Business Acquisition Financing

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Acquisition Financing
What is Acquisition Financing
Acquisition financing is the capital that is raised in order to buy another business. Acquisition financing enables the user to satisfy their current acquisition aspirations by providing immediate resources that can be applied to the transaction.

BREAKDOWN 'Financing acquisitions'
There are several different options for a company seeking acquisition financing. Alignment of creditors for a traditional loan are the most common options. Favorable rates for acquisition financing can help smaller companies achieve economies of scale and is generally considered an effective method of increasing the size of company operations. These loans are available through traditional banks as well as loan services that specialize in serving this marketing. Private lenders can offer acquisition financing to those who do not meet bank requirements, but they can also make financing available on more expensive terms. For example, A bank might be inclined to approve financing if the business to be acquired has a steady stream of income, substantial and sustained profits, and valuable assets. By comparison, getting bank approval can be problematic when it comes to financing the acquisition of a company that largely has accounts receivable rather than cash flow.

Multiple forms of business acquisition financing
Depending on the size of the companies involved and the nature of the acquisition, there may be financing options through the Small Business Administration. The SBA 7 (a) loan program, for example, can meet these needs for qualified borrowers. The advance can be as low as 10% for acquisitions when using this program. However, the borrower must meet the SBA requirements for business size, which include limits on net worth, average net income, and total loan size. There may also be extensive documentation for the applicant that includes submission of details about accounts receivable, personal and business tax information, and personal and business financial statements.

Other ways to finance an acquisition are debt that is repaid in the form of shares and the interests of the company making the acquisition. This can come into play if the buyer turns to close partners, such as friends and family, to provide financing to secure the acquisition. Seller financing is another way to finance the deal. This typically involves the buyer making a down payment and the seller financing the remainder of the transaction. The buyer may then make installment payments to the seller over an agreed period.

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Mergers and Acquisitions of Companies
External development is a form of business growth that results from the acquisition , participation, association or control of a company, companies or assets of other companies, expanding their current businesses or entering new ones. The term used in business jargon is M&A, which comes from Mergers and Acquisitions.

The reasons for a company to decide on external development (mergers, acquisitions, alliances ...) compared to the internal one has its origin in different causes that we will comment on in this definition.

Reasons for mergers and acquisitions
We will highlight the economic and market power reasons.

1. Economic reasons
Cost reduction : Through economies of scale and / or economies of scope through the integration of two companies whose productive and commercial systems are complementary to each other, generating synergies.
Get new resources and capabilities by joining or acquiring another company.

Replacement of the management team : It usually happens that, when management is replaced, there is a greater increase in value.
Obtaining tax incentives that can increase the benefits of acquisitions and mergers, due to the existence of exemptions or bonuses.

2. Motives for market power
It may be the only way to enter an industry and / or a country , as it has strong entry barriers.
When mergers and acquisitions are horizontally integrated , an increase in the market power of the resulting company is sought and, consequently, a reduction in the level of competition in the industry
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When mergers and acquisitions are vertically integrated, companies that operate at different stages of the production cycle are integrated , the objective is to immediately achieve the advantages of vertical integration , both backwards and forwards.

Types of external development
The types of external development are:
The merger of companies : Integration of two or more companies so that at least one of the originals disappears.

The acquisition of companies : Operation of purchase and sale of packages of shares between two companies, keeping the legal personality each of them.

Cooperation or alliances between companies : Intermediate formula, links and relationships are established between companies, without loss of legal personality of any of the participants, who maintain their legal and operational independence.

Depending on the type of relationship established between the companies, they can be classified into:

Horizontal: The companies are competitors among themselves and belong to the same industry.
Vertical: Companies are located in different phases of the complete cycle of exploitation of a product.
Conglomerates: Companies have very different activities from each other.

Types of mergers
They are unions between two or more companies, with the loss of legal personality of at least one participant.

1. Pure fusion
Two or more companies of an equivalent size, agree to join, creating a new company to which they contribute all their resources; dissolving the primitive companies. (A + B = C)

2. Merger by absorption
One of the companies involved (absorbed) disappears, integrating its assets into the absorbing company. The absorbing company (A) continues to exist, but accumulates to its equity the corresponding to the absorbed company (B).

3. Merger with Partial Contribution of Assets
A company (A) contributes only a part of its assets (a) together with the other company with which it merges (B), either to a new company (C) that is created in the merger agreement itself, or to another pre-existing society (B), which is thus increasing its size (B '); it is necessary that the company contributing assets (A) does not dissolve.

Business Acquisitions Financing
The participation or acquisition of companies takes place when a company buys part of the capital stock of another company, with the intention of totally or partially dominating it.

Acquisition or participation in companies will give rise to different levels or degrees of control depending on the percentage of share capital of the acquired company in its possession and according to the way in which the rest of the securities are distributed among the other shareholders: large packages of shares in the hands of very few individuals or a large number of shareholders with little individual participation.

The purchase of a company can be done through a conventional purchase-sale contract, but in recent decades, two financial formulas have been developed:

Purchase using financial leverage or Leveraged Buy-Out (LBO) .
Public offer for the acquisition of shares (OPA).

1. Buying through financial leverage (LBO)
Buying through financial leverage (LBO) consists of financing a significant part of the acquisition price of a company through the use of debt.

This debt is secured, not only by the buyer's equity or creditworthiness, but also by the assets of the acquired company and its future cash flows. So after the acquisition, the debt ratio tends to reach very high values.

It may be the case that the purchase is made by the same managers of the company to be acquired. In this case we are facing a purchase by management or Management Buy-Out (MBO). The reason why they decide to launch an offer on the company they work for is to put the company in the right direction.

2. The public offer for the acquisition of shares (OPA)
The public offer for the acquisition of OPA shares occurs when a company makes an offer to purchase all or part of the capital stock to the shareholders of another listed company under certain conditions.



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What is 'Midstream'
Midstream is a term used to describe one of the three main stages of oil and gas industry operations. Midstream's activities include the processing, storage, transportation and marketing of oil, natural gas and natural gas liquids. The other important stages are upstream, which relate to crude oil and natural production, and downstream, which relate to the refining of crude oil into gasoline, diesel, jet, and other fuels.

DESCENT 'Midstream'
Midway activities are commonly included as part of other operations for much of the global oil and gas industry. Intermediate and downstream activities take place after the initial production phase, known as the pre-phase, and up to the final point of sale. Many oil and gas companies are considered integrated because of their ability to combine oil and gas exploration and production activities as part of their overall operations.

The Midstream industry designation is much more prevalent in the oil industry in the United States and Canada than in the rest of the world due to the large private pipelines and storage facilities in these countries. For example, the Keystone Pipeline System is a pipeline system in Canada and the United States, commissioned in 2010 and now the sole property of TransCanada Corporation. Other Midstream operating companies include names such as Oasis Midstream Partners, Sanchez Midstream Partners, Hess Midstream, Magellan Midstream Partners, and EQT Midstream Partners. The designation in the US of crude oil transportation and storage as a separate part of the production chain is what allows the Midstream industry to exist.

Midstream example
Magellan says on its website that they own and operate five marine storage terminals located along coastal waterways with approximately 26 million barrels of aggregates storage capacity and approximately one million barrels of storage jointly owned through their joint venture Texas Frontera, LLC Marine Terminals provide distribution, storage, blending, inventory management and additive injection services for refineries, traders, traders and other end users of petroleum products. These key services offered between upstream production and refineries are an important part of the Midstream company designation.

In Europe, the transportation and storage of crude oil tends to be integrated with the upstream production business. Large European oil companies like Shell or BP tend to report production and transportation costs together in their annual financial results. Furthermore, many European oil pipelines are controlled by the governments of the countries whose territory they pass through or by state-owned oil transport companies in those countries. This state ownership tends to result in the absence of Midstream as a separate part of the oil production value chain.

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Collection proof
DEFINITION of "Pick-up proof"
A debtor who does not have any assets that a creditor can collect after a court orders the debtor to pay. Someone who is proof of collection has no income or assets that can legally be confiscated for payment of the debt. A creditor who obtains a judgment may attempt to garnish a debtor's wages, encumber his bank account, repossess his vehicle, or encumber his real estate, but none of these efforts will be successful if the debtor is proof of collection.

