Asset Finance Leasing

Asset finance is a boon to small and medium enterprises as it saves them precious working capital and helps them to improve their cash flow by letting them lease/hire expensive business critical assets rather than buying them outright. 

In general asset finance is available through two routes - hire purchase and leasing. Under a hire purchase arrangement, the ownership gets transferred to the customer at the end of the hiring period while in a leasing arrangement the customer must return the equipment back to the leasing company.

In both the options, the customers must pay an agreed monthly or quarterly rental for the length of hiring/leasing period. In this article we will talk about leasing and its various aspects.

This non-transferring of the ownership is the fundamental characteristic of the lease arrangement. During the period of lease, the customer pays monthly or quarterly (or whatever is agreed) to the leasing company. This rental payout is deductible from income in some cases (except for a finance lease).

There are various types of leasing:

Finance Leasing
This comes closest to the hire purchase option of asset financing with one major difference – the ownership of the asset doesn’t get transferred to the business customer at any point of leasing period. 

In this arrangement the customer pays the full cost of the equipment, plus the charges in the form of lease rentals over the period of the lease. The customer also gets to bear risks and enjoy benefits usually associated with the ownership without actually owning the asset – he must bear the maintenance and insurance cost of the asset and will have to treat the asset as a capital asset in the balance sheet.

At the end of the lease term, usually the asset in question is re-leased to the customer at much reduced payments or is sold second-hand to an unrelated third party.

Operating Leasing
While the term for a finance lease is long, an operating leasing is usually resorted to if the need of equipment is for a shorter period. Here the full cost of the equipment is not recovered and at the end of the lease term, usually the equipment is leased to some other customer or is sold second-hand.

This type of lease is fairly common for cars and construction equipment for whom there is a mature and ready second-hand market. The usual period is of two to three years or longer, but always short of the working life of the asset. The leased asset would not go in the balance sheet as part of capital assets. Rather the lease expenses will be treated as deductible expenses in the income statement.

Contract Hire
This is a variation of an operating lease and is mostly used for vehicles. With this option the customer gets the chance to use the new asset without bearing the risks associated with ownership. Here leasing companies agree to bear some part of the management and maintenance expenses. You need to work out full details with the leasing company.

Emergency Loans For People With Bad Credit

When urgent help with money is needed, situations where financial assistance is needed instantly, which happen to people regardless of their credit history, a lucky few know how to find bad credit emergency loans for fast money.

You may need to pay your utility bills to prevent the power being turned off on you and and your children, perhaps your car sputtered its last and needs repairing fast to avoid getting fired from your job.



You might be pulling your hair out because your brother has been arrested again and turned to you to get bailed out so as not to spend the night in jail, or god forbid, you find yourself facing emergency medical bills for the health of you or a loved one.

During these emergency situations, waiting for help is not an option.

Immediate Loans for Emergencies

To meet this need and provide help to people with a not so perfect credit score lenders created bad credit emergency loans, also known as hard money financing or second chance borrowing opportunities. Emergency loans for bad credit allow people to get instant emergency loans when they need them regardless of their bad credit record, looking to qualification standards besides your credit report, most commonly your income.

 EMERGENCY LOANS

Bad Credit Emergency Loans are short term loans that can be accessed immediately funding directly to your bank account within an hour, the same day, or 24 hours depending on the lender. Your average emergency money lender will not ask for a credit report from you the borrower unless you feel it is good enough to help you qualify for better interest rates and repayment terms.

Emergency loans for bad credit are structured to focus on easy approval and application requirements and quick funding. To qualify for these bad credit loans you must be employed in a job for at least half a year and must be 18 years old. If you are unemployed but can document a steady income you can qualify for money as well. The primary requirement to get ahold of emergency loans for people with bad credit would showing a record of monthly earnings, no less than a thousand dollars, to show a means of being able to repay what you borrow.

For funding of your loan you will be required to have a valid and an active bank account for the past three to six months which will be used to wire the money you borrow direct. The above qualification requirement is actually a double-edged sword for the borrower, as there are two reasons as to why lenders ask for banking information from the borrower. First for funding of the money you borrow, and secondly as a source of for repayment in following with your agreed upon emergency loan terms.

If the you become delinquent your payment of the emergency loan bills as stated in your contract, the lender can deduct what is owed from this bank account.

If you meet the qualification standards outlined above, the lenders will fund your bad credit emergency loan money direct into your bank account. You can borrow a range of money from $100-$10,000 depending on the lender you are working with. The repayment periods for these loans also varies, from two weeks to many months, just be sure to give yourself enough time to easily repay your emergency loan amount without overburdening yourself.

