Best-in-class financial services for police forces

Background

Police funding has risen by £4.8 billion and 77 per cent (39 per cent in real terms) since 1997. However the days where forces have enjoyed such levels of funding are over.

Chief Constables and senior management recognize that the annual cycle of looking for efficiencies year-on-year is not sustainable, and will not address the cash shortfall in years to come.

Facing slower funding growth and real cash deficits in their budgets, the Police Service must adopt innovative strategies which generate the productivity and efficiency gains needed to deliver high quality policing to the public.

The step-change in performance required to meet this challenge will only be achieved if the police service fully embraces effective resource management and makes efficient and productive use of its technology, partnerships and people.

The finance function has an essential role to play in addressing these challenges and supporting Forces' objectives economically and efficiently.

Challenge

Police Forces tend to nurture a divisional and departmental culture rather than a corporate one, with individual procurement activities that do not exploit economies of scale. This is in part the result of over a decade of devolving functions from the center to the.divisions.

In order to reduce costs, improve efficiency and mitigate against the threat of "top down" mandatory, centrally-driven initiatives, Police Forces need to set up a corporate back office and induce behavioral change. This change must involve compliance with a corporate culture rather than a series of silos running through the organization.

Developing a Best in Class Finance Function

Traditionally finance functions within Police Forces have focused on transactional processing with only limited support for management information and business decision support. With a renewed focus on efficiencies, there is now a pressing need for finance departments to transform in order to add greater value to the force but with minimal costs.

1) Aligning to Force Strategy

As Police Forces need finance to function, it is imperative that finance and operations are closely aligned. This collaboration can be very powerful and help deliver significant improvements to a Force, but in order to achieve this model, there are many barriers to overcome. Finance Directors must look at whether their Force is ready for this collaboration, but more importantly, they must consider whether the Force itself can survive without it.

Finance requires a clear vision that centers around its role as a balanced business partner. However to achieve this vision a huge effort is required from the bottom up to understand the significant complexity in underlying systems and processes and to devise a way forward that can work for that particular organization.

The success of any change management program is dependent on its execution. Change is difficult and costly to execute correctly, and often, Police Forces lack the relevant experience to achieve such change. Although finance directors are required to hold appropriate professional qualifications (as opposed to being former police officers as was the case a few years ago) many have progressed within the Public Sector with limited opportunities for learning from and interaction with best in class methodologies. In addition cultural issues around self-preservation can present barriers to change.

Whilst it is relatively easy to get the message of finance transformation across, securing commitment to embark on bold change can be tough. Business cases often lack the quality required to drive through change and even where they are of exceptional quality senior police officers often lack the commercial awareness to trust them.

2) Supporting Force Decisions

Many Finance Directors are keen to develop their finance functions. The challenge they face is convincing the rest of the Force that the finance function can add value - by devoting more time and effort to financial analysis and providing senior management with the tools to understand the financial implications of major strategic decisions.

Maintaining Financial Controls and Managing Risk

Sarbanes Oxley, International Financial Reporting Standards (IFRS), Basel II and Individual Capital Assessments (ICA) have all put financial controls and reporting under the spotlight in the private sector. This in turn is increasing the spotlight on financial controls in the public sector.

A 'Best in Class' Police Force finance function will not just have the minimum controls to meet the regulatory requirements but will evaluate how the legislation and regulations that the finance function are required to comply with, can be leveraged to provide value to the organization. Providing strategic information that will enable the force to meet its objectives is a key task for a leading finance function.

3) Value to the Force

The drive for development over the last decade or so, has moved decision making to the Divisions and has led to an increase in costs in the finance function. Through utilizing a number of initiatives in a program of transformation, a Force can leverage up to 40% of savings on the cost of finance together with improving the responsiveness of finance teams and the quality of financial information. These initiatives include:

Centralization

By centralizing the finance function, a Police Force can create centers of excellence where industry best practice can be developed and shared. This will not only re-empower the department, creating greater independence and objectivity in assessing projects and performance, but also lead to more consistent management information and a higher degree of control. A Police Force can also develop a business partner group to act as strategic liaisons to departments and divisions. The business partners would, for example, advise on how the departmental and divisional commanders can meet the budget in future months instead of merely advising that the budget has been missed for the previous month.

With the mundane number crunching being performed in a shared service center, finance professionals will find they now have time to act as business partners to divisions and departments and focus on the strategic issues.

The cultural impact on the departments and divisional commanders should not be underestimated. Commanders will be concerned that:

o Their budgets will be centralized

o Workloads would increase

o There will be limited access to finance individuals

o There will not be on site support

However, if the centralized shared service center is designed appropriately none of the above should apply. In fact from centralization under a best practice model, leaders should accrue the following benefits:

o Strategic advice provided by business partners

o Increased flexibility

o Improved management information

o Faster transactions

o Reduced number of unresolved queries

o Greater clarity on service and cost of provision

o Forum for finance to be strategically aligned to the needs of the Force

A Force that moves from a de-centralized to a centralized system should try and ensure that the finance function does not lose touch with the Chief Constable and Divisional Commanders. Forces need to have a robust business case for finance transformation combined with a governance structure that spans operational, tactical and strategic requirements. There is a risk that potential benefits of implementing such a change may not be realized if the program is not carefully managed. Investment is needed to create a successful centralized finance function. Typically the future potential benefits of greater visibility and control, consistent processes, standardized management information, economies of scale, long-term cost savings and an empowered group of proud finance professionals, should outweigh those initial costs.