BREAKDOWN 'Collection-Proof'
Certain types of income are proof of collection. These include income from Social Security and Social Security Disability, Veterans Benefits, Unemployment Compensation, Workers' Compensation, Child Support, and Welfare. A certain amount of money from these protected sources that a debtor already has in a bank account at the time of judgment is also protected under certain conditions. Also, if the debtor's wages are too low, they cannot be garnished at all. For example, in California, a debtor with $ 1,560 in disposable monthly earnings is protected from wage garnishment beginning in 2014.

Certain assets can also be proof of collection, depending on the debtor's state of residence and the type of debt. For example, a primary residence, up to a certain value, often cannot be repossessed and sold to pay off a debt. Vehicles can be protected, as well as a limited amount of personal property, company property, and household items. The rules regarding what income and assets are protected contain numerous complexities that can make a seemingly protected item collectible, however. An attorney or consumer advocacy group can help proof-of-collection debtors figure out the rules and how they apply to their unique circumstances.

The length of validity of a judgment varies by state. In Nevada, for example, it's six years. The judgment will not necessarily disappear at the end of that period, as the creditor may try to renew it. In other words, the fact that it is proof of collection at the time a judgment is rendered does not mean that the debtor never has to return the amount owed. As soon as the debtor's financial situation improves, the creditor can start collecting, and the amount owed can continue to accrue interest as long as it has not been paid.

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Recession proof
DEFINITION of 'recession proof'
Recession-proof is a term used to describe an asset, company, industry, or other entity that is believed to be economically resistant to the effects of a recession. Recession-proof stocks are added to investment portfolios to protect them from times of economic downturn, which can be the start of a recession. Securities believed to be recession proof often have negative beta values ​​(such as gold), which would indicate an inverse relationship to the larger market.

DOWNING DOWN 'Recession proof'
Although many items have been labeled recession-proof, very few turn out to be. Too often, the far-reaching consequences of a recessionary period are too much for the most recession-resistant companies or assets to bear. Even stocks, which are supposedly the most sensitive assets during a recession, are not always predictable. Several recessions (1945, 1949, 1953, 1980, among others) saw price increases for the S&P 500.

Negative Beta
Securities believed to be recession-proof often have negative beta values, indicating an inverse relationship to the larger market. Gold and gold stocks, for example, were once believed to be recession-proof due to gold's negative beta value. Physical gold has performed well in some economic downturns, but typically under specific circumstances, including expected high inflation. Securitized gold (gold stocks and exchange traded funds) tends to have a positive beta. Additionally, holding assets with a negative beta during non-recessive periods reduces the expected return on the portfolio.

An asset with a negative beta has an expected return below the risk-free rate in normal times. Recession-proof investments often underperform during normal times, as well as during the payback period after a recession.

Defensive industries
Defensive stocks, such as healthcare or utilities, are often cited as recession-proof investments. The reasoning is that consumers still need to buy health care and electricity, regardless of the financial situation. However, many defensive industries account for a small percentage of consumer spending, limiting their recession-proof value.

The alcohol industry is often cited as a recession-proof industry. A common joke is that during good economic times, people drink more to celebrate, and during bad economic times, they drink more to deal with stress. However, a 2015 study of alcohol use during the Great Recession from MIT found a 6.5% decrease in alcohol consumption per capita in the United States.

Recession test of a global portfolio
Several factors can be used to safeguard a global portfolio against a recession, including asset diversification, rebalancing, and a long investment term.

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What Is a Structured Settlement Annuity?
A structured annuity settlement is a financial vehicle that includes periodic payments, provided that the plaintiff in a personal injury liability lawsuit replaces a cash payment settlement. This type of financial tool can only be configured with a licensed settlement planner. (Settlement Quotes does not create these insurance products.)

A structured settlement is set up by purchasing an annuity through a life insurance company such as Metlife or Monumental Life Insurance Company. This annuity can be a monthly, semi-annual, annual or lifetime payment from the claimant. These periodic payments are tax-free and are a great source of fixed income for an individual after a personal injury liability case.

selling annuity ᛋᚠᚢᛞ, Structured Settlement Annuity

Many people wonder if they can receive a one-time cash payment after they start receiving their structured settlement annuity payments. The answer is no, you cannot go back to a cash settlement for the total. You do have options however. Settlement Quotes provides services to people in this situation. We will offer you a sum of cash for your structured settlement from other companies.

This is not always the best option for many people. A discount rate will be applied to your structured settlement to calculate your present value of your structured annuity to calculate your cash settlement. Due to the time value of money, you will only receive a partial amount in the lump sum. After a court approval process the lump sum payment will remain tax free.



Quotes Settlement only recommends using this inexpensive option if you have other financial assets that can provide financial support for your family. Many people pay off their debts, send their kids to college, or make a down payment on a house with the money they receive from the factored structured settlement.

There are many benefits to keeping your settlement structured. Quotes Settlement recommends seeking the advice of a financial professional before factoring payments through a structured settlement factoring company. A structured settlement can be used as a source of income when it comes to applying for a loan. This option must be tried first before attempting to receive a one-time payment.



Frequently Asked Questions

Structured Settlement Quotes is dedicated to providing you with the information you need to make an informed decision about the sale of your structured settlement or annuity payments. The following is a list of the most frequently asked questions, followed by detailed answers from our learning center organized by topic:

About Settlement Quotes

What makes Settlement Quotes services unique in the market?

For what types of payments does Structured Settlement Quotes provide price quotes service?

About Selling Your Annual Structured Settlement

What is an annual structured settlement?

Is it legal to sell your structured settlement payments?

What if your structured settlement agreement or annuity policy contains an anti-sale or non-transferable clause?

Can only some of your structured settlement payments be sold or do you have to sell all of them?

What if you have sold some of your structured settlement payments in the past? Can more payments be sold now to registered Certified Structured Settlement Quotes funders?

Do you have to pay taxes on the money received from the sale of your structured settlement payments?

What if you are in bankruptcy and have not yet been discharged?

The sale and transaction with a financier are risk free?

If you are a minor, can you sell your structured settlement payments?

Is It Legally Allowed To Sell Workers' Compensation Payments?

About the Bidding Process

How do you start the bidding process to receive quotes from our certified sponsors?

How long will it be until you receive the quotes?

How many quotes do you receive from Settlement Quotes?

Each of the quotes you receive is a guaranteed offer to buy your structured settlement payments?

Are you obliged to sell if you only request a quote?

How long do you have to accept an offer?

What if you accept an offer and then decide you want to cancel?

When do you find out which certified finance company gave the highest quote?

About the selling process and getting your money

Once you accept an offer, what are the steps to follow to complete the sale transaction and how long does it take to receive payment?

If the sale transaction is not completed for any reason, will you still receive your payments as usual?

About Settlement Quotes

What makes Settlement Quotes services unique in the market?

Settlement Quotes is a market leader in providing the industry for buying and selling structured settlement payments and other annuities in every state.

Settlement Quotes brings together, settlement buyers (Certified funders) to compete for their payments.

If you decide to sell, you have the peace of mind of knowing that the selected Certified Financier is one of the most experienced and respected in the industry to complete the sale and get your money in the shortest time allowed by law.

For what types of payments does Structured Settlement Quotes provide a quote service?

Settlement Quotes provides structured settlement quotes and other insurance annuity payments. Specifically, we can quote the payments you receive:

From an insurance company

As a result of a lawsuit or insurance settlement

Payments of any guarantee or life contingencies

Not as a result of a workers' compensation claim

We DO NOT offer quotes on:

Workers' compensation payments

Payments for a minor

Pensions

Social security payments

TIAA CREF payments

Mortgages

Pre-settlement cases

Settlement of travel expenses

VA disability or pension

Other disability payments

About Selling Your Structured Settlement Annuity

What is a structured settlement annuity?

A structured settlement annuity is a contract issued by an insurance company to finance the payment of personal injury compensation over a period of time. It is sometimes referred to as an insurance allowance.

In the event of your death, your beneficiary is guaranteed a tax-free payment or series of payments over a fixed period of time.

Most structured settlements are the result of a lawsuit, with payments resulting from a legal action.

Is it legal to sell your structured settlement payments?

Yes. You can sell your structured settlement or insurance settlement payments.

Most states have a structured Settlement Protection Act. These laws allow you to sell your payments if the following requirements are met:

Full information should be given on the financial terms of your sale.

You have a "cooling off period" after signing the documents you can change your mind and cancel the sale.

You must be informed in writing to request independent professional advice regarding your sale. In some states, you can choose to waive the tips.

The hearing takes place before a judge who considers your case and decides whether or not to approve the sale. The judge will examine your financial situation, what you want to do with the money, and whether it is in your best interest to sell payments.

The judge must issue a court order approving the sale.