Repaying Your Bad Credit Emergency Loans

Borrowing emergency loans for bad credit, is not all sunshine, butterflies and moonbeams. Your avergae bad credit emergency loan should be expected to have high interest, up front borrowing percentages charged based on the amount you need to borrow, and stringent repayment dates. This is the trade off for getting a no hassle cash loan with almost no questions asked.

The market for getting emergency loans for bad credit is big, with a number of lenders who have different interest rates which you should review in comparison prior to borrowing money. The best way to find the best bad credit emergency loans is using the internet. Online, you can compare the interest rates of various lenders from the comfort of your own home and pick the emergency loan that will be suited to how much money you need to borrow, the time allotted by your emergency, and your ability to repay what you need.

Once the loan is re-paid, the lender be satisfied and will be open to future emergency loan funding should you need it. If your timely payments are reported to the credit bureaus you will also be improving your credit score getting you one step closer to qualifying for cheaper, better loan offers.

However, borrowing too many bad credit emergency loans causes you to risk falling into what is called a debt-trap, meaning you have too many lenders seeking repayment for monies borrowed, leaving you unable to meet your obligations with your current paycheck.

In falling behind you incur penalties that make it more difficult for the you to pay as agreed, resulting in a vicious cycle of paying interest and penalties without deducting money from your loan balance. A good way of avoid the dept-trap would be to make sure not to borrow too many emergency loans at once and to manage the emergency money repayment carefully.

Emergency Loan Alternatives
The alternative to emergency loans for bad credit would simply be saving an emergency fund for when these urgent times arise, allowing you to draft from your savings when necessary. This type of saving strategy would make bad credit emergency loans unnecessary, though not everyone is always prepared for when emergencies strike and it is good to know your options.

For people with bad credit, emergency loans are a vital tool for borrowers who are in dire need of money and do not have the time to wait to get approved for a traditional loan, which will require enduring the qualification review documentation standards that come hand in hand with traditional financing.

However, money borrowed using emergency loans for bad credit also has its negatives, and it is up to you as the borrower to decide if you need the money fast, and can manage effectively the emergency loan repayment schedule.

Introduction To Financial Modeling

Financial modeling in Excel is one of the most versatile and powerful finance skills today. This skill is often a sought-after add-on to well-known financial designations such as CFA, CPA, CA, CMA and CGA. In a nutshell financial modeling is a process of building a multi-year forecast of a company’s financial statements: income statement, balance sheet and statement of cash flows. The projected time period varies from one model to the next, the norm being 5 to 10 years. Why is financial modeling so important? It is used in a variety of finance applications such as investment banking – initial public offerings (IPO), secondary financings, mergers and acquisitions (M&A); corporate banking; private equity; venture capital; equity research; corporate strategic planning and budgeting; and numerous other important applications. Below are just a few financial modeling application examples:

An investment banker builds a financial model of a mobile telephony software company that is going through an IPO process. The main outputs of the model will be metrics used in valuation: unlevered free cash flows (UFCF), earnings and net debt calculations. The financial model will be used in discounted cash flow (DCF) valuation. DCF, together with comparable trading and transactions valuation will be used in the company’s ultimate valuation. The end goal of this modeling process will be to value the per-share offering price of the company’s shares once they are listed on the stock exchange.

A credit-focused financial model is being built by the commercial lending unit of a major bank. This is a part of processing a large commercial loan application filed by a manufacturing company which is looking to expand its operations. The model’s emphasis is on the debt servicing ability of the company in question. The most important outputs that the commercial bankers will look at are debt to equity ratio, interest coverage and fixed charge coverage ratios.

An equity analyst builds a financial model of a company that his firm decided to initiate coverage on. The focus of the model is on DCF valuation and unlevered free cash flows generated by the company. Based on the model’s results the analyst will issue buy/sell/hold recommendations on the stock based on the relationship of his target stock price and the current market stock price.

A private equity firm is considering a 50% acquisition of an early stage pharmaceutical company that needs capital for sustaining its research and development (R&D) program. The private equity firm sees value and significant upside in this situation given the target firm’s pending patent applications. The purpose for building the financial model is to determine the price at which the private equity firm is willing to purchase the 50% stake, given the hurdle IRR (internal rate of return) rate of 35%.