To reduce the commercial, operational and capability risks, the finance functions can be completely outsourced or partially outsourced to third parties. This will provide guaranteed cost benefits and may provide the opportunity to leverage relationships with vendors that provide best practice processes.

Process Efficiencies

Typically for Police Forces the focus on development has developed a silo based culture with disparate processes. As a result significant opportunities exist for standardization and simplification of processes which provide scalability, reduce manual effort and deliver business benefit. From simply rationalizing processes, a force can typically accrue a 40% reduction in the number of processes. An example of this is the use of electronic bank statements instead of using the manual bank statement for bank reconciliation and accounts receivable processes. This would save considerable effort that is involved in analyzing the data, moving the data onto different spreadsheet and inputting the data into the financial systems.

Organizations that possess a silo operating model tend to have significant inefficiencies and duplication in their processes, for example in HR and Payroll. This is largely due to the teams involved meeting their own goals but not aligning to the corporate objectives of an organization. Police Forces have a number of independent teams that are reliant on one another for data with finance in departments, divisions and headquarters sending and receiving information from each other as well as from the rest of the Force. The silo model leads to ineffective data being received by the teams that then have to carry out additional work to obtain the information required.

Whilst the argument for development has been well made in the context of moving decision making closer to operational service delivery, the added cost in terms of resources, duplication and misaligned processes has rarely featured in the debate. In the current financial climate these costs need to be recognized.

Culture

Within transactional processes, a leading finance function will set up targets for staff members on a daily basis. This target setting is an element of the metric based culture that leading finance functions develop. If the appropriate metrics of productivity and quality are applied and when these targets are challenging but not impossible, this is proven to result in improvements to productivity and quality.

A 'Best in Class' finance function in Police Forces will have a service focused culture, with the primary objectives of providing a high level of satisfaction for its customers (departments, divisions, employees & suppliers). A 'Best in Class' finance function will measure customer satisfaction on a timely basis through a metric based approach. This will be combined with a team wide focus on process improvement, with process owners, that will not necessarily be the team leads, owning force-wide improvement to each of the finance processes.

Organizational Improvements

Organizational structures within Police Forces are typically made up of supervisors leading teams of one to four team members. Through centralizing and consolidating the finance function, an opportunity exists to increase the span of control to best practice levels of 6 to 8 team members to one team lead / supervisor. By adjusting the organizational structure and increasing the span of control, Police Forces can accrue significant cashable benefit from a reduction in the number of team leads and team leads can accrue better management experience from managing larger teams.

Technology Enabled Improvements

There are a significant number of technology improvements that a Police Force could implement to help develop a 'Best in Class' finance function.

These include:

A) Scanning and workflow

Through adopting a scanning and workflow solution to replace manual processes, improved visibility, transparency and efficiencies can be reaped.

B) Call logging, tracking and workflow tool

Police Forces generally have a number of individuals responding to internal and supplier queries. These queries are neither logged nor tracked. The consequence of this is dual:

o Queries consume considerable effort within a particular finance team. There is a high risk of duplicated effort from the lack of logging of queries. For example, a query could be responded to for 30 minutes by person A in the finance team. Due to this query not being logged, if the individual that raised the query called up again and spoke to a different person then just for one additional question, this could take up to 20 minutes to ensure that the background was appropriately explained.

o Queries can have numerous interfaces with the business. An unresolved query can be responded against by up to four separate teams with considerable delay in providing a clear answer for the supplier.

The implementation of a call logging, tracking and workflow tool to document, measure and close internal and supplier queries combined with the set up of a central queries team, would significantly reduce the effort involved in responding to queries within the finance departments and divisions, as well as within the actual divisions and departments, and procurement.

C) Database solution

Throughout finance departments there are a significant number of spreadsheets utilized prior to input into the financial system. There is a tendency to transfer information manually from one spreadsheet to another to meet the needs of different teams.

Replacing the spreadsheets with a database solution would rationalize the number of inputs and lead to effort savings for the front line Police Officers as well as Police Staff.

D) Customize reports

In obtaining management information from the financial systems, police staff run a series of reports, import these into excel, use lookups to match the data and implement pivots to illustrate the data as required. There is significant manual effort that is involved in carrying out this work. Through customizing reports the outputs from the financial system can be set up to provide the data in the formats required through the click of a button. This would have the benefit of reduced effort and improved motivation for team members that previously carried out these mundane tasks.

In designing, procuring and implementing new technology enabling tools, a Police Force will face a number of challenges including investment approval; IT capacity; capability; and procurement.

These challenges can be mitigated through partnering with a third party service company with whom the investment can be shared, the skills can be provided and the procurement cycle can be minimized.

Conclusion

It is clear that cultural, process and technology change is required if police forces are to deliver both sustainable efficiencies and high quality services. In an environment where for the first time forces face real cash deficits and face having to reduce police officer and support staff numbers whilst maintaining current performance levels the current finance delivery models requires new thinking.

While there a number of barriers to be overcome in achieving a best in class finance function, it won't be long before such a decision becomes mandatory. Those who are ahead of the curve will inevitably find themselves in a stronger position.

Rakesh Sangani is a Partner at Proservartner and focuses upon back office transformation within Police, Health, Local Government and Professional Services

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Small business finance - search for the right mix of fremd-and equity

Financing a small business can be quite time consuming activity for a business owner be. Can be the most important part of growing a business, but we must beware not to allow it to consume the business. Finance is the relationship between cash, risks and take advantage of. Manage each well and have sound finances mix for your business.