What if your structured settlement agreement or annuity policy contains an anti-sale or non-transferable clause?

An anti-transfer clause or anti-sale language does not prevent you from selling your payments.

Some structured settlement agreements or annuity policies contain anti-sale or non-transfer clauses such as:

"None of the periodic payments can be advanced, deferred, increased or decreased, they cannot be anticipated, sold, assigned or encumbered."

Since you must obtain a court order approving the sale of your payments, a judge will review and evaluate your case.

The judges have the power to approve the sale, even if the no-sell clause appears in the structured settlement agreement or structured settlement annuity policy which tries to prevent you from selling your payments.

Can only some of your structured settlement payments be sold or do you have to sell all of them?

You can sell part or all of your payments.

You can create more than one online file with different payment combinations and get more than one set of price quotes in order to better meet your financial needs.

If you only sell some of your payments, your insurance company will continue to pay the payments you still have on time and in good time.

What if you have sold some of your structured settlement payments in the past? Can more payments be sold now to registered Certified Structured Settlement Quotes funders?

Yes. If you have sold some of your structured settlement payments in the past, you can sell the remaining payments that you are still a beneficiary of.

Do you want to know how much your payments are worth? Get a guaranteed price offer set for your payments in less than 24 hours.

Do you have to pay taxes on the money received from the sale of your structured settlement payments?

The money you receive from the sale of your structured settlement payments will have the same tax treatment as the payments you receive from your structured settlement annuity.

If you receive your payments tax free then the money you receive from the sale of your payments will also be tax free.

In most cases, structured settlement annuity payments are tax-free because your pension was established to qualify for tax-free treatment under section 130 of the Internal Revenue Code.

The US Federal Government has taken several steps to ensure that payments received for personal injury damages are tax-free.

Section 104 (a) (2) of the Internal Revenue Code confirms that damages received from personal injury or illness are not considered income and are not taxable.

In 2002, a federal law was passed to protect beneficiaries in the sale of their structured settlement payments. As a result, Section 5891 was introduced into the Internal Revenue Code.

Section 5891 requires that the sale of structured settlement payments be approved by a court in accordance with applicable state law.

Please note that this information is provided as a courtesy only, and does not constitute legal advice. You should seek legal or professional counsel to deal with your specific circumstances.

What if you are in bankruptcy and have not yet been discharged?

We can quote your payments, even if you are in bankruptcy and have not yet been discharged.

If you are in bankruptcy, you will need to notify us before your case is quoted so that we can speak with your bankruptcy administrator or legal representative to obtain additional information.

Our certified funders reserve the right to deduct a commission for additional work in processing cases that have not yet been discharged from bankruptcy.

The sale and transaction with a financier are risk free?

You do not waive any rights in the sale of a structured settlement until the transaction is completed and you have received the full sale price. Furthermore, your case is protected by the court and a judge's order that forces the financing company to carry out its obligations. You are fully protected.

If you are a minor, can you sell your structured settlement payments?

Settlement Quotes does not offer quotes to underage beneficiaries as they have no legal capacity to sell their payments without the intervention of a litigation or a guardian.

Is It Legally Allowed To Sell Workers' Compensation Payments?

It is not legal for you to sell structured settlement annuities that arise from workers' compensation claims. You must keep the annuity until all payments have been completed.

About the Bidding Process

How do you start the bidding process to receive quotes from our certified sponsors?

To start the bidding process,

1- Go to the form above and enter the amounts of the payments, the date and the insurance company. You can enter as many cases as you like with different payment combinations to get the amount of money that best suits your financial needs.

OR

2- Contact one of our customer service specialists at 1-888-562-1268 and he or she can help you enter the information necessary for our certified financiers to start bidding and competing to buy your payments. Once the offers are received, one of our customer service specialists will contact you to review your case.

How long will it be until you receive the quotes?

We are usually able to get back to you within a few hours (up to a maximum of 24) with the company offering to buy your annuity. You can receive all or some of your quotes, in just 1 hour.

How many quotes do you receive from Settlement Quotes?

We are going to share with you the top quotes we receive from our certified sponsors. The number of citations we receive will depend on the number of certified funding participants at the time your case is entered on the Settlement Quotes website.

Each of the quotes you receive is a guaranteed offer to buy your structured settlement payments?

Yes. The price quotes received are guaranteed offers to purchase your structured settlement payments.

We guarantee:

1- You will get a higher price from each of our Certified Financiers in advance, without problems.

2- You will receive your guaranteed quote quickly --- in less than 24 hours and, often, in the shortest time of 2 hours.

3- Each quote constitutes an offer to purchase your annuity payments that remains open for acceptance for 24 hours after publication in order to provide time to decide. If you do not accept the offer within 24 hours from the date of registration, the offer is frozen and may remain valid or may be revoked or modified at the discretion of the respective certified financier on a case by case basis. It is recommended to contact Settlement Quotes at 1-888-562-1268 to confirm the availability of these types of offers, if the 24-hour period has already expired.

Are you obliged to sell if you only request a quote?

No. There is no obligation to accept an offer to purchase. You may decide that you do not want to sell your annuity in which case we will close the file until further notice from you.

How long do you have to accept an offer?

Each offer provided by our certified partners is open for acceptance for a period of 24 hours after publication. To accept, simply contact us by phone at 1-888-562-1268 and notify one of our customer service specialists that you accept the offer and wish to continue your sale.

What if you accept an offer and then decide you want to cancel?

You should not indicate acceptance of the offer until you are sure you want to proceed with the sale. However, even if you accept and receive sales documents, there is usually a "cool down" in which you can change your mind and cancel the transaction. The reflection time period is clearly stated either in the sales compliance certificate or in the Assignment Agreement that you receive as part of the sales documentation.

When do you find out which certified finance company gave the highest quote?

You will be notified by email or phone of the successful Certified Funder immediately upon acceptance of an offer to purchase. You can rest assured that each Funding Entity is examined by Settlement Quotes and certified to be reliable, trustworthy and competent to complete your transfer and get your money in the shortest time allowed by law.

About the selling process and getting your money

Once you accept an offer, what are the steps to follow to complete the sale operation and how long does it take to receive payment

At Settlement Quotes we understand that your financial goals depend on completing your sales transaction and getting paid in the shortest time allowed by law.

Once you have accepted an offer and confirm that you wish to proceed with the sale to the winning Certified Funder, the sale process immediately begins as follows:

1- First call at 2 hours. You will receive a call from a customer service expert on behalf of the certified finance company within 2 hours of acceptance. At that time, our expert will inform you that Financial Certificated was the successful bidder and will provide you with the contact information.

2- Legal documents in 24 hours. You will receive the legal documents from the Certified Financier within 24 hours. A Notary Public will wait for you at your home or other convenient location to review the sale documents with you, answer any questions you may have, and sign the sale.

3- Process in court within 30 days. Our Certified Financier will complete the court process as soon as legally permitted. This could take about 30 days, depending on the state.

4- Immediate access to your money. You will get your money directly by bank transfer into an account of your choice immediately after completing the legal process.

5- The expected time from price quotation to financing and the entire transfer process can take about 6 weeks, depending on the state in which you reside.

If the sale transaction is not completed for any reason, will you still receive your payments as usual?

Our certified funder will process the sale transaction of your structured settlement, at no cost to you.

In the unlikely event that your sale is not completed for any reason:

1- Neither Settlement Quotes nor the corresponding certified funder will charge you any fees or penalties. This promise will be recorded in writing in the sales documentation that you receive.

2- You will have the right to receive all the payments of the annuity that you had agreed to sell as they mature.

3- Your insurance company will continue to pay all future payments as if it had never entered into a sales transaction.

You will have no future obligation to Settlement Quotes or the applicable certified funder.

see also finance and business knowledge

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Through the Board
DEFINITION of 'Cross The Board'
A directional movement throughout the market, or a market condition in which most stocks and sectors are moving in the same direction. These movements are usually caused by events that affect the entire market.

BREAKDOWN 'Across the Board'
If you hear in the financial media that the "stock market is on the rise," it means that most of the shares on the market are up in today's price. The term comes from the big board of the NYSE, a big board on which stock quotes were once written; when most prices rose or fell, the movement was "generalized."

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Through bill of lading
DEFINITION of 'Through Bill Of Lading'
A direct bill of lading is a legal document that allows the transport of goods both within national borders and through international shipments. The direct bill of lading is often required for the export of goods, as it serves as a bill of lading, a contract of carriage, as well as the title (sometimes) of the goods.

