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What is a Notional Amount?

Different financial instruments will have a face value. This is referred to as a notional amount or notional value. The word ‘notional’ means that something is just an idea and not a physical reality. The reason why we talk about a notional amount on a financial instrument is that it is an amount of money that doesn’t actually change hands. This numerical value is still important though, especially when it comes to calculating any payments that need to be made on a bond, future, or other derivative instrument.

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What is Structured Finance?

When it comes to obtaining a business loan there will usually be a number of options. In many cases a standard loan will not be suitable and some type of structured finance may be the best option. This type of loan is given based on the performance of the company in the past. This means that there is not the need to provide collateral in the same way as would be required with other types of loan. So long as the company can show a good cash flow in the past they can use this to secure the loan. Of course for it to be convincing to lenders this cash flow will need to have been consistent and enough to pay off any future repayments on the loan.

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What is an Allonge?

An allonge is something that may sound quite exotic, but it is actually quite a simple document. It is generally just a slip of paper where people can add their signature. The reason for having an allonge is that it makes it possible for the reader to confirm that they agree with the contents of a main document. In a lot of cases this slip of paper will be added to something like a contract or other agreement.  Even though this slip of paper is a separate physical document it is considered the same as the main document for legal purposes. The name of this piece of paper comes from the French word ‘allonger’ which means to draw out. Read the rest of this entry »

What is Insolvency?

If a company or individual is in a situation where they can no longer pay their bills it is referred to as insolvency. This is a precarious situation for any business to be in and if cash cannot be generated quickly to cover debts it can lead to bankruptcy. The main reason why this situation occurs is because debts and liabilities are more than cash flow or available liquid assets. It could be that the company has a lot more assets then debts but if this can’t be turned into cash quickly it could still spend the end for the business. Read the rest of this entry »

What is a Cashbook?

These days most of us are more aware of the need to track our income and expenditure. Bookkeeping is something that most of us will associate with businesses, but it is also something that can benefit personal money management. A good way to do this is to have a cashbook. There is something that anyone can learn to use and it can be very beneficial when it comes to managing personal finance.

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What Is a Lump Sum Contract?

When it comes to paying money for work to be done, there are a number of options. One way of doing things is to pay for the costs associated with the job along with a fix fee for labor. This means that there can be uncertainty about the final cost until the work is complete. Another option is the lump sum contract. What happens here is that the individual who wants a project complete agrees to pay a specific lump sum of money upon completion of the work. Here the final cost is already decided and it is up to the contractor to get the job done within their budget.

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What is a Lockbox?

There are many businesses that find a need for a bank service known as a lockbox. It is a way to facilitate payment by post where the money goes to the lockbox instead of office address. In some ways it is similar to a post office box, but in this instance it is the bank that has control over it. There are many great advantages to such a system and this is why it is so popular with many businesses. Read the rest of this entry »

What is a T-Bill?

a t-billThe best advice a finance advisor can give a client is to have a diversified investment portfolio. This means that there should be a variety of investments that run along a continuum of risk, i.e. some investments will carry more risk than others.

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