Develop a business plan and loan package with a well developed strategic plan, which in turn to realistic and believable financials. Before you can finance a business, project, an extension or an acquisition, you need to just what are your funding needs develop.

Finance your business from a position of strength. As a business owner needs show your trust in the business by investing up to ten percent of your financing from own funds. The remaining twenty to thirty percent of your cash needs come from private investors and venture capital. Keep in mind sweat equity is expected, but it is not a substitute for cash.

According to the evaluation of your company and the risk, thirty to forty percent stake in your company for three to five years should the private-equity component on average one. This equity position in your company to give up, still maintain clear majority in, type in the remaining 60 percent of your finance needs of use.

The remaining financing finance come in the form of long-term liabilities, working capital, equipment and inventory. By a strong cash position in your company, is a variety of lenders available to you. It of a good idea to do an experienced commercial loan broker finance "shopping" for you and present you with a variety of options to rent. It is important at this point, that you your structure not ideal finance, given your business needs and structures instead of trying in a financial instrument for your operations force.

With a strong cash position in your company, use the additional debt financing any undue strain on your cash flow. Sixty-five percent debt is a healthy. Debt financing can come in the form of unsecured finance, such as such as short-term loans, financing facility and long term debt. Unsecured debt is usually called cash flow financing and creditworthiness requires. Debt financing can also come in the form of secured or asset-based finance, which may contain claims, inventory, equipment, real estate, personal property, of letter of credit/credit and Government guaranteed finance. A tailor-made mix of secured and unsecured debt, specifically up to financial needs of your company, is the advantage of a strong cash position.

The cash flow statement is an important financial track the impact of certain types of finance. It is important, have a firm grip on your monthly cash flow, together with the control, and planning and finance monitoring of the company planning the structure of a financial budget successfully.

Your financial plan is a result and part of the strategic planning process. You must be needs careful objectives in your cash with your cash. Short term capital for long-term growth and vice versa is a no-no. Violating the match rule about levels, high risk, interest rate, re-finance opportunities and operational independence can bring. Some deviation from this ancient rule is allowed. For example, if you have a long-term need for working capital, then a permanent capital need can be justified. An other good financial strategy has unforeseen expenditure and maximum flexibility to release capital on hand for your working capital needs. For example, a line of credit get a chance, quickly created and then long-term funding, planning map for cheaper, more suitable, all this in advance with a lender.

Unfortunately, finance is not usually treated until is a company in crisis. Plan package in advance with an effective business plan and loan. Equity financing stress when can debt and creditor provides confidence can not cash flow business relations with your company. Good financial structure reduces the cost of capital and the financial risks. Should help broker to give you a management consultant, finance Professional or credit with your financial plan.

Frank Goley works as a management consultant success for ABC business consulting. He has extensive experience in business finance and has over 20 years experience as an expert Business Planner.

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Car finance UK – easy way to your car financing

Car is today very important live for everyone. There are many people who have their own car, but many people have no car. They have not enough to buy credits on a new branding car, so they need auto financing to do so. Car finance Germany is so easy, but it is not easy at favourable interest rates. So that when looking for car you should try finance Germany, financed this company get a cheap price loans can offer you. It is necessary to minimize ability your burden on your finances and repayment.

In the UK, there are various lenders which offer cheap car finance for new and used car. You should try to receive different loan offers from different lenders and compare finance before looking for car finance UK for affordable prices. There are a large number of lenders providing cheap car finance in the UK. It is suitable, that you do not, that propose a creditor recognize should compare without auto loan offers. You need to before a car financing check all documents and the deals that financier are offered by your car. It would be the best decision for the best loan deal shopping.

Many people have not enough to buy cash or storage on a car, but they need car also, so that they finance companies their dream car for hiking. Some of them are priced finance, but some of them numbers higher for their finances. You have to look so different car finance companies UK online. There are a lot of car finance sites, where they offer financing various schema and other information related to car. So not here and there hiking you and go online search for best car finance UK.

If you have a bad credit history and not car finance company to this offer you cheap prices find finance, you should go online and find a site that can meet your needs. Guarantees cheap prices on car finance UK, prefer borrowing, which it is your estimated capital at home designed. So lenders for cheap car finance in the UK refer to an online. But make sure that good you have compared the online financier, so that you can a proposal such as cheap rate loans in the United Kingdom will receive.

Allan Thomas works as a Manager in the finance for bad credit car loan. She has much experience in finance. Other financing details of car finance UK [http://www.securedcarfinance.co.uk/car_finance_uk.html], secured car, used funding, private car to car finance, new car finance visit [http://www.securedcarfinance.co.uk/]

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Financing cash flow peaks and valleys

For many businesses, financing can drive cash flow for your business such as a continuous roller coaster.

Sales are up, then down. Margins are good, then they reduce from. Cash flow can swing back and forth like an ECG graph of a heart attack.

How do you go on financing cash flow for this type of business?

First, you need to know exactly, and manage your monthly fixed costs. Regardless of what happens in the course of the year you must be on what amount of resources, are needed from scheduled and recurring operating costs to cover, which will occur if you have a sale or not complete. Does this every month for a full twelve month cycle is the basis for cash flow decision-making.