BREAKDOWN 'Through bill of lading'
A direct bill of lading is just one type of bill of lading. A bill of lading is a relationship between the shipper of a good and the carrier or carrier used in international trade. It is required to ship goods, and acts as a receipt and a contract. It shows that the carrier has received the freight as described, that is, the cargo receipt. It also documents the delivery conditions, stipulating that the shipper must deliver that cargo to the cosigner in good condition: the contract of carriage. The word "cargo" is derived from the word "cargo", which refers to the loading of goods on a ship.

A bill of lading is perhaps the most important document in shipping. It legally details the type, quantity and destination of the goods being transported, how they are billed and how the goods must be handled, and must accompany the goods shipped, signed by a representative of the sender.

Through the Bill of Lading, the Specifics
A bill of lading via bill of lading has specific stipulations and conditions. A bill of lading sometimes only covers part or one aspect of the shipping process. A direct bill of lading is more involved. As noted above, a direct bill of lading enables the transportation of goods both within national borders and via international shipments. The bill is often necessary to export goods, and serves as a legal certificate authorizing a party to be in possession of a particular asset and to transport it. This is because a direct bill of lading allows the carrier to pass cargo through several different modes of transportation and several different distribution centers.

A carrier can move products both within a country and export them, often by air, with a direct bill of lading. The direct bill of lading must contain an "inland bill of lading", which is the documentation required for domestic transportation. If the shipper wishes to move the goods across the ocean, the "inland bill of lading" will not suffice; the direct bill of lading will require a "sea bill of lading" for any merchandise moving across the ocean

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DEFINITION of «Through Fund»
A type of target date retirement fund whose asset allocation includes higher risk and potentially higher return investments "until" and after the fund's target date. A through fund might make sense for individuals who only need to sell a small percentage of their investments each year to cover their retirement expenses and who want to continue investing during their retirement years.

BREAKDOWN 'Through the Fund'
The further a fund's target date is, the more shares it will have relative to bonds. A through fund assumes more risk, for a longer time, than a to fund. Both reach conservative positions on schedule, but invest less conservatively through funds. This gives them the potential for bigger returns - and bigger losses too - right from the start. Additionally, your strategy means that a direct fund will contain assets that can grow past the cut-off date, allowing you to continue to accumulate assets during your retirement.

Before choosing a specific target date fund for your retirement savings, research its track record (how it becomes progressively more conservative) to see how the fund's asset allocation will change over time. Also determine if it is a through fund or a to fund.

A fund to the 2045 target date could have a planning path that results in an asset allocation of 60% of stocks and 40% of bonds and short-term funds in 2045. The percentage of stocks would gradually decrease during its retirement years. , while the percentage of bonds and short-term funds would increase. But even at the cutoff date, there would be both stocks and bonds / short-term funds in your direct fund and this pattern would continue into retirement.

Through funds are intended to be held beyond your target dates, while funds are likely to work better for you if they are cashed out and / or reinvested on your target date.

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What is a 'Share'
An A share is a class of shares offered in a family of multiclass mutual funds. Series A shares are a common class type offered to individual investors. They are typically characterized by a front-end sales charge when negotiated through a full-service broker.

BREAKDOWN 'A-Share'
Series A shares are a type of mutual fund share class. These actions are aimed at individual private investors. Other retail share classes in a multiclass mutual fund can include Class B or C. Investors will also find adviser shares and institutional shares. (See also: The ABCs of Mutual Fund Classes.)

Investments in the mutual fund share class are collectively pooled and managed by the fund's portfolio manager. Each share class invests in the same fund strategy with the same portfolio manager. What differentiates the share classes is primarily their fee structure. Share classes allow fund companies to target different types of investors, from individuals to advisers to institutional.

The provisions for each class of retail shares are determined by the mutual fund company. A significant factor in the structuring of the share classes is the sales charge scheme developed for the distribution of the mutual fund among the intermediaries. Mutual fund companies determine a sales commission structure for each class of shares that is presented in the fund's prospectus. Each share class also has its own operating expense structure. Distribution fees, also known as 12b-1 fees, are part of the fund's operating expenses, although they are paid to intermediaries. Distribution commissions are often different between share classes and are usually correlated with the sales commission schedule, which requires lower distribution commissions in the share classes with higher sales commission commissions. Mutual fund companies can report individual net asset values ​​(NAVs) and performance returns for each class of shares. The returns of a share class will be affected more generally by selling expenses, with less effect on the returns from distribution expenses.

Fees and expenses
Typically, Class A shares have forward sales charges that can reach approximately 5.75% of an investment when traded through a full service broker. Expense ratios per share class also vary among retail stocks, which are generally higher than advisory or institutional stocks.

Mutual fund companies will detail their sales charges and expense ratios by share class in the fund's prospectus. Many mutual fund companies also offer share class returns in their marketing materials.

The Principal Equity Income Fund is one example. This fund offers A, C and I shares. The one-year return for the A share class with forward sales fees as of November 30, 2017 was 15.60%. This differs from the return on C shares, which was 20.46% with a deferred sales charge. The expense ratios of the two share classes also vary. Share class A has a total expense ratio of 0.91%. Share class C has a

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10 Ways To Cut Your Health Care Costs
If you haven't already received your company's health insurance renewal notice this year, bruce yourself. Average cost per employee scem certain to surge by more than 20 percent for the second year in a row.

Among Nations Business readers who responded to an August health care survey, nearly one-third reported health-insurance premium increases of 30 percent or more. Thirty-seven per cent reported increases ranging from 16 percent to 29 percent.

At that rate, the average cost of health insurance per employee will exceed $3,000 in 1990, up from $2748 in 1989, recording to A. Foster Higgins & Co., benefits consulting firm based in New York.

A recent, survey by Nobel Lowndes, in employee benefits firm in East Orange, NJ., found that 79 percent of senior executives believe health-care costs will continue to increase 20 percent or more each year for the next three years. These gloomy executives tre primed for the worst, knowing that costs have already gone up eightfold since 1970.

Moreover, business shouldn't count on Congress for a big fix. Although some lawmakers favor Canadian-tyle nationalized health-care system or mandated coverage for all workers, those legislators comprise . vocal minority that is better at capturing public attention than winning converts on Capitol Hill. In addition, both of those proposals focus on broadening coverage to the nation's 81 million to 37 million uninsured, not on controlling spending.

The message here is clear: If you haven't already gotten serious about cutting your company's health-insurance costs, now is the time. It can be done. Just ask Philip Leber, who slashed his small company's monthly premium from $10,000 to $2,500.

The first thing you should do is learn how the system works-or doesn't work. Most small employers spend few er than four hours a year thinking about their company health plans.

Learn what your options are. Your insurance agent can help you shop for cheaper plans. But don't stop there. Compare plan benefits, insufitncc-COMpany records and service guarantees.

Consider Blue Cross and Blue Shield plus and HMOs (health-maintenance organizations), even if your agent lireas offer clear advantages to small companies. Experts regard HMOs as the best buys in health care.

Find out if your company is eligible for new, low-cost health insurance plans now available in five states. In addition, foundation-funded pilot projects in several parts of the country are demonstrating that it is possible to eut health-coverage costs 30 to 10 percent.

In short, health insurance isn't as simple as it used to be. And the pace of change is accelerating, offering new hope for a truce in the business battle with exploding health-care costs.

The next couple of years present as much potential for change as at any time in the past 20 years," says Gail Wilensky. administrator of the federal Health Care Financing Administration, which ovence Medicare.

You can be part of that change by putting at least some of the following 10 idens to work for your company.

1. Increase Cost Sharing By Employees
This recommendation is at the top of every consultant's list. Small companies tend to pay for more of their workers' Local healthcare bill than large companies do. Yet research shows that insulating employees from the costs of care encourages unnecessary use of health services.

Fifty-two percent of the companies responding to the Nation' Business health survey said they pay 100 percent of their employees' health insurance premiums. But 45 percent said they intended to implement or increase employee contributions to these premiums. An equal number said they plan to increase employee deductibles.

Insurance companies first attached $100 deductibles to major-medical plans in the early 1950s. But 40 percent of employers still set deductibles at $100 or less.

Celtie Life Insurance Co., a small business health insurer based in Chicago, calculates that raising . $100 deductible to $250 would eut premium COKLS for single coverage by about 11 percent. A 3.500 deductible would cut costs by about one-fourth. A $1,000 deductible would save about one-third.

