price fluctuations. This is something that is crucial if the world is going to accept cryptocurrencies in the mainstream. No-one wants to accept payment for something, or receive their paycheck, without stability as the amount they receive could change dramatically from day to day. Due to their nature, stablecoins are helping to overcome many of the challenges faced by traditional cryptocurrencies like Bitcoin and Ethereum, which will only help to encourage the spread.

As you can see, stablecoins have a clear place in the economy. It will be interesting to see if they ever replace Fiat currency in the future.

Approved
ArticlesFinance

How to get Approved for Finance

Approved


Applying and then being rejected for equipment finance or loans for your business can be disappointing and frustrating, not to mention time consuming, even more so in the current climate. This is why we are encouraging our businesses to follow the correct process and work with us to process their applications efficiently and have a better chance of securing the best deal possible.

It’s safe to say that lenders do not need an excuse to turn down applications, which means your application needs to tick every box, cross every ‘t’ and dot every ‘i’, in order to give you the best possible chance. Our job is to help you, so here are some of our top tips on how to get approved for finance.

 

Have a target outcome in mind

Lenders will either provide finance for your equipment, to help support your business and its operations, selling to customers, such as a frying range for a chip shop, oven for a restaurant or squat rack for a gym. However, you may require a business loan, which may support your business by helping to invest in equipment, stabilise cash flow as well as giving you money for a rainy day. By establishing which of these two target outcomes is suitable for you and your business, you can ensure you get the right finance for the right reasons, giving your business the best time of investment.

 

Get the right equipment

Most lenders prefer equipment in a good condition from a recognised supplier, such as those we work with at Johnson Reed. The finance for your equipment will be secured against the value of the asset, therefore the working condition, type and origin of the equipment will help to reassure the lender that it can help your business, whether its use is directly or indirectly connected to turnover, in order to be sure your business can repay the finance. This gives the lender confidence in your business and the investment.

 

Have a rationale

Your business is more likely to be accepted for finance if you have a clear rationale or business plan for the purchase. By answering the following questions:

What is the finance for?

How will it be used?

How will it benefit your business

How will it help you generate turnover?

the lender will be able to clearly see the plan for the business, how it can generate revenue using the finance, giving confidence to the lender to accept your rationale and confidence that you can make repayments. Being prepared and knowing your business inside out, as of course you do, is exactly how you can you can boost your chances to secure that all important investment for your business.

 

Check your credit score and documents

By having your credit score in order (we use Experian), with updated history, addresses, details and information, as well as any documents ready-to-hand. Having information and documents such as bank statements, accounts, ID and rationale for investment can all help to ensure your application is processed quickly and efficiently, without delays or hesitation from the lender.

 

Think like an underwriter

You need to install confidence in underwriters when applying for finance. They are paid to assess your application by scrutinising every aspect of it, to establish whether there are any doubts about you or your business, and its ability to succeed in repaying the finance that you need. Therefore, it makes sense to think like one, try and visualise what they are thinking when processing your application. Are you presenting the best case for your business to be approved? Are you presenting a clear rationale, with up-to-date documents and reasoning behind any questions they have regarding your business? The answer to these questions needs to be ‘yes’ to give your business the best chance.

 

We know how important investing in your business is, and how it has to be done right. This is why we offer hands-on support to our clients in securing their funds, at the best price, because rates matter, to us and to you, when it’s your business.

If you are interested in a business loan, equipment finance or leasing from Johnson Reed, visit our website, drop us a call (0161 429 6949) or an email ([email protected]).

Crypto currency
ArticlesFinance

3 Signs That Crypto Is Going Mainstream

Crypto currency

 

This Bitcoin bull run is different from 2017’s because cryptocurrency is showing all the signs of going mainstream in the next couple of years

For a long time, cryptocurrency was the preserve of a small group of tech enthusiasts and hardcore libertarians. This began to change in 2017 when Bitcoin hit staggering heights and the front pages of most newspapers. After the great crash of 2018, however, Bitcoin and other cryptocurrencies dropped off the radar of mainstream consciousness.