Secondly, from where you are now, to determine the amount of funds in cash, owner of outside capital, which invested in the company and outside sources currently could be others.

Third project from your cash flow so that fixed costs, existing liabilities and receivables are realistic appeared in future weeks and months. If cash is always tight, make sure that you do your cash flow on a weekly basis. There is much variability in the course of a single month project only on a monthly basis.

Now, you have to evaluate a basis for the financing of your cash flows.

Financing cash flow clearly his, sector is to always have something for every company due to the industry, level of the company, company size, business model, owner resources and so on.

Every company must itself its funding sources to assess cash flow, including but not limited to owner investment, trade, or payable financing, government transfers payable discounts for prepayments, deposits on sale, third-party financing (line of credit, term loans, factoring, purchase order financing, inventory financing, asset based lending, or what is relevant for you).

Okay, so, now you have a cashflow stock and a thorough understanding of your options for the financing of cash flows in your specific business model.

What to do?

Now you are able to maintain his, future opportunities, that fit into your cash flow.

Three points to clarify, before we go further.

First financing remains, not necessarily on a loan from someone when your cash flow needs more money. Its a process keep your cash flow continuous positive at the lowest possible cost.

Secondly, you should only market and sell, what you can cash flow. Marketers will measure the ROI of a marketing initiative. But if you not the business to the sale to complete and collecting the proceeds cash flow, there are be measured any ROI. If you have a business with fluctuating sales and margins, you can enter only in transactions that you can finance.

Thirdly, marketing to customers, you can sell, must again and again to to maximize your marketing efforts and reduce the unpredictability of the annual sales cycle through regular repetition to focus incoming orders and sales.

Marketing works under the premise that when they provide what the customer wants the money side of the equation will take care of themselves,. In many companies, this proves to be true in fact. But in a business with fluctuating sales and margins, financing, cash flow has an other criteria be included in sales and marketing activities.

Overtime, virtually every company has the potential to smooth out the peaks and valleys through a robust marketing plan, that better lines up with the customer requirements and the business financing constraints or parameters.

Next to the link financing cash flow more to marketing and sales, builds which next to the most effective action you take, your sources of funding.

Here are some possible strategies for expanding your sources for financing cash flow.

: Strategy # 1 strategic partnerships more funding in certain situations can benefit with major suppliers, the expansion of opportunities. (This happens with larger suppliers, that 1) have the financial means to develop financing, 2) see as important customer and value your company 3) ability to manage forecast and cash flow have confidence in the business.

Strategy # 2: you sure as far as maintenance show possible that your financial accounts can a profit debt financing. You can be good accountants income tax money saving, but if they business profitability on or close to zero and tax planning drive, can also effectively destroys your ability to borrow money.

If possible, only make strategy # 3: customers with credit worthy. Credit worthy enable customers of the business and potential lenders finance receivables increase the amount of external financing available.

: Strategy # 4 processing path for your physical assets. Equipment and inventory are easier to finance, if the lender is clearly understood how to liquidate the assets in the event of default. In some cases companies can be assigned to resale option agreement on certain equipment and inventory of interested parties, will receive a lender as a remedy against a facility used for the financing of cash flow.

Strategy # 5: joint venture an opportunity with a different business to share the risk of a major distribution facilities, which may be to risky to assume to yourself.

Summary

The primary long-term goal of a company with fluctuating cash flow and edges smooth out the peaks and valleys and create a scalable business with a predictable sales process.

This is best achieved with an approach that inter alia the following steps.

Step # 1. micro manage you your fixed costs and cash flow and exactly project from the cash flow requirements of the company on a weekly basis.

Step # 2. take you have a detailed list of all sources that you use for financing cash flow.

Step # 3. integrating you your financing constraints in your marketing approach.

Step # 4. If possible, only with credit card worthy customers to reduce risk and increase financing options active.

Step # 5. work for the extension of your funding sources and source available limits for the financing of cash flow.

Economic cycle stability and cash flow predictability is an evolutionary step for any company. The industries with long sales cycles will tend to be more difficult to tame to manage due to a larger number of variables.

Continuous focus describes the process for improvements help, create the desired results in the course of time.

Brent Finlay facilitates the understanding of corporate financing. Information about you to find and financing for your company to secure. Get your free 6 part mini-course website the small business loans and financing

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Car finance for beginners

One of the most misunderstood concepts about leasing or buying a new car with a loan is how the financing really works. We'll say it again later, but the key concept to understand is that dealers do not finance car leases and loans. Repeat: New-car dealers do not finance cars. However, dealers can affect what you pay for financing.

Dealer always sell for cash

Car dealers are independent business people who have an authorized franchise with one or more car manufacturers. They do not work for the manufacturer. There are no manufacturer-owned car dealerships. In some cases, a large dealership may own multiple dealership stores in various locations. These stores may sell the same brand vehicles, or different brands. Dealers buy cars from the manufacturer, usually with large loans from a bank or finance company. The bank charges dealers interest on these loans. Dealers have to sell cars to pay off these loans and associated interest, as well as cover other expenses of running a business.

Dealers always get cash for their cars, whether it's directly from the customer, or from a finance company or bank who has loaned a customer the money. A common misconception is that dealers give cash customers a discount. This is not true because dealers generally make more money on financed loans or leases -- in the form of commissions or boosted interest rates.

