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Monthly Archives: February 2017

Types of Current Accounts for Businesses

One of the compulsory requirements when starting a business is that of opening a Current Bank account. It is the best for carrying out business transactions, and keeping business separate from your personal expenses. It is required for any kind of business – big or small – current account is required to document company transactions and records. They have attractive offers associated with them because of the frequent transactions in these accounts.

It is easy to a current account all you need to provide is some proof of the business and business expenses to get the account.

There are various types of accounts available in India, so it is important to scrutinize each one and selecting the right one for you. Banks have a variety of offers and different type of business accounts to offer. Your bank will have the right solution for all your current account requirements.

These are accounts in which high amount transactions take place on a regular basis. When choosing an account you must consider how much you want to save for, duration and how much money you can afford to save on a monthly basis.

Look for an account which can give the best interest rates. Earning a good interest rate on this account should be a priority.

There are many offers associated with a current business account:

  • Look for acurrent account which can adjust itself with your business cycle. It will give you freedom to control the average balance you maintain in the account. So higher the average balance in the account, higher the free limit you get.
  • Some current accounts require a fixed average balance per month.
  • Various provisions on free cash deposit
  • Free non cash transactions
  • Current accounts have perks like upto 200 free transactions
  • Free cheque book pages, internet banking, phone banking services.
  • Free demand drafts
  • Instant mobile alerts

Current accounts can be opened by anyone over 18 years of age. It is a requisite for

  • Sole proprietorships
  • Businesses
  • Private/ Limited companies
  • Public enterprises
  • Trusts, Societies, Clubs
  • Local authorities or other Government bodies

Like several other accounts, there are certain requirements with a bank a/c to function properly. You require to keep a minimum balance on a current account and it is often higher than on a savings a/c, since the money involved is more. In addition, a minimum deposit amount is required to open the account; this amount depends on the bank and type of the account.

There are several current a/c options available – all that you have to do is assess your business requirement and then negotiate good terms with your banker, and get the perfect account for youto get the best out of your business current account.

Trade Finance Products are provided by Financial Institutions

Letters of credit

A letter of credit is an undertaking by the bank or financial institutions of a promise to pay the seller/exporter on behalf of the buyer/importer – with the condition that the seller submits the documents related to the agreement to the designated bank or financial institution of the buyer. The bank or financial institution specified in the purchase agreement will pay the seller/exporter the agreed payment against consignments.

Bank Guarantee

This is also a promise or undertaking provided by the Bank in favour of the beneficiary and on behalf of the applicant. If the applicant fails to meet the obligations of the agreement either by finance or performance then the guarantor bank will make the payment to the beneficiary on behalf of the applicant on receipt of the claim or demand made by the beneficiary. There are various types of bank guarantees offered by the banks and these include Tender Bond, Performance Bond, Advance Payment, Retention, Labour and financial.

Discounting of bills

This is the most common service relating to trade that is provided by the banks. Here the bank designated by the seller will collect the payment from the buyers designated bank on behalf of the seller, so that the shipment can be sent to the buyer by the seller as per the agreement executed between them.

Trade finance is an important factor in the transaction procedures of almost every trade that most traders complete because of the various benefits offered by the various financing tools. What is trade finance? Trade finance is essentially granted by the banks wherein the bank agrees to guarantee the payment in a trading transaction between a buyer and seller. The guarantee comprises of at least one of the afore-mentioned tools and depending on their requirement and size of business; traders avail themselves of them as they provide security for their consignment and payment. An intermediary such as a bank guaranteeing the payment the seller will send the shipment in time and in full and the buyer will also make the full payment because the consignment has arrived in full.

Types of Financial Calculators available in the Market

These calculators are designed to calculate the ideal rates most suited to you, depending on the input you have. There are plenty of calculators that are available in the financial market, each designed for a different purpose. Some of them include the following:

Calculator to help in planning your retirement:

At some point in time, you will need to retire from your professional life. But planning your finances after you retire will help you get a peace of mind. The retirement calculator will help you plan your finances depending on factors such as your age, current income and savings rate. Additionally, it will take into consideration other influential factors depending on your choice of lifestyle you would want to lead after your retirement.

Loan calculator to help make your EMI’s

When you apply for a loan, you will be required to know much to keep aside for the EMI’s. This is crucial as it will help you plan your principal amount and interest rate before you even start. The loan calculator takes these factors into consideration before calculating the ideal amount for you. Normally, there are plenty of other loan payment calculators that are created depending on the type of loan you would want to apply for.

Mortgage Calculator:

This type of calculator helps you compare mortgage rates. It will help you help you compare fixed rates and adjustable mortgage rates, which will help you determine which rate is the best choice for you. It comprises of several set of relevant questions that will help you plan for the future by determining a recommendation.

Debt Planning Calculator:

If you find yourself in financial debt, no doubt you will need to take necessary steps to prevent it from affect any of your finances. Just like the loan calculator the debt calculator, will calculate how much of a debt you can pay off with adjusted interest rates and repayment tenure. This will help you take the necessary steps or financial maintenance to ensure that you get out of your debt.

Net Worth Calculator:

Everyone should know their financial status. This will help you make investments in high risk ventures like stocks or any other equity. Alternatively, it will help you explore other safe options to invest you wealth so that you get high returns. Through this calculator, you can calculate the value of your current assets and the reconciliation of your debts.

Loan Calculators the Best Financial Tools for Financial Needs

Without the right financial planning, it is easy to end up with disorganized finances. No doubt, life would be simple if you do not have to worry about loans and debts. However, such is the reality, where you will need to deal with finances as a part of your life in this modern society.

Part of preparing your finances is by using all financial tools available to help organize your finances. If you ever need to apply for a loan, you need to understand all the variants, features and how it can affect your current finances. Part of being prepared is having a concrete understanding of how a loan works.Tools such as the loan calculator is one way to do so. Here is why this tool will help you with your financial needs in terms of a loan:

Loan comparison:

With so many loans offered in the financial market, how are you aware which choice is the best for you? Each of these loans are designed for different purposes. Additionally, they are also equipped with certain features and rates, which affect your repayment. Therefore, it is important to choose the right loan, for the right financial situation. A loan calculator will help you decide which loan type is the best for you and your financial needs.

Plan your finances for repayment:

When you opt for any borrowing, you will be required to repay the borrowed funds in addition to the added interest amongst other charges. Without the proper planning, you may take a loan amount which you cannot afford, thus leaving you in a situation wherein you will pay more than you should. This will leave you in a more dire financial position than before. However, a loan calculator will ensure that you understand the loan features and get the rates that suit your needs perfectly. It will also help you understand how much funds you need to keep aside when it comes to repaying the loan.

Plan your finances during the repayment:

While you can use the loan calculator to play your finances before you apply, you can also use to plan your finances during the repayment process. This is beneficial especially if you opted for a floating interest rate or if you get an unexpected raise in your income. In this case, use the calculator to recalculate the interest rate that is most feasible to you with the added income. Alternatively, if you have any prepayment features for the amount you have applied for, you can use the calculator for the amount to calculate the ideal rates and repayment tenure to suit your need. In this way, you can adjust the features of a loan, during the process of repaying it.