2. Allow Employees To Pay For Health Premiums With Tax Free Dollars
Set up a so-called flexible spending account, which allow your employees to pay their share of health insurance premiums and we reimbursed health-centre expenses with pretax dollars. A flexible spending account could save employees 20 cents to 35 cents on the dollar, because state and federal income taxes and Social Security taxes ?r? n?t imposed.

Moreover, the company saves by ducing the employees base salary on which it pays Social Security and other taxes.

Hire an outside payroll accounting firm to handle the paperwork. You can pay the service fee and still come out with a net savings, by Dan Brown, 1 Silver Spring, Md., insurance broker The monthly administration fee would run between $2 and $5 per employee.

3. Transfer HighRisk Employees To The State's High-Risk Pool
Insurance premium sonr' whenev. er someone in a small-group planbecomes very ill with cancer or heart disease, for exam. ple. As an employer, you should explore the possibility of moving employees with serious health problems into 1 state high-risk pool and then negotiating a lower premium for the healthy members of your group.

Twenty-four states have high-risk pools for people whom insurance earners don't want to cover, although some of these pools are not yet operational, Risk-pool insurance generally sells for 150 percent of the typical individual premium. The insurance is comparable to that offered by i standard munjon: medien health policy.

Rules governing coverage differ from state to state. For example, some states won't allow employers to move high-risk individuals into the pool if only the uninsured are admitted. Other states encourage it. Some state pools have waiting lists.

Call your state insurance commissioner's office for details if you live in one of the following states: California, Colorado, Connecticut, Florida, Geor gin, Illinois, Indiana, Iow, Louisiana, Maine, Minnesota Missouri Montana. Nebraska, New Mexico, North Dakota, Oregon, South Carolina, Tennessee, Texas, Utah, Washington, Wisconsin, Wyoming.

4. Switch To An OpenEnrollment Blue Cross And Blue Shield Plan
Blue Cross and Blue Shield plans operate as de facto high-risk pools in a number of states by providing open enrollment periods during which any group can buy insurance. Among the 74 Blue Cross and Blue Shield organizations nationwide, 21 offer open enrollment.

Open-enrollment plans are better than state risk pools because Blue Cross offers coverage at substantially less cost than the rates charged by state pools," says Greg Scandlen, director of states services research for the Blue Cross and Blue Shield Association in Washington, D.C.

Employers who buy open-enrollment plans are insulated from the premium spikes they can experience with other insurers once someone in the group becomes very ill. These plans une so-called community rating to calculate premium increases. All companies buying one of these policies are in the same risk pool, and all pay the same rates.

All the Blues once tried community rating to set premium levels. But that began to change in the 1960s when commercial insurers started to lure away firms with low risks by offering them cheaper health insurance. The Blues in: increasingly found themselves writing policies for groups with above-average health claims. As a result, premiums went up. And most Blues today use the same health screening and rating practices used by commercial insurers.

Five of the open-enrollment plans limit applications for insurance to speeifle periods during the year. Some will tazke groups no smaller than 10 employees. For details, contact Blue Cross pilates in Alabama, Maryland, Massachusetts, Michigan, the National Capital Arel (Washington, D.C.). New Hampshire, New Jersey, New York (six different plans), North Carolina, Pennsylvania four different plans), Rhode Island, Vermont, and Virginia.

5. Replace Your Traditional Health Plan With An HMO
Unlike traditional health insurance, HMOs cover all medical needs, in eluding routine preventive care, for a flat monthly fee that typically is less expensive than traditional health insurance. Moreover, two types of HMOs, the staff and the group models, have proven to be more effective at controlling costs than any other form of health-care delivery. Staff models employ physicians directly and put them on salary. With group models, the HMO contracts with a multispecialty group practice and caps payments for services.

Look for an HMO that operates in Accordance with voluntary federal standards, 50-called federally qualified HMOs. These HMOs are barred from refusing health coverage based on medical screening. Their premium rate increases are tied to the experience of everyone in the HMO, which protects a company from sharp increases based on heavy claims from a few of its employees. There are 307 federally qualified HMOs covering more than three fourths of all persons enrolled in HMOS tuationwide.

The catch with an HMO is that those who are covered have to use the HMO's doctor and the hospitals that it designates. Those unwilling to surrender their freedom of choice can go for an "open-ended" HMO, & new hybrid that will allow the insured to see doctors outside the HMO if the covered person is willing to pay out-of-pocket deductibles and coinsurance. Enrollment in open-ended HMOs jumped 39 percent in 1989.

Because HMOs typically can't afford to market to small companies, start your search in the Yellow Pages.

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6. If An HMO Is Dut, Shop For A Traditional Plan With Managed Care Or A PPO
Switching to a mannered-care health plan with built-in restraints on the use of health services should cut your costs by 5 to 10 percent.

The context health insurance you can buy is a traditional indemnity plan. Under such a plan, employees choose their physicians. Insurers, acting as a passive pass-through mechanism, reimburse doctors and hospitals on li fee for service basis. They also increase employer premiums as necessary to keep pate with rising costs. Many experts predict that traditional indemnity health insurance will be replaced by mariage-care indemnity plans by the mid-1990s. Mina ged-eare plans attempt to hold down costs by placing controls on the use of medical services.

Most insurance carriers already aller variety of managed-care features as additions to traditional indemnity plans. They include prior approval for elective hospital admissions, second opinions for surgery, utilization review, case management, and discharge planning.

A number of insurers also offer preferred-provider organizations (PPOs), which also may be organized by hospitals or sponsored by large employers. PPOs are groups of doctors who have agreed to discount their fees, usually by about 10 percent to 20 percent. By definition, PPOs build in managed-care fenturen to hold down expenses. To encourage use of PPO doctors, employees pay only a small fee of $5 to $10 per office visit. Employees my use doctors outside the PPO, but out-of-pocket expenses rise sharply with the addition of deductibles and coinsurance.

7. Purchase Your Health Insurance Through A Business Group Or Coalition
Individual small employers have little or no lever age in buying health insurance, but when a number of small employers band together to purchase insurance they can wield real clout in the market.

The Small Business Service Bureau, an association based in Worcester, Mass.. arranges group insurance through HMOs and Blue Cross organizations for 35,000 small businesses most with fewer than 10 employees, across the country. We negotiate the terms of the benefits, and we have trained staff members who explain the options to small-business owners," says Lisa M. Carroll, health-services director.

Fred Rohm, president of the New Castle County Chamber of Commerce, in Newark, Del, manages a group-purchasing arrangement for seall employers in his area. Premiums for 350 small employers covered by the chamber's indemnity plan went up only 1 percent this year.

The chamber in San Francisco launched a group-purchasing arrangement in March. It lets small employers in the Bay Arel choose an indemnity plan, an HMO, or a PPO, Ask your local chamber or business association about group purchasing.

But we caution in signing up. Some insurance agents and many business trade associations offer group-purchase. ing plans known as multiple employer trusts (METS), "METS were everybody's answer to the problem of rising costs several years ago," says David Helms, president of the Alpha Center, health policy and planning center in Washington, D.C. But METR in general have not lived up to their cost cutting expectations, primarily because insurers lure away low risk groups with rock bottom rates, says Helms. This leaves the MET with higher-risk groups, which erodes its ability to negotiate low rates. Make sure the MET you choose is backed by an insurance company. Self-insured METS—those not backed by an insurer have experienced high failure rates.

8. Purchase One Of The No-Frills Insurance Plans Now Available in Five States
Virginia, Missouri, Florida, Illinois, and Washington this year exempted small firms from regulations requiring them to provide certain types of health coverage. Typical mandates cover chiropractors, well-baby care, dental checkups, and treatment for alcohol and drug abuse. Some states require coverage for more exotie procedures, such as in vitro fertilization and acupuncture. By exempting small firms from such mandates, Insurers may offer no-frills plans with premiums costing 20 to 10 percent less.

"To prevent employers from canceling existing insurance, some states restrict the new. lower cont plans to companies that have been without insurance for at least a year. Call your state insurance commissioner for details. More states are expected to remove mandates for small companies next year.

9. Determine if You Are Eligible For One Of The Low-Cost Pilot Projects Operating In 10 States
Pilot projects funded by the Robert Wood Johnson Foundation of Princeton, NJ have helped nearly 2,000 small businesses in 10 states purchase health insurance at sayings of 30 percent to 40 percent. The projects were designed to attract small unit: sured companies. Although these projects typically exclude firms that have offered group insurance within the past year, there are two notable exceptions-in Florida and Colorado.

