Branson backs innovation to cut FX costs
Sir Richard Branson has giving his backing to a business which uses a so-called “peer-to-peer” technology to cut out the traditional international bank payments system, effectively matching consumers and companies in other countries that wish to use the opposite currency. What this does is to cut out or bypass that traditional method of using banks.
The London based company is called “TransferWise” and is enthusiastically backed by the entrepreneur, who has described it as an “innovative idea for shaking up the financial services sector while helping start-ups in a practical way”. He has said that one of the biggest obstacles facing businesses trading overseas has always been the cost of transferring money. This has often resulting in the company never managing to trade abroad or to get off the ground in the export markets.
The new company is another novel idea from the former Skype director Taavet Hinrikus and consultant Kristo Käärmann, they have said that the idea came following the amount of money that Skype was “constantly wasting” on banking fees. They also cite the reason that not only is it being cheaper for the users than traditional bank transfer methods; it makes charges transparent and exchange rates readily visible to the company.
In a statement TransferWise said it will give away $100m worth of foreign transfers for free to small and medium-sized companies on a first come, first served basis, waiving its usual flat 0.5pc charge”.
Why novice traders should spend time learning forex
Many novices get involved in the world of online currency trading after attending some sort of introductory seminar. They get excited with what they perceive to be a get-rich-quick opportunity and start to trade forex without taking time off to first learn forex. Unsurprisingly, the probability that such a trader will become successful is low.
There are numerous websites providing free forex training tutorials. They cover technical indicators, fundamental indicators, how to red charts, trading systems and many other aspects of trading. There really is no excuse for the novice investor not learning the basics of the forex market before entering into a trade.
There are websites such as the Forex Factory, which specialise in providing forex training and vital tools to both novice and professional traders. Anyone new to the market is advised to study the basics of the market by checking out one or more of these sites before opening a demo account. Once you feel comfortable with the core principles of trading you are ready to open a demo account and start making ‘paper’ trades.
This is the point where you should start developing your own trading system; before, not after you make your first live trade. During this stage feel free to experiment with various systems. Try using different technical indicators and or combinations of them. Somewhere along the line you will learn which technical indicators work best for you.
Keep records of your demo trades. It is vital to learn what worked for you and what did not and to identify why.
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Invoice financing advice
However valuable the products or services your business offers are, it may take longer than you would like to receive payment. It is not unusual for clients to take six weeks or more to settle invoices, leaving you hanging on.
It may be possible to access an overdraft or loan facility, but there is another option – known as invoice financing – which is also available to you. Put simply, this process sells your outstanding invoices to a third party and provides you with a lump sum payment in their place.
Although available to firms of all types and sizes, this service is particularly beneficial to small and medium-sized businesses, which may not have extensive financial history or assets. As invoice financing advice is free, it is certainly worth contacting a broker if you are struggling to obtain the funds you need to keep your business afloat.
Because there are so many companies on the market offering this service, it is really important that you get reliable invoice financing advice from a broker, such as Touch Financial. The broker will be able to explain the two different types of invoice financing, factoring and invoice discounting, enabling you to decide whether to maintain or relinquish control of your invoices altogether.
Not only does the service pay out an upfront lump sum – sometimes within 24 hours – those who opt for a factoring solution rather than an invoice discounting service, will be able to focus on growing their business while a professional finance agency takes charge of the unpaid invoices.
Obtaining invoice financing advice will allow you to ask any questions you may have and to make more informed decisions. The broker will explain which is the best option for your specific business and will help you to obtain quotes from a range of prospective buyers.
Business factoring advice
Perhaps you are just starting out in business, or maybe your company has been operating for some time and you have become increasingly busy. Whatever the situation, finding out about business factoring may help to simplify the way you run the business while also improving cash flow.
The first step is to find a company that can provide you with all the business factoring information you may need. A broker such as Touch Financial will be able to explain what information you need to put together in order to use a factoring service, and the pros and cons of doing so. The broker will also be able to explain the costs that are involved.