Bitcoin was still a popular asset but primarily one for savvy individuals trading on exchanges and consumers making derivatives bets via smartphone apps. But the latter half of 2020 saw a change. Today, all the signs point to crypto going mainstream and becoming part of our daily lives.

 

1. The PayPal Effect

With over 305 million active accounts and a merchant network of 22 million, PayPal has a large reach. This is why the company’s bombshell announcement that it would start allowing users to buy, and more importantly spend, cryptocurrency was so big. Users would be locked into PayPal’s network, which will not be enough for crypto purists. But it provides an easier way than ever before for people to buy and sell cryptocurrency.
PayPal’s decision will help to normalize cryptocurrency for large numbers of people and merchants who would never have considered it before. The key is that most people are familiar with how PayPal works. So it provides a frictionless way for merchants to accept crypto payments without being forced to integrate new tools into their e-commerce packages. In other words, it makes cryptocurrency simple.
The decision has come with some limitations. For the moment, it is limited to the United States. And perhaps more important, users will be unable to withdraw cryptocurrency from the PayPal wallet. This means that PayPal is acting as a sort of “crypto gateway,” rather than allowing users to truly own and control their cryptocurrencies.
That being said, the deal is still significant and represents a leap forward in crypto education and acceptance.

 

2. Institutional Capital Is Obsessed With Bitcoin

The most recent Bitcoin bull run differs from 2017 because it is being fuelled in part by institutional investment capital. Household names in the investment world, including Grayscale, MassMutual, and even Goldman Sachs, have jumped headfirst into the world of cryptocurrency. Indeed Greyscale now has over $19 billion in crypto-assets and that figure looks set to grow.
This rush of investor capital is significant as it represents a “stronger hand” than many of the retail investors currently in cryptocurrency. Many companies that are betting on crypto will be looking to hold their assets for the long term. One of the more ambitious claims was from Microstrategy, which is looking to hold onto its newly acquired BTC for 100 years or more. 
In theory, this capital increases the underlying value of Bitcoin. This effect is compounded because the supply of Bitcoin is capped at 21 million. This means that scarcity will cause an increase in value as demand continues to rise. In the long term, this will lead to other cryptocurrencies being lifted by Bitcon’s rising tide, as investors late to the party seek a better deal with more affordable options.
 

3. A Crypto Ecosystem Is Being Built

The other success story of 2020 is Ethereum, which has grown by more than 455% to $723. This impressive growth has been driven primarily by an explosion in DeFi apps, and the much-anticipated update to Ethereum 2.0.
DeFi apps are designed to mimic real-world financial instruments and have attracted around $14 billion in locked crypto assets. The most popular so far have been lending apps and decentralized exchanges.
The apps work using smart contracts and the vast majority use the ERC20 token protocol. This means they use the Ethereum blockchain. These smart contracts enable decentralized apps to do things like allowing P2P crypto exchanges and lending without the need for a 3rd party adjudicator.
The problem is that each contract functions as a transaction and so needs to be approved by validators on the Ethereum blockchain. The sheer popularity of DeFi apps has led to a significant slowdown in 2020, which some saw as a block on growth. The Ethereum 2.0 update will go some way towards fixing this via a switch to Proof of Stake, which will improve scalability.
If the Ethereum 2.0 update proves to be workable, it could be a bedrock upon which a fully decentralized crypto ecosystem is built. This will enable crypto holders to access financial services without being forced to use fiat currency and could open up a whole new world.

 

Crypto Is Here to Stay

Perhaps the biggest sign that the world is warming up to crypto comes from JPMorgan’s own Jamie Dimon. The famous executive was one of the more vocal voices comparing Bitcoin, and by extension cryptocurrencies generally, to a scam akin to the famous Dutch tulip mania. Now he openly admits that Bitcoin and the technologically underpinning it has potential, but it is simply not his “cup of tea.”
With even staunch skeptics coming around, it’s clear that cryptocurrency is here to stay and you may even find yourself using your own crypto wallet in the near future. If you aren’t already, that is.
financial crime
ArticlesFinanceRisk Management

How businesses can prevent themselves from financial crime- an expert advises

financial crime

How businesses can prevent themselves from financial crime- an expert advises

Financial crime is a threat which every business faces. Companies have been warned to take more care this year as the increasing digitisation of business elements such as online banking may have increased their online security risk if preventative measures haven’t been taken.