A pulp and paper company’s CFO prepares a detailed multi-year budget of the company. She uses Excel financial modeling techniques to achieve her goal. The model will contain a 5-year projection of the company’s income statement, balance sheet and cash flow statement and help the company assess future financing, staffing and operational needs. The multi-year budget will be submitted to the company CEO for review.

The financial modeling process is as much an art as it is a science. Solid financial modeling training through seminars and courses is a must for people seeking careers in many finance areas. These skills are further honed and advanced through the real-life work experience of building financial models.

The financial modeling process begins with gathering information. The analyst must become intimately familiar with the company he models, its industry and competitive landscape, its plans and prospects, and the strength of the company’s management. Crucial pieces of information are the company’s past financial reports, management interviews, conference call transcripts, research analyst reports, and industry publications. It must be noted that this information gathering exercise is much more challenging when modeling a private company as opposed to a public company. Private company information can often only be obtained through direct access to the company insiders.

An typical Excel financial model will consist of the following parts:

Assumptions. These are the model’s inputs. Assumptions are based on the company’s historical information as well as its future plans and current market trends.

Historical and projected financial statements – income statement, balance sheet, cash flow statement. Projections are based on historical performance and model assumptions.

Supporting schedules including working capital schedule, capital expenditures (CAPEX) schedule, debt schedule, and tax schedule.

The model’s outputs depend on the primary purpose for building the model. In many cases modellers focus on earnings, unlevered free cash flows, capital structure and debt capacity.

Scenario and sensitivity analyses are often incorporated into the models, including scenario managers, data tables and charts.

Financial models often serve as foundation for more detailed further analysis such as valuation, M&A merger modelling (accretion/dilution analysis), LBO analysis and Monte Carlo simulations.

So what does it take to be a good financial modeller? Accounting and finance knowledge is compulsory. In-depth understanding of financial statements and relationships between line items of the income statement, balance sheet and the cash flow statement is an absolute must. Microsoft Excel proficiency is another prerequisite. A good modeller not only knows Excel functions, tools and formats, but also is quick and efficient in using Excel’s numerous keyboard shortcuts. Sometimes it takes years of Excel modeling to become truly proficient at this task.

Credit Risk Indicators

The recent financial turmoil is up to very large extent based on the poor evaluation of Credit risk indicators. This turmoil compelled the major financial institutions to move towards foreclosures because they haven’t put much attention over the fundamental evaluation of credit risk. The credit card holders are rapidly defaulting over their debts due to economic slowdown and their week financial capability, this phenomenon is pressurizing the financial institutions to safeguard themselves as much as possible by adopting the efficient Credit risk indicators in order to ascertain the probability of default or repayments. No doubt, if a financial institution keeps itself away from the accurate evaluation of these indicators, then most likely it is moving towards foreclosure because it has neglected the fundamentals which are very vital to survive in today’s highly fluctuating economy. These indicators provide you with the latest and accurate information regarding debtors and enable you to avoid possibilities of their defaults.

The credit indicators are not only for debtors but they can also be applied over the companies. In the case of companies, the Credit risk indicators generally predict the probability of failure of a company within a short span of time. This debtor assessment depends on the analysis of several factors such as industry comparisons, performance, resources and the trends. In the case of debtors you need to prepare the credit scorecard, this step involves the investment as you have to do some research in order to make sure that the indicators are fruitful and relevant. Your investment will become very fruitful in long run because once you establish the accurate system of Credit risk indicators evaluation, then you are most likely to avoid any default or repayment from your debtors. In order to make these credit indicators more efficient you may seek assistance from the credit risk agencies. These agencies provide you the efficient third party services and work outside your financial institution. You must hire the services of these agencies as they are professionals having a lot of experience of the same field. They not only provide you assistance in developing the efficient scorecards but also help you in preparing the right strategy for credit indicators. If you are planning to prepare the credit scorecard by yourself and you have sufficient experience and expertise then you must do it by yourself because those financial institutions who develop their own credit risk assessment indicators are more likely to become more faster in their performance as they have no need to depend on the external factors such as these credit risk agencies.

Credit risk indicators play a very vital role in safeguarding the financial institutions from foreclosures or to incur a heavy loss over their extended credit. These credit indicators not only must be implemented very carefully but also should be evaluated with deeper concentration and expertise because merely selection of good credit indicators cannot save you from the credit crunch in the shape of your debtors’ default. These credit indicators have equal importance for companies as they have to implement these indicators over themselves too. If credit indicators are selected, implemented and evaluated with much attention then you can easily avoid any massive loss in your business.