The Florida Small Business Health Access Corp. in Tampu accepts firms that have gone uninsured for only six months. The corporation currently provides health services to 560 small businesses covering 2,856 individuals. It uses state funds to subsidize marketing and administration. That lowers the cost of premiums employers pay to enroll their workers in a local HMO, A 35 yer old adult male pays $75.52 a month for the standard option plan; family coverage is $198.96.

Eighty percent of the companies enrolled have three or fewer employees. says Rod Sailors, the corporation's director. The legislature more than doubled the plan's subsidy this year to $4.7 million permitting it to expand into 11 rural counties by next June.

In Denver, the Shared Cost Option for Private Employers (SCOPE) accepta small companies seeking to switch to s lower-cost health plan, as well as those currently uninsured. SCOPE, in operation less than a year, is providing health Insurance to 171 companies covering 4,296 individuals.

SCOPE's health plan is the only project funded by the Robert Wood John son Foundation that operates without a government subsidy. It cuts premium costs by requiring relatively high deductibles and coinsurance (the percentage of costs not covered by insurance) and by relying on a select group of doctors and hospitals. Routine visits to a doctor's office require a $15 payment. Hospital admissions require an individual to pay a $250 deductible plus half of the first $5,000 in charges. But the plan also covers a wide array of preventive Care at no charge.

The high enst-sharing with employees allows U.S. Life Insurance Co., the Neptune, NJ.. insurer offering the plan to keep rates low. A single 31+ year-old male pays $18.91 n month: family coverage is $148.47. "In the first five weeks of the plan]. 8,000 businesses called for information," says Judith Glacner, SCOPE's director.

Other Robert Wood Johnson Foundation health-care pilot projects are those operating statewide in Michigan, Tennessee, Utah, Washington and Wisconsin as well as those in Tucson, Ariz Brunswick, Maine and San Francisco.

10. Seek Out New, Low-Cost Plans Offered By Some Insurers
The low-cost health-insurance plan offered by U.S. Life Insurance through the SCOPE program in Denver already has inspired similar plans, says David Dunn, a senior vice president of U.S. Life. Just because of SCOPE, most of the carriers in Denver have tried to design similar products to appeal to the same market," says Dunn.

He has encouraged other insurers to copy the plan and offer it elsewhere. A number have shown some interest in doing so. Blue Cross and Blue Shield organizations also have launched a number of low-cost plans designed for small companies and the uninsured. Blue Cross of Tennessee offers a comprehensive, nongroup program called Impact, for employers with four or fewer workers. Premiums for individuals start as low 18 $28.13 a month.

Blue Cross and Blue Shield of Oregon offers a PPO for small groups. Premiums ire about one-third less than those of regular Blue Cross plans. there are, of course, other ways to eat health-care costs. The additional options that follow are common among midsized and larger companies yet are within the reach of many small firme:

- Start a wellness program that promotes healthful behavior. By some estimates, about one-half of nll health problems are related to lifestyle choices such as smoking and neglecting to get ?r???r ?x?r?.

Explore the feasibility of using a mail-order prescription drug program if you have employees who need large quantities of high-cost maintenance dngs, Mail-order pharmacies do a high volume business and offer unit prices based on that volume. They are often more aggressive in providing lower cost generic drugs, which can be a cost saving in itself when appropriate.

Eliminate mental health and drug dependency care from your health plan, and contract for this coverage separately, using a quality managed-care company that specializes in these services. This strategy can save you 10 to 40 percent of your health-care costs. Mental-health and drug-dependency care are the fastest growing segments of medical plans today. Experts say that much of the treatment now provided is inadequate or unnecessary.

- Offer a cafeteria-style benefits plan. Cafeteria plans allow employees to tailor their benefits to their individal needs, and they also enable employers to establish limits on company contributions.

For small companies, the frontier in health-care cost management lies in direct contracting with doctors and hospitals. Fred Rohm, of the New Castle County Chamber of Commerce, is eager to test how well this works. Although his plans are still in the formative stage, Rohim knows what he wants:

health center staffed with salaried doctors who would provide basic services to employees and dependents of hundreds of small companies in his area. Patients would receive routine care at the center, including X-rays and laboratory tests. As necessary, the staff doctors would channel patients to outside specialists who would work for discounted fees. Hospital treatment would be paid according to a set fee schedule reflecting significant reductions from sual charges.

I think we can sell the plan if we can price it at 360 to $75 per month per individual," says Rohm. That's about 40 percent to 50 percent less than the typical health-insurance plan.

Rohm is negotiating with JSA Health Care Corp. of Columbia, Md, to set up the proposed health center. JSA is one of a handful of companies nationwide breaking into the business of setting up health centers with company doctors for corporate clients.

Joseph L. Falkson, JSA's director of primary health, says the company currently runs seven similar health centers for dependents of US military personnel, and those centers have succeeded in holding down costs. We have calculated that between 1986 and 1989, we had 1 million patient visits at the centers," he says. "Our estimate is that we saved the military $40 million over what it would have spent if our patients had been purchasing typical fee-for-service medical care."

Company health centers represent just one approach for solving the health-care problems faced by American business. Clearly, there is no one solution best for all, but there are many small ways in which individual companies, business groups, insurers, and government can chip away at the problems today while contributing to a lasting solution for the future.

Time will tell whether any of the recent innovations in health-care delivery will lend the way out of the current Crisis. But workable solutions need to be developed sooner rather than later. The nation's employer-based health-insurance system can't take too many more years of 20 percent price increases.

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Payable liabilities

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A callable liability is defined as a company's legal financial debts or obligations that arise during the course of business operations. Liabilities are canceled over time through the transfer of economic benefits, such as money, products or services.

Therefore, an enforceable liability is a debt of a company that requires the entity to give up an economic benefit (cash, assets, etc.) to pay for past transactions or events.

It is recorded on the right side of the balance sheet. Includes loans, accounts payable, mortgages, deferred income, and accrued expenses. In general, enforceable liability refers to the state of being responsible for something, and this term can refer to any money or service owed to another party.

Callable liabilities are a vital aspect of a business because they are used to finance operations and pay for large expansions. They can also make transactions between companies more efficient.

What does it consist of?
Callable liabilities are debts and obligations of the business that represent a creditor's claim on the assets of the business.

An enforceable liability is increased in the accounting records with a credit and reduced with a debit. It can be considered a source of funds, as an amount owed to a third party is essentially borrowed money that can then be used to support the asset base of a business.

It is possible that an enforceable liability is negative, arising when a company pays more than the amount of a liability. This theoretically creates an asset for the amount of the overpayment. Negative liabilities tend to be quite small.

Types
- Any type of loan from people or banks to improve a business or personal income, to be paid in the short or long term.

- A duty or responsibility towards others, whose cancellation implies the transfer or future use of assets, a provision of services, or another transaction that produces an economic benefit, on a specified or determinable date, with the occurrence of a specific event or by being required.

- A duty or responsibility that obliges the entity to others, leaving little or no discretion to avoid its cancellation.

Classification of payable liabilities
Companies classify their callable liabilities into two categories: short-term and long-term. Short-term receivables are debts payable within one year. Long-term receivables are debts that are payable over a longer period of time.

Ideally, analysts reasonably expect a company to be able to pay its short-term liabilities with cash. On the other hand, analysts expect that long-term liabilities can be paid with assets derived from future earnings or with financing transactions.

For example, if a company obtains a mortgage to be paid in a period of 15 years, that is a long-term liability.

However, mortgage payments due during the current year are considered the short-term portion of long-term debt and are recorded in the short-term receivables section of the balance sheet.

The general time frame separating these two distinctions is one year, but it can change by business.

Relationship between liabilities and assets
Assets are the things a business owns, including tangible items such as buildings, machinery, and equipment, as well as intangible items such as accounts receivable, patents, or intellectual property.

If a company subtracts its liabilities from its assets, the difference is the equity of its owners or shareholders. This relationship can be expressed as:

Assets - Callable liabilities = Owner's capital.

However, in most cases, this equation is commonly presented as: Liabilities + Equity = Assets.

Difference between an expense and a callable liability
An expense is the cost of operations that a business incurs to generate revenue. Unlike assets and liabilities, expenses are related to income, and both are listed on a company's income financial knowledge statement.

Expenses are used to calculate net income. The equation for calculating net income is income minus expenses. If a company has more expenses than income in the last three years, it may indicate weak financial stability, because it has been losing money in those years.

Expenses and liabilities due should not be confused with each other. The second is reflected in a company's balance sheet, while the first appears in the company's income statement.