Business factoring allows companies to sell their accounts receivable, or unpaid invoices, to a third party. Although the firm will have to sell these at a discount, it can be a real weight off the business owner’s mind to know that someone else will collect any funds owed by clients on their behalf. Furthermore, having a lump sum can really help to balance the books and may provide much-needed capital that allows the business to make necessary expenditures and, ultimately, to grow.
In simplified terms, business factoring is a type of cash advance. Some companies prefer to use this service rather than dealing with unpaid invoices themselves as it is quicker and more or less hassle-free. While business factoring information is offered free of charge, it is worth remembering, however, that your business will only recover a percentage of the full invoice sums.
A factoring broker may suggest that your accounts receivable are sold to an open group of buyers, or they may know of specific buyers who may be interested. The broker will help you to search for quotes from third parties so that your business gets the very best factoring rates available.
Online trading and the Martingale method
Many investors who become involved in trading forex are perpetually looking for the holy grail of trading; a single technique or system that will guarantee a quick way to riches. In their search they often stumble across the Martingale system.
This system originated in the world of gambling. What it basically boils down to is that you start betting small and if you are wrong, you place exactly the same bet again, but this time doubling the bet size. If playing roulette, for example, you keep on betting on one colour, red or black and every time you are wrong, you double your bet. Statistically, the argument goes, you have to be right sooner or later, in which case you will have a guaranteed profit.
Applying this method to forex trading implies that you start off by going long or short on a particular currency with a relatively small short term trade; for example, five minutes. If you go long and the price of the currency goes down during the next five minutes, double the money on your next trade and go long again. If the theory works as it should, you will eventually be right and hence make a guaranteed profit.
If all of this sounds too good to be true, it probably is. It requires virtually unlimited funds to ensure an eventual ‘win’. For instance, if you go long and the market suddenly nosedives, it can keep on going the wrong way for a very long time. It is likely that by that time you will be placing very large trades and you might eventually wipe out your entire trading account before the market turns around.
The Martingale method, when used as a forex trading system, is one that looks very good on paper, but in real life has probably wiped out more gamblers and most likely traders as well, than any other ‘system’ we know of.
Trading on the move
Noticing and acting on signals in a timely fashion is one of the most important elements of forex trading. Most traders work during a set period of time each day. As the market is constantly open during the week, traders inevitably miss out on some excellent opportunities.
It seems foolish to forgo valuable market movements, simply because they occur at an inconvenient time. Many forex brokers now offer the opportunity to trade using portable devices. Their apps offer enjoyable and profitable ways to make money on the move. For many, this has expanded the time during which they can make money on the forex markets.
Train, bus and taxi journeys can now serve as opportunities to trade, meaning individuals never need to miss out on uptrends again.
Smartphones and tablets also have an advantage over PCs and laptops in that they turn on immediately. This allows traders to act instantly if they receive a signal from websites like forexloft.com.
While mobile applications cannot provide all the functionality of full trading platforms, they make trading on the go simple and extend the period of time during which traders can work.
Generate finance without going to a bank
Are you having difficulty getting the bank to back you when you need funding for your business? It is a common problem, even in situations where your business is strong. What’s more, it can be frustrating if you are eager to expand and embrace new opportunities. Fortunately, there are ways that you can raise money without going to a bank, chief among them being investment finance.
Creating opportunity
Investment finance involves creating the opportunity for another business or individual to invest in your business. Obviously you will need to give them something in return and this is achieved by transferring shares. It means you may have to share decisions about your company's future and it certainly means you will have to share the profits, but if you approach it wisely it can be a good move for all involved. After all, extra finance gives you the flexibility to develop your business, which should result in an overall increase in profits.
Finding a financer
Finding a reliable source of finance, someone willing to invest in your business, is not as difficult as it might sound. There are always people out there looking for good investment opportunities, even at times when banks are reticent. As you will want to be sure your investor has good references and as it is easier to enter a relationship of this sort with someone you can get along with, the best way to find finance is usually to network in person. Local business associations and government run business support agencies can help. They will put you in touch with potential investors who can make all the difference to your enterprise.