Here, Andrew Davies, VP of Global Market Strategy, Financial Crime & Risk Management at Fiserv discusses the biggest challenges businesses can face and the best practices they can implement to prevent being a victim of financial crime.

1. What are the biggest challenges that corporates face when it comes to fraud management?

Money moves around the world faster now than ever before, and many electronic transfers are settled in real time. Most financial transactions are completed with no face-to-face interactions. These are good things; they facilitate global trade and keep the wheels of global commerce turning. However, these transformational capabilities come with risks that must be managed. Managing these risks effectively and doing so in a way that doesn’t introduce friction to business operations and the customer experience are the biggest challenges facing businesses when it comes to fraud management.

Fraud threats are evolving as quickly as money moves. Criminals are becoming more sophisticated and are singularly focused on exploiting any situation and any weakness. For example, according to the Federal Trade Commission in the United States, between 1st January and 22nd September this year, U.S. citizens have lost more than $145M to COVID-19 scams. In the U.K., during the first half of 2020, U.K. Finance tells us a total of £207.8 million has been lost to authorised push payment fraud.

Criminals leverage technology and are constantly refining their tactics to commit fraud and find new ways of hiding their activities. The rising use of mobile devices and contactless transactions have also opened more channels for cyberattacks. In this environment, corporates are challenged to balance expectations for instant, real-time and seamless services with the need for security.

 

2. How is automation playing a role in fraud and risk management?

Automation is enabling corporates to deliver better fraud and risk management systems and formulate effective prevention strategies.

The fuel powering intelligent automation is data. For example, intelligent automation technology, a combination of robotic processing automation (RPA) and artificial intelligence (AI), can act on and analyse large volumes of structured and unstructured data efficiently, leading to valuable, accurate insights that would be out of reach otherwise.

Automation can also help reduce operational costs and streamline workflows. Employees spend less time on manual, time-intensive tasks, and focus instead on the strategic aspects of fraud and risk management.

 

3. What technological and infrastructure investments do corporates need to make in order to keep ahead of criminals?

Keeping ahead of criminals is a never-ending race. Fraud prevention really is an area where up-to-date capabilities and techniques can make a difference. As fraud continues to evolve, so do financial crime prevention technologies. Therefore, it is vital for businesses to make the appropriate technological investments, not only to keep pace with current challenges, but also to stay ahead of any potential emerging threats. Corporates can take advantage of tools such as advanced analytics to detect characteristics that are indicative of previous attacks and uncover new attack vectors by identifying unusual behavior patterns. Intelligent automation and insightful data management systems can be utilised to optimise operations and results. With effective technology, corporates can maximise data assets to monitor, detect and combat emerging threats, as well as reduce false positives and minimise customer friction.

For all organisations nowadays, security is a differentiator. Everyone wants to do business with corporates that provide security and have integrity. Trusted providers can help advise, and implement, various tools to ensure that corporates have the appropriate and most up-to-update capabilities.

 

4. How can corporates formulate optimal “best practices” for fraud prevention and risk management?

Best practices consist of several key elements. As mentioned earlier, appropriate technology investment and implementation is considered a best practice. Sharing data with peers and creating a data consortium is another powerful best practice; it can improve data integrity and detection accuracy, allowing for better fraud prevention and management. Shared data insights drive increased collaboration between corporates, financial institutions, law enforcement and regulators, something all can benefit from. Common data usage can facilitate more effective fraud risk management while also assisting law enforcement.

Internal collaboration is also a best practice. Enterprises can share data, as well as use common technology and tools, such as alert and monitoring systems, across different business units, from corporate finance to sales departments. This enables corporates to generate more reliable data and gain a better overview of risk.