Expenses are the costs of operating a company, while liabilities due are the obligations and debts that a company has.

Examples
If a wine supplier sells a case of wine to a restaurant, in most cases they do not require payment when they deliver the merchandise. Instead, you invoice the restaurant for the purchase in order to simplify delivery and facilitate the restaurant's payment.

The outstanding money that the restaurant owes its wine supplier is considered a callable liability. On the other hand, the wine supplier considers the money owed to him to be an asset.

When a business deposits cash with a bank, the bank records a callable liability on its balance sheet. This represents the obligation to pay the depositor, generally when the latter requires it. Simultaneously, following the double entry principle, the bank records the cash itself, as an asset.

Short-term and long-term liabilities
Examples of short-term liabilities are payroll expenses and accounts payable, such as money owed to vendors, monthly utilities, and similar expenses.

Debt is not the only long-term liability incurred by the company. Rent, deferred taxes, payroll, long-term bonds, interest payable, and pension obligations can also be listed under long-term liability.

Balance sheet of a company
The balance sheet of a company reports assets of $ 100,000, accounts payable (liabilities due) of $ 40,000 and equity of $ 60,000.

The source of the company's assets are creditors / suppliers for $ 40,000, and owners for $ 60,000.

Creditors / suppliers thus have a claim against the assets of the company. The owner can claim what remains after the due liabilities have been paid.

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Rules for emergency funds
Start building up your emergency fund, said Christine DiGangi in Credit.com. “It may not be the most fun budget category,” but emergency funds are an essential part of personal finance. First off, define “emergency.” The answer “may not be the same for everyone,” but one rule of thumb is to maintain separate accounts for “income emergencies,” such as job loss, and “expense emergencies,” like paying for unexpected repairs. Financial planners suggest stashing the cash in a dedicated savings account to avoid the temptation of simply writing a check, but “if you don’t like the idea of letting money sit in a savings account,” you might consider a CD or a Roth IRA. Be wary of early withdrawal fees, but the higher yields will be a nice bonus if you don’t have an emergency after all.

Negotiating a debt settlement
Sort out your debts like a pro, said AJ Smith in Credit.com. While “there are countless services out there” for settling debts, “it is possible to resolve this on your own.” Begin by making a list of your creditors, and then prioritize the bills with the highest interest or smallest balances. Collectors typically won’t settle unless the account is delinquent, but “there is no guarantee they will accept a settlement even if you stop paying.” Being up front about your inability to pay may encourage them to negotiate. Calculate the “percentage of the debts you are able to pay and the maximum you can afford,” factor in other expenses, and start negotiating with a lowball offer: 25 or 30 percent of the balance. This “sets the tone” and will help you score a more realistic settlement, ideally between 40 and 60 percent of the original debt.

Countering cash buyers
Don’t get beat by all-cash bidders, said Daniel J. Goldstein in MarketWatch.com. These days, all-cash deals are making the high-end housing market more competitive than ever. But for buyers who want to finance, there’s still hope. For example, some borrowers might combine “second mortgages home-equity lines of credit, and quick closings” to get a leg up. And since many all-cash bids come from overseas, the offers “can appear and disappear.” With a big down payment and some patience, “your financing-contingent offer still might have a shot.” And recruiting an expert—such as a real estate agent or a loan officer—can help you find sellers who are more “open to accepting bids with financing.”

The end of free checking
The age of free checking is fading, said Chris Morran in Consumerist.com. While U.S. consumers and businesses have $1.4 trillion stashed away—more than ever—in checking accounts, banks are limiting “the availability of unconditional free checking” and tightening their requirements, making it harder for many customers to avoid fees. Luckily, “there are still plenty of free checking accounts out there, but many of them are through smaller regional banks and credit unions.” Those institutions should be rewarded for continuing to offer a service that used to be—and still ought to be—a given. Consumers can do that “by moving their money, or putting it into interest-earning accounts so that they at least get something in return for allowing the bank to use their deposits.”

Curb your shopping enthusiasm
Stop overspending, said Donna Fuscaldo in FoxBusiness.com. If you’re hemorrhaging cash, one way to stanch the flow is to learn to keep your spending “triggers” in check. These days, “it’s easier than ever to hop online when we’re bored.” For compulsive shoppers, that can be dangerous, since “boredom or feeling stagnant is a common trigger.” Anxiety can also cause people to stress-shop, so “try other activities like taking a walk, chatting with a friend, or organizing a closet to regain some control.” And while “the idea of having to ‘keep up with the Joneses’ resonates” with many people, such insecurity can “drain our budgets.” One way to “prevent that trigger from turning into a bingeshopping spree is to set spending limits.” Try carrying only cash so you can better “fight the urge to use” your credit cards.

Retiring when self-employed
Can self-employed workers ever really retire? asked Michele Lerner in DailyFinance .com. Irregular income can make it difficult for self-employed people to save, but experts recommend they open a retirement account anyway. “You don’t have to fund it right away, but having it open will make it easier to contribute money when you do come into a windfall,” said Lule Demmissie of TD Ameritrade. Self-employed people also have a few special retirement options available to them, including SEP-IRAs, which have higher contribution limits than traditional and Roth IRAs, and Solo 401(k)s, which are ideal for self-employed workers with no additional employees.

How to switch bank accounts
Moving your money to a different bank “can be a huge hassle,” said Kristin Wong in Lifehacker .com. To make the process “as painless as possible,” start by finding the right bank, weighing your priorities and habits against balance requirements, fees, interest rates, and proximity to ATMs and branches. Before you close your old account, check for any unposted checks or scheduled payments to avoid incurring an overdraft fee. And don’t empty it right away. “Keep a small cushion in your old account until the transition is complete,” just in case. If you have set up automatic payments, remember to reroute them to your new account and “contact your employer and update your direct deposit info.” Once you think you’ve finished with your old bank, beware of “zombie accounts”: Some banks reopen recently closed accounts if a deposit is made, which can restart maintenance and minimum balance fees.

Index vs. actively managed funds
Torn between actively managed and index funds? asked Michael A. Pollock in The Wall Street Journal. The good news is you don’t have to choose. While “some investors swear” by one or the other, you can “  combine the two types of funds to achieve specific purposes.” Index funds are great for broad markets over long periods, but a skilled fund manager may be better for “less efficient market areas that don’t trade as actively and are slower to react to new information.” Indexes help you cash in on market rallies, while adding “a defensively minded active fund to your index holdings” can help “dial back overall volatility.” Some of both may be best.

Nailing your performance review
Don’t let your annual performance review “get you down,” said Daniel Bortz in CNN .com. These meetings offer “one of the few times of the year you get to chat with your boss about your career,” and you can use them to “set the stage for a big raise or promotion.” Submit a one-page self-evaluation before the review to set a baseline, summing up a handful of your contributions. Then “request a real critique” to get some useful feedback. Unfortunately, “budgets are typically set by the time of the review,” so don’t count on a raise. But ask for “details on the salary review process to help you prep for next year.” By finding out “how and when your raise was decided and who was consulted,” you’ll have a head start for the next review.

A very early 529 gift
Why wait until a child is born to start a 529 college savings plan? asked Peter S. Green in The Wall Street Journal. Anyone hoping to become a grandparent one day can open a 529 to “get the savings ball rolling early.” A future grandparent who designates the beneficiary as the future parent can contribute as much as $70,000 in a single year tax free (equal to five years’ worth of contributions at $14,000). When the infant arrives, the account can be transferred into his or her name. Starting early has major benefits: A 529 plan opened with an initial gift of $14,000, five years before a child is born, funded with $500 every month, and earning interest at 3 percent compounded monthly, would yield $226,784 by the child’s 18th birthday. The same plan started at birth would yield $167,336.

IRA and 401(k) changes in 2015
Some taxpayers will be able to save more in their retirement accounts next year, said Emily Brandon in USNews.com. The annual limit for 401(k)s and 403(b)s has been raised by $500, to $18,000. The IRA contribution limit has been left unchanged at $5,500, or $6,500 if you are 50 or older. Savers will also soon have a new account option: the myRA, the no-fee Roth IRA accounts offered by the Treasury Department and available later this year. The accounts are open to individuals who make less than $129,000 a year ($191,000 for couples) and are guaranteed to never lose value. And for those savers with several IRA accounts, a new rule takes effect Jan. 1 prohibiting more than one rollover from one IRA to another in any 12-month period.