Dealers don't finance leases and loans

When a dealer leases or sells a car to a customer, he has finance companies or banks that he works with to provide his customers the financing they need. Most dealers use the car manufacturer's "captive" finance company, such as GMAC, Ford Motor Credit, and American Honda Finance. Dealers arrrange financing on customers' behalf -- as a service. Customers can arrange their own financing if they choose.

Key point: Dealers do not finance leases and loans. Dealers do not approve customers for leases or loans. Dealers do not process leases or loans or take payments on leases or loans. Dealers simply take lease and loan applications and try to arrange financing for customers.

Dealers use independent finance companies or banks on customers' behalf

A dealer may do a cursory preliminary check of a customer's credit history using one of the three major credit reporting agencies. This NOT for loan or lease approval, but only to determine if the customer has such serious credit problems that it would not make sense to continue with the transaction.

Remember, the dealer is NOT the finance company -- he cannot approve customers for loans or leases. The finance company or bank to which the dealer sends the lease or loan application will do their own check and look at not only credit history and payment history, but credit score, and debt-to-income ratio. This credit worthiness check is much more thorough than the simple check that the dealer may have done.

What you'll pay - your credit score

When a finance company or bank checks your credit score, you'll be classified in one of three categories. First, you could be rated a "prime" customer, or "A" tier. This means your FICO score is higher than 680. You qualify for the best interest rate.

If your credit score is between 620 and 680, you are "near-prime" and will pay as much as 5% higher interest rate than someone with a better score.

If your score is below 620, you are considered "sub-prime" and will almost certainly have difficulty finding a bank or finance company who is willing to give you a loan or lease. If you find one, your interest rate will likely be extremely high.

Dealers can change your interest rate

One of the potential "hidden" fees when buying or leasing a car is a markup that dealers can add to your interest rate, even when you have a good credit score.. Say the normal interest rate from the finance company used by the dealer is 6.0%. The dealer marks up the rate by a percentage, say 2.0%, making your real rate 8.0%. This markup is never mentioned anywhere in the documents you sign. Car dealers claim the practice is justified to cover the cost of their brokering customers' financing. In fact, it's additional profit or simply making up for concessions made to the customer somewhere else in the deal.

Automotive News reports that a number of companies such as DaimlerChrysler Services, Honda Finance, and GMAC have settled on a 2.5% markup limit agreement. California now has a law that sets a 2.5% markup ceiling for most car loans. So it seems that 2.5% is now the magic number in the industry.

A common question from automotive consumers is, "Can I negotiate my interest rate?" In most cases you can try to negotiate the markup, but not the base rate, which is set by the finance company based on your FICO score. In the past, there was no good way to know how much the car dealership was marking up the rate but, now, with the recent "agreements" and laws, we can assume the markup rate is going to be as much as 2.5% added to the base rate. Lease rates are particularly difficult to negotiate because the interest rate is expressed as "money factor" (see the discussion of lease finance fees in our Monthly Lease Payments article), and the rate doesn't appear in your lease contract.

Be aware that not all dealers mark up interest rates, but it seems to be a growing practice. Also remember that your base rate will be determined by how a finance company values your credit history and your credit score. This is why is it so important to understand how credit scoring works. A low score or mistakes in your credit history report can easily force a high base rate, even without markup. Therefore, knowing your credit score and shopping around for the best rates is always a good thing to do.

Dealers may check your credit, but it matters little

Many customers mistakenly assume that when the dealer says he has done a credit check and lets the customer sign papers, that the deal is done and everything is legally wrapped up. Not true. Customers often believe that they can somehow keep a car that they haven't paid for just because they have signed papers or that there is some minor technical mistake in their contract. This is also a misconception.

What you sign and what it means

When a customer leases or buys a car with a loan, he or she signs papers that essentially say the following: " I agree to lease or buy this car, using funds that might be loaned to me by a finance company or bank (if they approve me) that the dealer will attempt to arrange for me and, if those funds are not approved by a finance company or bank, the deal is void unless the dealer can find another finance company that will approve me. If the funds are approved, the finance company or bank will pay the dealer directly with those funds that have been loaned to me. The finance company or bank will then work directly with me to arrange monthly payments to repay that loan or lease. I understand that the dealer will have then been paid in full for his car and will no longer be involved in the lease or loan."

If your lease or loan is not approved

The finance company or bank can find problems in the customer's credit history/score or debt-to-income data that makes them flag the application as high risk. They can then ask the dealer to inform the customer that the application was not approved, or that additional money is required, or that a co-signer is needed in order to re-submit the application for approval. Finance companies and banks work through the dealer; they do not work with the customer directly until the payment book arrives after approval.

With leases, a finance company will sometimes ask for a down payment when there was none initially, or may ask for a larger security deposit, possibly when there was none initially. Often, this will allow the payment to remain the same even though the overall cost of the deal has gone up.

If the finance company or bank does not approve the customer's lease or loan, they don't pay the dealer for the car, and the car still belongs to the dealer, even though he may have already allowed the customer to drive the car home a couple of weeks ago. If the dealer doesn't get paid, he will want his car back, regardless of any contracts the customer may have signed.

What choices do you have?

First, the customer should always know their own credit history and FICO score before ever setting foot in a dealer's showroom. This way, there won't be any surprises later. Second, the customer can ask the dealer if he works with other banks or finance companies who might be willing to approve the loan or lease. Third, the customer can always shop for their own lease or loan financing and get pre-approval for a spending limit.

Al Hearn is founder, owner, and operator of two popular automotive consumer web sites, Lease Guide and Used Car Advisor, which provide free auto buying, selling, leasing, and financing advice.