 

5. How can robust fraud prevention and risk management strategies be a differentiator for businesses?

Combatting financial crime and any associated activities is an increasing priority for corporates and their customers. Beyond the immediate effect on business, preventing fraud and countering money laundering support the moral imperative to limit the impact of crime on society. Fraud and money laundering are not victimless crimes – they are often conducted by the same organised crime groups that perpetrate human trafficking and drug trafficking, both predicate crimes for money laundering. With the access organisations have today to more innovative and advanced technologies, they can better defend their customers, and conduct business securely and seamlessly.

A robust fraud prevention and risk management strategy can be a key differentiator for organisations versus the competition. It enables corporates to retain customer trust, create better relationships with partners and regulators, and develop a better reputation amongst society.

ArticlesFinance

PayPal Will Soon Include Bitcoin on Its Platform — Is This Good News?

Blockchain tech is going mainstream as the traditional finance world begins to embrace its disruptive potential.

Bitcoin and Ethereum are the market leaders when it comes to cryptocurrency investment by institutions or consumers trading in retail markets. And it’s no secret that both digital assets have helped create many millionaires. But it’s the technology that undergirds it that has the power to change the world.

Blockchain has plenty of applications but centralised blockchains could help to ease the many problems that currently plague our international money-transfer system.

Slow, Expensive Transfers Remain a Major Pain Point

A big challenge for financial institutions is cross-border and cross-country transfers. This is because there is a heavy reliance upon correspondence banks and other middlemen. One of the early attempts to ease this problem came from blockchain company Ripple.

Ripple is better known for its payment network and protocol, rather than its currency (XRP). The project uses an open-source peer-to-peer decentralized platform that acts as an agnostic form of money transfer. It does this using RippleNet, a network of institutional payment providers like banks and money services businesses that leverage Ripple’s technology.

Ripple uses a network of “gateways” to serve as the link between two parties who want to make a transaction and provide liquidity to the system. This helps the company avoid the problems faced by traditional currencies. It also keeps transaction fees as low as $0.00001. Reportedly, one-third of the world’s major banks are already using the platform.

Traditional Fintech Companies Are Jumping on Blockchain

The success of Ripple hasn’t gone unnoticed. For some time now, a number of companies have been toying with blockchain technology. The most recent, and impactful, was the fintech giant PayPal. While there have been many other fintech companies adopting crypto, like Revolut, the news that PayPal was making it possible to buy and sell Bitcoin made big waves.

The company confirmed that users in the US would be able to trade Bitcoin, Ethereum, Litecoin, and Bitcoin Cash using their PayPal accounts. The service will be rolled out to Vemo and other geographical areas over the first half of 2021 and users will be able to use their cryptocurrency to purchase goods and products via PayPal.

Bitcoin and other cryptocurrencies saw a sudden price rise as many traders and investors learned the news. It was generally seen as a sign that cryptocurrency had taken another big step towards the mainstream.

But there is a problem. PayPal users will not be able to withdraw cryptocurrency from the company’s ecosystem and there is a good reason for it.

Bitcoin Isn’t Ready for the PayPal Effect

Bitcoin still suffers from a scalability problem. During any major rise in transaction volume, the waiting times for a single Bitcoin transaction increases significantly. This “PayPal effect” could have a disastrous impact on the reputation of cryptocurrency.

There are around 350 million users and 26 million vendors in the PayPal ecosystem, compared to Bitcoin’s estimated 190 million users. To understand the impact that this sudden influx of users could have, it is useful to look at how the DeFi craze impacted Ethereum in September.

As the number of DeFi apps exploded, the transaction costs on the network skyrocketed. In September, miners made over $160 million, a 39% increase from the month before. This was due to an increased number of transactions triggered by DeFi. Now imagine if Bitcoin suddenly gained 350 million more users, few of whom really understand how blockchains operate.