Beware of power-sucking appliances
Don’t let “vampire appliances” bleed your bank account dry, said Catey Hill in MarketWatch.com. “Even when you’re not using electronics and appliances, they may still be sucking up energy” and costing you hundreds of dollars a year. Utility experts estimate that roughly 10 percent of the average household’s energy bill is thanks to power-sucking appliances. Flat-screen TVs are often the priciest power drain, and though it’s impractical to unplug your TV each day, one option is to buy an advanced power strip, which prevents electronics from using power when they’re not in use. At a cost of $15 to $30, the strips will “save you money in the long run.” Experts also recommend using the power strips to plug in video game consoles, cable boxes, laser printers, and small kitchen appliances.

The right way to rent textbooks
If the high cost of textbooks has you in a panic, consider renting, said Ann Carrns in The New York Times. The average cost of college textbooks and supplies is about $1,200 per year, but more-affordable alternatives are becoming more popular. Last semester, more than a third of students rented at least one textbook, up from a quarter a year earlier. When deciding whether to rent or buy, start by comparing prices, both at your campus bookstore and online booksellers like Chegg.com and Amazon. If you rent and are worried about late fees, text and email reminders can help you stay in the clear. And don’t forget that there are a few downsides to renting, including fees for any damage and the fact that you won’t “recoup any of your money by reselling the volume.”

Consolidating IRAs with a spouse
If you and your spouse are trying to merge a retirement account, forget it, said Liz Weston in Bankrate.com. Though spouses can inherit retirement accounts after a partner’s death, retirement accounts are ultimately “like credit scores. Each person has his or her own, and they can’t be merged after marriage.” But if you’re trying to make managing your retirement funds more, well, manageable, consider consolidating your family’s accounts to a single investment firm. “Not only will it be easier to manage and coordinate your investments, but some firms lower or waive fees based on how much a household has invested with them.” Vanguard, for example, waives one of its annual fees when a household has combined assets of $50,000 or more.

The cost of retail-branded cards
Stay away from store credit cards, said Mitch Lipka in DailyFinance.com. Though big signup discounts can make store-branded credit cards a tempting offer, a new survey released last week shows those initial savings will cost you—big time. The CreditCards.com survey found that the average retail card’s annual percentage rate was 23.2 percent—more than eight points above the average credit card’s interest rate, “and more than double what consumers with good credit can get.” That means that a cardholder with a $1,000 balance on a typical store-branded card who makes minimum monthly payments would spend more than six years paying off the debt, including $840 in interest. That’s a year longer—and more than twice as much in interest—than the same balance on the typical nonstore card.

The benefits of aging
There are more perks to turning 50 than just cheap movie tickets, said Lindsay Gellman in The Wall Street Journal, but surveys indicate that fewer than half of eligible seniors are taking advantage of them. Unlike their youthful counterparts, investors who have hit the half-century mark can bolster their retirement savings by making pretax “catch-up  contributions” of up to $23,000 annually to their 401(k) accounts, $5,500 more than investors under 50 are allowed. Seniors can also put up to $6,500 toward an IRA, $1,000 more per year than permitted for younger investors. And while 59 ½ is typically the age at which retirement distributions can be taken without incurring a 10 percent early withdrawal penalty, workers who retire, quit, or are laid off can tap an employer-based savings plan penalty-free beginning the year they turn 55.

Keeping wealth in the family
While you can’t take it with you, the wealth you leave behind may not last as long as you’d like, said Beth Pinsker in Reuters.com. Studies have shown that roughly 90 percent of families with at least $5 million in investable assets exhaust their estates within three generations. The main reason, according to new research from Merrill Lynch, is that many rich families have an “unreasonable expectation of how much they can withdraw and still have the money last.” It’s partly a math problem, as estate planners often don’t account for just how big families can get by the third or fourth generation, and thus fail to adjust distributions or lower expectations. Another major problem: Later generations rest on their laurels. “To make wealth last forever,” said study co-author Michael Liersch, “you’re probably going to need future generations to replenish that wealth.”

Cash floods the housing market
When it comes to home buying, cash is still king, said Doug Carroll in USA Today. Allcash home purchases accounted for one third of total sales in the first quarter this year, up from 29 percent in 2012. While speculators have been paying cash to snap up homes to rent or flip in recent years, the current trend is being driven by retirees and Baby Boomers who have been put off by the challenges of today’s mortgage market. Thanks to “decades of accumulated equity,” older Americans have the funds to buy a home outright or to buy rental property as an additional income stream during retirement.

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[anyaha]

Banking Explained Money and Credit
The international banking system is an enigma. There are more than 30.000 different banks world wide, and they hold unbelievable amounts of assets. The top 10 banks alone account for roughly 25 trillion US-Dollars. Today, banking can seem very complex, but originally, the idea was to make life simpler. 11th century Italy was the centre of European trading. Merchants from all over the continent met to trade their goods, but there was one problem: too many currencies in circulation.

In Pisa, merchants had to deal with seven different types of coins and had to exchange their money constantly. This exchange business, which commonly took place outdoors benches, is where we get the word "bank" from; from the word "banco", Italian for "bench". The dangers of travelling, counterfeit money and the difficulty of getting a loan got people thinking. It was time for a new business model: home brokers started to give credit to businessmen, while genevese merchants developed cashless payments.

Networks of banks spread all over Europe, handing out credit even to the church, or European kings. What about today ? In a nutshell, banks are in the risk management business. This is a simplified version of the way it works. People keep their money in banks and receive a small amout of interest. The bank takes this money, and lends it out at much higher interest rates. It's a calculated risk, because some of the lenders will default on their credit.

This process is essential for our economic system, because it provides ressources for people to buy things like houses, or for industries to expand their businesses and grow. So banks take funds that are unused by savers, and turn them into funds society can use to do stuff. Other sources of income for banks include accepting saving deposits, the credit card business, buying and selling currencies, custodian business and cash management services. The main problem with banks nowadays is, that a lot of them have abandoned their traditional role as providers of long-time financial products, in favour of short-time gains that carry much higher risks.

During the financial boom, most major banks adopted financial constructs that were barely comprehensable and did their own trading in habit to make fast money, and earn their executives and traders millions in bonuses. This was nothing short of gambling and damaged whole economies and societies. Like back in 2008, when banks like Leeman Brothers gave credit to basically anyone who wanted to buy a house, and thereby put the bank in an extremely dangerous risk position. This led to the collapse of the housing market in the US and parts of Europe, causing stock prices to plummet, which eventually led to a global banking crisis, and one of the largest financial crises in history.

Hundreds of billions of dollars just evaporated. Millions of people lost their jobs and lots of money. Most of the world's major banks had to pay billions in fines and bankers became some of the least trusted professionals. The US government and the European Union had to put together huge bailout packages to purchase bad assets and stop the banks from going bankrupt. New regulations were put into force to govern the banking business, compulsary bank emergency funds were enforced to absorb shocks in the event of another financial crisis. But other pieces of tough new legislation were successfully blocked by the banking lobby

Today, other models of providing financing are gaining ground fast. Like new investment banks, that charge a yearly fee and do not get commissions on sales, thus providing the motivation to act in the motivation in the best interests of their clients. or credit unions - cooperative initiatives that were established in the 19th century to circumvent credit sharks. In a nutshell, they provide the same financial services as banks, but focus on shared value rather than profit maximisation. The self proclaimed goal is to help members create opportunities like starting small businesses, expanding farms or building family homes while investing back into communities.

They are controlled by their members, who also elect the board of directors democratically. World wide, credit union systems vary significantly, ranging from a handfull of members to organisations with several billion US-Dollars and hundreds of thousands of members. The focus on benefits for their members impacts the risk credit unions are willing to take, which explains why credit unions, although also hurting, survived the last financial crisis way better than traditional banks. Not to forget the explosion of crowdfunding in recent years. Aside from making awesome video games possible, platforms arosed that enabled people to get loans from large groups of small investors, circumventing the bank as a middle man.

But it also works for industry - lots of new technology companies started out on kickstarter or indiegogo. The funding individual gets the satisfaction of being part of a bigger thing, and can invest in ideas they believe in. While spreading the risk so widely, that, if the project fails, the damage is limited. And last but not least, micro credits. Lots of very small loans, mostly handed out in developping countries that help people escape poverty. People who were previously unable to get access to the money they needed to start a business, because they weren't deemed worth the time.

Nowadays, the granting of micro-credits has evolved into a multi-billion dollar business. So, banking might not be up your street, but the banks' role of providing funds to people and businesses is crucial for our society and has to be done. Who will do it and how it will be done in the future is up for us to decide, though.