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Customer key finance programs to boost sales

While studies show that technology again is spending on the rise, there is a reason that you have heard a collective sigh of relief from the software industry. While many households are once again allows for the acquisition of enterprise software, hardware and peripherals, there's no question that today's buyers are smarter, wiser and more selective than ever before.

Although the purse have relaxed, competition at an all-time high is. It is no longer enough to provide a software solution requirements corresponding to the potential customer, or even to provide it at the best price. Today smart suppliers looking constantly for opportunities to stay one step ahead of the competition.

Although sales growth see always part of a highly competitive business strategy, often a software development company, a simple method to achieve this goal - so that it easier for customers to buy.

An option increasing popularity among the software vendors is to create a customized financial program that provides no-hassle financing solutions for your potential customers. In addition to "One-Stop shopping", your customers can benefit other financing, it easier for them to commit that technology purchases, including make:

wholly-owned financing-many finance companies offer 100% financing for the costs of software and maintenance contracts, no deposit required. Since customers not to come up with a down payment, can you immediately a purchase make, rather than keep the sale with a "wait and see" mentality that often accompanies a leap in cash reserves. It allows your customers invest more capital in income-generating activities.

Improved cash flow management - software financing, your customers can get to improve capital for reinvestment in their business and budgeting accuracy through fixed monthly payments. Funding makes it easy for customers on multi-annual budgets by paying for your software over its useful life.

Flexible payment structures - can optimize customer of budgets by taking advantage of to maximize the return on their investments the flexible payment structures to available funding. For example, can with software funding, customers ramp is payment according to the sales generated of a new technology project, financed by using the software.

Financing offers a clear advantage for the buyer, if a program is well planned, the list of the benefits for developers, distributors and resellers can be useful.

Improved customer relationships

As mentioned earlier, added value offers more flexibility to financing models for the customer through the strengthening of their purchasing power and offers comfort. It increases their satisfaction with the ability to purchase their budget, the entire technology solution - including such software, hardware, service, support, integration and training - instead of only the parts b. and to use pieces that could afford an outright purchase.

Shorter sales cycles

Seems every customer on the sales side, the interest in a product is a good start. However, there are many times when the question of how pay I happens for the new software prevents the sale. Time lost impasse offers can be eliminated if financing is part of the sale, as the ability to pay immediately in the equation. In addition many finance companies offer a quick credit and documentation now, easy processes, so you can quickly complete a sale and avoid costly processing delays.

Another advantage is that software requirements in the sales process will be discussed, the finance specialist with the chief financial officer can work or accountant to determine which option and payment fits financing plan best business requirements and cash flow.

Customers can direct financing also software manufacturer save millions of dollars every year by reducing the number of days pending a sale. Consider a company with quarterly cash sales of $ 50 million. On average, it may take 45 days to collect payment. Assuming a borrowing rate of 6 percent, leading 45-day delay in payment costs borne by $371.204. If the same set of numbers with a leasing financing program, the payment 2 days generated, deletes the cost $82.253, save the company more than $288.951 in a business district.

The big picture

Total devices can financing programs:

Generate greater and more profitable sales faster;

Increase account control;

Improve sales efficiency and productivity;

Days sale excellent reduction;

Improvement of cash flow;

Distinguish your company from the competition; and

Provide complete solutions for your customers.

Take the next step

After you identify the interested in flexible funding within the framework of the sales process is the next step is to develop a financial program. By partnering with an experienced leasing company for your customers develop a financial program, you can all the finance company transfer the uncertainties of the dimension — your customers.

A partnership with an experienced finance company also means that you can focus, - software development - a well-known experts leave what can your company best while deal with the intricacies of a financial program. Simply put, working with a third party, your company will receive all the benefits with none of the risk.

Regardless of whether you financing partner your customers refer directly to your program or to work with a third-party financial partners, to develop an in-house program, it is important to choose an experienced equipment finance partner. While the sales process the finance expert work closely with your customers, and it is important that his actions and level of service your company reflect ability, the expectations of your customers. Search in the search for a financial partner for a company that:

Is flexible and willing to work with your management team to develop a program that will meet your financial goals.

Has experience in the Finance IT and software since the sales process, client decision making criteria and revenue recognition, that differs from capital asset seller;

Marketing support and materials, you need to promote your finance program help

Is willing and able, your sales team with materials and training to the sales team members sure are convenient and easily able to with their customers to increase financing as an option; and is a financially stable, long-term business partner.

Businesses looking for a leasing partner find select leasing (www.) ChooseLeasing.org), a website developed by the equipment leasing Association, where you will find answers to frequently asked questions about leasing and seek an experienced leasing companies finance specializing in vendor programs.

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Accounts, accounts receivable financing - don't worry, be happy

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

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

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

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

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

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

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

The MSN Encarta Dictionary defines the word worry as:

"Worry

verb (past and past participle wororied, present participle wororyoing, 3rd person present singular worories)Definition:
1. transitive and intransitive verb be or make anxious: to feel anxious about something unpleasant that may have happened or may happen, or make somebody do this

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

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

a dog suspected of worrying sheep

4. transitive verb

Same as worry at

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

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

Stop worrying that button or it'll come off.

noun (plural worories)Definition:
1. anxiousness: a troubled unsettled feeling

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

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

The opposite is:

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

Not to worry. We'll do better next time.

no worries U.K. Australia New Zealand used to say that something is no trouble or is not worth mentioning (informal)".