This would be a massive problem. Visa is able to process around 1,736 transactions a second. Currently, Bitcoin can guarantee less than 5 transactions per second. And as more transactions hit the blockchain, their costs will skyrocket. Until Bitcoin can move away from Proof of Work consensus, the PayPal effect remains a major threat.

It’s Not All Bad News

In order to combat this effect, PayPal has decided to make it possible to access cryptocurrency through their network, and not withdraw it. Other limitations will help to keep down the volume of cryptocurrency taken into the network and mitigate the impact — at least until second layers such as the lightning network are in place to reduce scalability problems.

The good news is that PayPal has opened up an easier way for people to become acquainted with using cryptocurrency. It has the potential to normalize the practice of paying for goods and services using it, something which is currently difficult to impossible except for niche purchases such as VPNs.

This change would have two important effects:

  • It makes it easier for vendors to justify accepting Bitcoin. As more vendors adopt cryptocurrency payments, the utility for Bitcoin and other cryptocurrencies will increase significantly, and more people will see it as a viable method of payment.

  • It might shock the crypto community into accelerating to make solutions more scalable, either by shifting towards Proof of Stake as Ethereum has. Or by adding in second-layer solutions.

While many crypto enthusiasts won’t be happy with PayPal’s closed garden, this is a positive step towards the mainstream. It will take time before PayPal is able to open up withdrawal features, but they likely will if regulations and scalability allow it.

FinanceWealth Management

World Mental Health Day: Does More Money Correlate With More Happiness?

World Mental Health Day: Does More Money Correlate With More Happiness?

It’s an age-old question, does money really bring happiness? While many joys can’t purchased, money can give access to things that can lead to happiness.

Many of us strive to do better in our careers to obtain a higher salary, which we assume will lead to a more comfortable lifestyle – but do higher salaries actually equal happiness?

We firstly mined and then cross-matched ONS data from Average Weekly Earnings by Industry and National Well-being to understand if there were correlations between income and happiness. The infographic showing the results can be seen below:

info

Industries with Correlations Between Average Weekly Salary and Happiness

Happiness was calculated by asking adults aged 16 and over to rate on a scale of 0 to 10 where 0 was not at all and 10 was completely happy, how happy they were feeling.

The top-scoring industries with high correlations between happiness and average weekly earnings were as follows:

  1. Retail Trade and Repairs – 92.01%
  2. Accommodation and Food Service Activities – 88.91%
  3. Education – 88.59%
  4. Administrative and Support Service Activities – 87.4%
  5. Manufacturing – Engineering and Allied Industries – 86.3%

These industries showed strong correlations between earnings and happiness. This means that as earnings increase, happiness tends to as well.

The industries with the lowest correlations were:

  1. Mining and Quarrying – 22.15%
  2. Professional, Scientific & Technical Activities – 26.18%
  3. Manufacturing – Chemicals and Man-made Fibres – 33.22%
  4. Real Estate Activities – 33.68%
  5. Financial & Insurance Activities – 34.30%

While specific data as to why this happiness was so low or high was not provided, we can speculate. Many careers, such as mining and quarrying, can be highly stressful and demanding roles. Although these industries can often pay a decent salary, the satisfaction levels may not increase due to this as the intensity of these roles can often lead to strain regardless of the weekly earnings. The impact on the health of an individual working in mining and quarrying would be a good example of this.

This does not imply that industries with the highest correlations are not stressful roles, rather any unhappiness can be lessened with the benefit of a higher salary. Overall, skill, trade and administrative based jobs see higher correlations with happiness and weekly salaries.

Industries with Correlations Between Average Weekly Earnings and Anxiety

Anxiety was scored in the same way to happiness, by asking adults aged 16 and over to rate on a scale of 0 to 10 where 0 was not at all and 10 was completely anxious, how anxious they were feeling

The top-scoring industries with a correlation between anxiety and average weekly earnings were as follows:

  1. Retail Trade and Repairs – 74.52%
  2. Manufacturing-Other – 72.07%
  3. Manufacturing – Engineering and Allied Industries – 70.67%
  4. Education – 68.51%
  5. Accommodation and Food Service Activities – 68.04%

Although these are not as strong as the 80%+ correlations that are shown against happiness and average weekly earnings, there is still something to be taken from these results.