What is invoice finance?
Invoice finance, which is also sometimes called debtor finance, is a corporate procedure whereby one business entity contracts another to collect accounts receivable from its customers. The company that will be collecting the debt pays an agreed percentage of the debt to the originator company. In this way the originator is compensated in a timely manner for services or goods supplied, while the collection company makes a profit by charging interest on the entire debt due. The balance of the debt is paid to the originator upon collection. Interest fees are collected, either at the inception of the contract or upon delivery of the balance, depending on the particular service.
Using invoice finance companies makes sense for new or growing companies that need immediate cash flow. An invoice finance company can offer a considerable portion of the debt in an upfront payment, often within 24 hours, while dealing with a customer may take upwards of six weeks. This frees up capital to pay employees, advertise services, make business purchases or engage in any other potentially profitable business venture.
While most invoice finance companies will advance a client as much as 80 percent of the total debt financed, an invoice financer courting a prospective company may offer up to 100 percent of the debt due. Although financing rates will vary from one lender to the next, they are generally about 1.5 points above the current bank-lending rate. This is quite a reasonable amount, as the finance company will not only be fronting the collectable debt, but will also be using its own workforce to collect the debt for the client company. This eliminates the need for an extensive accounts receivable department and can cut payroll significantly, especially in larger companies.
Picture: David Plas
The basics of an FX trading system
Without a trading system it’s very unlikely that even the best trader in the world would be able to make a profit consistently.
You don’t need a master’s degree to create a trading system. All it really comprises is a set of rules determining when to enter a trade, when to exit it again, how much to risk of a single trade and how many trades to have open at any given time. It will also cover issues such as stop losses, take profit levels etc.
Entering a trade could for example be based on the price trading above or below a simple moving average. It’s possible to use more than one technical indicator, but don’t overdo it.
Exiting a trade is actually trickier. Here you could have a rule that says you exit as soon as you have made a certain amount of profit or loss, or when the price breaks through a certain technical level, e.g. the moving average. Never cling to a losing trade: that is probably the downfall of more traders than any other single mistake.
How much to risk on a trade should depend on the size of your trading account. As a general rule, never risk more than between 2% and 5% of trading funds on any single trade.
Overtrading, i.e. making too many trades open at any given moment or making a multitude of trades per day is another common mistake made by novices. Have a rule in this regard and stick to that rule.
Stop losses should form an important part of your trading system. Don’t set them too narrow – that will kick you out of many trades that eventually turn out to be profitable. Setting them too wide on the other hand will expose your account to catastrophic losses.
Forex services and demo accounts can be very useful to both novice and professional traders and there is a wealth of knowledge available for those who put a bit of time in.
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What are the benefits of invoice financing?
There are many different methods available to help increase capital for your business. One of the most renowned is invoice financing which involves gaining funds against money you are owed by customers. Invoice discounting solutions from Touch Financial and other lenders can be an ideal way to gain the capital necessary for a young company to continue. But what other benefits does the system offer?
One of the main benefits to invoice financing is that it is a debt free way of obtaining capital. Whilst most other forms of business finance are loans, invoice capital is technically just a straight transaction and will not appear on your firm’s finances as a debt. This will make it easier to obtain a genuine loan if you need one.
In a way, it is also one of the safest methods of obtaining capital, as it can help your firm avoid any future credit issues. By obtaining the money from invoices earlier than you might otherwise have done, you can avoid having to make use of genuine credit.
Unlike bank loans, and other forms of financing, where the lender will make a decision as to how much you need, with invoice financing it is also entirely down to you how much capital you obtain. You can benefit from as much invoice capital as you like providing your company is making adequate sales. You also do not have to take more than you are comfortable with.
The fact that it is the most bespoke method of obtaining money is what has made invoice discounting solutions from Touch Financial and other firms so popular.