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

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

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

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

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

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

"Here is a little song I wrote

You might want to sing it note for note

Don't worry be happy

In every life we have some trouble

When you worry you make it double

Don't worry, be happy......

Ain't got no place to lay your head

Somebody came and took your bed

Don't worry, be happy

The land lord say your rent is late

He may have to litigate

Don't worry, be happy

Look at me I am happy

Don't worry, be happy

Here I give you my phone number

When you worry call me

I make you happy

Don't worry, be happy

Ain't got no cash, ain't got no style

Ain't got not girl to make you smile

But don't worry be happy

Cause when you worry

Your face will frown

And that will bring everybody down

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

There is this little song I wrote

I hope you learn it note for note

Like good little children

Don't worry, be happy

Listen to what I say

In your life expect some trouble

But when you worry

You make it double

Don't worry, be happy......

Don't worry don't do it, be happy

Put a smile on your face

Don't bring everybody down like this

Don't worry, it will soon past

Whatever it is

Don't worry, be happy"

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

Copyright © 2007 Gregg Financial Services

Mr. Elberg is a licensed attorney and licensed real estate broker. Gregg Financial Services is a full service brokerage for commercial finance companies and banks that fund B2B businesses. Mr. Elberg arranges funding from $25,000 to $50 million per month at competitive pricing, and works to reduce your financing costs as your company grows. For more information about GFS, please visit our website: http: http://www.greggfinancialservices.com

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The basics of the recreational vehicle financing

It is considered that always a good financing business on an RV is now much easier than it was before. Recreational vehicle financing is there for RV units to finance but more recently there was an influx of flexibility in how it was done. Also recreational vehicle is financing compared to above, now far more directly, simply and easily. However, it would be good, keep in mind the financing RV to buy is financing not exactly the same as a car. Some would say it is far more similar to such as financing a boat.

It is a widespread perception, if you purchase an RV, even with funding, that a person who paid on time. The General reliability of the people, the opt for recreational vehicle financing are loans company confidence in low interest rates and terms that are not as hard as those that one on a car financing agreement. Monthly payments are also more affordable thanks to this reputation. As such, if a person is considering buying an RV it would be a good idea to take advantage of this popularity in connection with a good credit rating and a clean credit history. The above combination could buy a potential buyers easily on their RV an incredible bargain land.

Another incredible aspect of recreational vehicle financing would be the average number of years for the terms of payment. Usually between 10 and 20 years, any RV financing arrangement is considerably longer than that of a car. Very few financing institutions lumps the interest rates at the beginning or end of the payment period, which means that the interest is distributed evenly. What does this mean for the average buyer is the fact that she suddenly need not to fear have their budgets must pay limited new recreational vehicle from a sudden increase in the interest for their.

A feature of recreational vehicle financing shares with car financing would be the emergence of online finance companies. Operated the same way as automobile counterparts, RV known groups are financing than less critical about a person, the credit rating and credit history, provided not have bankruptcy or have non-performing loans. Car and RV loan companies share the convenience of the speed. It is not uncommon that an online RV financing the group able, within a minute to determine whether a potential customer for a financing agreement would be based on the limitations and conditions in question. Car and RV financing groups share an other small comfort in the fact the that neither tries, slide tools such as insurance or an extended service plan for the buyer how would a trader.

With the ease, speed and flexibility of the recreational vehicle services via the Internet financing, it is no wonder that it featured a slow but steady growth of people are online lenders are for their financing. While the market for recreational vehicle financing in the market for car finance is much smaller, is still significant enough, to a number of websites and companies willing to provide to justify their services to interested parties. With the price of the real estate currently on the rise might contact some people at RV units cheaper, temporary alternative. Of course, the persons referred come to realize that in terms of funding RV group the best way for them is to minimize their costs.

Please visit finance [http://www.itrustmotors.com/financing.htm] financing and recreational vehicle for more valuable information on car www.itrustmotors.com/financing.htm [http://www.itrustmotors.com/financing.htm]

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Car finance puts you on top gear when you buy a car

Fast car on public roads. It is a perfect image for all car enthusiasts. But you have, go to your work and your children to school fall. This is the real picture for most of us. We need to save time if we do not have. A typical person has so many odd jobs to complete that a car can, without doubt, facilitate their accomplishment. Her car is financing to buy not your idea of how your car; then you are solid methods probably still with traditional car purchase. Take your inhibitions regarding for auto financing, because there is no doubt in the mind holds up your financial caliber establishment you with a car loan finance.

Car finance has a new spin in related investments to buy a car. So, how finance you a car? If that question baffled you, then you can go a long way in the process of buying a car must. The term "Financing" to buy a car connotes either render loans you buy the car or the car, the you by lease to map. You are probably focused on the former importance. Many people are on auto financing call point of sale, since it seems like a convenient way. It seems easy; You select a car, fill out an application for business credit, and all in a day's work continue with your car-. Car dealer financing give auto financing, on weekends and at night, when other banks and credit unions are closed.

Seems easy, doesn't it? But there is a catch. The merchant will be charged certainly you more financing for your car. Car buyers are overweight typically by 3% on their car financing. A large number of complaints about financing concern car dealers. 0% APR is not only attractive, but attracts the buyer acquires car financing not meditate, if it is possible for them. There are very few people who actually receive a 0% APR. To offer car financing generally fall in the Middle so that car financing an extremely embarrassing to experience. You buy a new car and probably for the first time, you certainly want it to complement your enthusiasm. There are some basic things, which must be kept in mind, that decisive primeval step in the car to buy.