Happiness is strongest with average weekly earnings in retail and trade repairs, but this is also the highest correlation with anxiety. Most of the industries that reflect happiness, also reflect more anxiety.

Anxiety is not to be mistaken with unhappiness and you can have both alongside each other. We can hypothesise from these results that as wages increase, job responsibility increases and can cause more anxiety in the role.

Interestingly, health and social work scored the lowest correlation with anxiety at 53.40%. This industry is infamous for having high stress and anxiety levels but these results may show that anxiety does not increase with weekly wages.

 

Those That Reported as Living Comfortably or Completely Satisfied with Income Reported Higher Levels of Anxiety.

Respondent income was scored on the same scoring system as happiness (so is subjective to how happy they are about their level of income instead of actual income which is scored objectively in ‘average weekly earnings’) and was broken up into:

  • Completely satisfied
  • Mostly satisfied
  • Somewhat satisfied
  • Neither satisfied nor dissatisfied
  • Somewhat dissatisfied
  • Mostly dissatisfied
  • Completely dissatisfied

Managing financially also followed the same scoring system and was broken up into:

  • Living comfortably
  • Doing alright
  • Just about getting by
  • Finding it quite difficult
  • Finding it very difficult

Those who ranked themselves as ‘completely satisfied’ with their income showed a correlation with higher levels of anxiety at 65.68%.

Those who reported as ‘living comfortably’ reported an 89.97% correlation with anxiety.

With this, we can see that the higher the earnings, most likely from roles with higher responsibility and stress levels, the higher the anxiety.

Again, this does not correlate with happiness but we can conclude that for 65-80% of those who live comfortably or are completely satisfied with their income, the higher their levels of anxiety.

 

Correlation Between Bonuses and Happiness

Many companies throughout the UK provide bonuses to boost staff productivity and morale, however, it appears these bonuses may not be providing increasing feelings of happiness.

When workers were surveyed regarding if bonuses correlated with happiness, the correlation percentages were small and relatively inconclusive.

The industry with the highest correlation between bonuses and happiness was the construction industry, despite being the top scorer, showed at only 41%.

This could be interpreted in a few ways. Perhaps the bonus sums are not high enough to justify a change in attitude or income satisfaction may be high enough that some extra will not bring elation.

It could also be that performance-based bonuses can cause more stress in the workplace as employees push themselves to meet targets to achieve these. The outcome may not justify the means.

 

Income Satisfaction and Happiness

You may be forgiven in believing industries who previously reported a correlation between higher weekly and happiness would also report a high correlation with satisfaction with income and happiness.

Higher earnings do not necessarily equal income satisfaction. Those on more modest incomes can still report higher levels of income satisfaction and happiness.

The industries that had the largest correlations between income satisfaction and happiness are:

  1. Retail Trade and Repairs – 87.81%
  2. Administrative and Support Service Activities – 87.74%
  3. Education – 85.71%
  4. Accommodation and Food Service Service Activities – 84.87%
  5. Health and Social Work – 81.98%

The industries that had the lowest correlations between income satisfaction and happiness are:

  1. Mining and Quarrying – 9.28%
  2. Professional, Scientific & Technical Activities – 24.15%
  3. Manufacturing – Chemicals and Man-made Fibres – 29.18%
  4. Financial & Insurance Activities – 29.46%
  5. Real Estate Activities – 29.95%

Changes in income have very little correlation on happiness for mining and quarrying, likely because of the perceived poorer working conditions that remain regardless of income changes and the impact on the health of the worker.

Overall, retail trade and repairs show to have the highest correlations between income satisfaction and average weekly earnings, as well as income satisfaction and happiness but also showed high correlations with anxiety.

We can conclude from this, money can equal happiness but only in certain industries, as long as we are also willing to take on higher levels of anxiety.