Car buying and financing in particular is your credit score before you apply for a car loan. Many people are not aware of the fact that they have even a credit score. Appropriate, you can check your credit score online. So, if you may have bad credit history then you interest rate on your auto financing more numbers. If your credit score falls below 550, would probably apply for is not such a good idea new car financing. First repair you credit score. Repair credit score requires little effort, will help you pay back your debt and keep your credit report. Finance car loan you can get online car finance companies even if your credit score is lower than required. The car financing loan can finance to get approved in minutes. Online car finance companies have auto finance process revolutionized. Lowest online auto financing prices offer no registration fees or down payments one car financial company tremendous competition for car dealers. Car finance companies have set standards for auto financing is worth to opt for.

70% of cars are achieved by a type of funding. You are able to finance even a used car. The process is so easy and undemanding as a new car financing. The essence to find that right auto financing is to do research on your kind of car. Knowledge is makes; You must be this ancient logic awake. If enough information is often available, then why not use make it. You can find out by how much does your car compare prices with local dealer. It is very crucial exactly how much you can afford; Calculate monthly income and deduct your usual monthly expenses to find out how much you, can afford on a monthly basis. You calculate carefully, otherwise are the car financing credit difficulties in the repayment of finance. And you want never to deceive to with your repayment plan, because a lot at stake. You can free advice for your own car financing online through credit unions and loan to locate institutions.

You are a car enthusiast, a car consumers, only a person who needs a car, should drive the best car. And why not the best car to drive, when you access to the best car financing plans have. Auto financing is a transparent route that leads to a car owner. Finance car loans are usually short-term loans from 36 up to 72 months. Shorter loan period imply lower interest rates and will prove to be cheaper. You have worked hard to select car that you want; It is a pretty good chance that you would have to work not so hard for car finance. So sit back relax and enjoy the ride.

After he loans gone through the agony of borrowing, Natasha Anderson understands the need for good quality loan advice. Her articles endeavor, you give advice on the most basic way for the benefit of the readers are available. It hopes that this will help you to find the loan that beseems their expectations. Work loan, for the UK website [http://www.ukfinanceworld.co.uk.To] you can find a secured secured or unsecured loan that best suits, their visit http://www.ukfinanceworld.co.uk

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Finance, loans, investment - economic categories

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

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

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

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

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

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

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

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

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

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

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

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

In every discussed position there are:

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

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

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

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

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

"Finances are the system of economical relations, which are connected with firm creation, distribution and usage of financial resources".

We meet with absolutely innovational definitions of finances in Z. Body and R. Merton's basis manuals. "Finance - it is the science about how the people lead spending `the deficit cash resources and incomes in the definite period of time. The financial decisions are characterized by the expenses and incomes which are 1) separated in time, and 2) as a rule, it is impossible to take them into account beforehand neither by those who get decisions nor any other person" . "Financial theory consists of numbers of the conceptions... which learns systematically the subjects of distribution of the cash resources relatively to the time factor; it also considers quantitative models, with the help of which the estimation, putting into practice and realization of the alternative variants of every financial decisions take place" .

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

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

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

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

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

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

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

In the manual of the political economy published under reduction of V. A. Medvedev the following definition is given: "credit, as an economical category, expresses the created relations between the society, labour collective and workers during formation and usage of the loan funds, under the terms of paying present and returning, during transmission of sources for the temporal usage and accumulation".

Credit is discussed in the following way in the earlier education-methodological manuals of political economy: "credit is the system of money relations, which is created in the process of using and mobilization of temporarily free cash means of the state budget, unions, manufactures, organizations and population. Credit has an objective character. It is used for providing widened further production of the state and other needs. Credit differs from finances by the returning character, while financing of manufactures and organizations by the state is fulfilled without this condition".

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

Following scientists give slightly different definitions of credit:

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

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

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

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

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

o The loaning of money may bear no interest;

o Any person may take part in it.

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

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

o It may not bear no interest (if the assignment doesn't foresee something);

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

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

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

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

b) Its opportune returning;

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

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

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

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

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

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

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

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

In the discussing context we consider:

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

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

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

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

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

Let's sum up middle results of discussing new concept - "finance-investment sphere" and discuss its investment consisting parts.

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

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

Let's discuss termini - "investment" and "capital placement's" usage in the economical literature.

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

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

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

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

- providing high rates of economical growth;

- raising an economical effectiveness, which is expressed:

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

b) by fulfilling the branch structure of the investments;

c) by improving their technological structure;

d) by optimization of their further production structure.

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

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

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

"Investment commodity, capital goods - a capital."

In the official manuals of political economy of the reformation time the capital investments are discussed as "expenses for creating new main funds and widening, reconstruction and renewing the active ones". In this definition the investments (capital placements) during separation of the forms (types) of further production of the main funds are bounded only by main funds (without increases of the circulation funds and insurance reserves):

a) creating new ones;

b) widening;

c) reconstruction;

d) renewing.

Also, the concept of the industrial gathering appears, at the expenses of widening of basic, circulation funds and also insurance reserves takes place".

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

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

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

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

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

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

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

- less then 6 months - quick compensative;

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

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

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

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

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

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

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

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

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

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

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

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

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