finance futures

Financing Cash Flow Peaks And Valleys

For many businesses, financing cash flow for their business can be like riding a continuous roller coaster. Sales are up, then they do down. Margins are good, then they flatten out. Cash flow can swing back and forth like an EKG graph of a heart attack. So how do you go about financing cash flow […]

Customer Finance Programs Key to Increasing Sales

While studies show that technology spending is once again on the rise, there’s a reason you haven’t heard a collective sigh of relief from the software industry. While many budgets are once again allowing for the purchase of enterprise software, hardware and peripherals, there’s no question that today’s purchasers are smarter, savvier and more selective than ever.

Even though the purse strings have loosened, competition is at an all-time high. It’s no longer enough to provide a software solution that meets the potential customer’s needs, or even to provide it at the best price. Today, smart vendors are constantly looking for ways to stay one step ahead of the competition.

While increasing sales is always part of a competitive business strategy, software development companies often overlook a simple method of accomplishing this objective – making it easier for customers to buy.

One option increasing in popularity among software vendors is to establish a customized finance program that provides no-hassle financing solutions for your prospective clients. In addition to “one-stop shopping,” your customers can reap the other benefits of financing that make it easier for them to commit to technology purchases, including:

100 percent financing — Many finance companies offer 100 percent financing for the cost of software and maintenance contracts, which requires no down payment. Because customers don’t have to come up with a down payment, they can make a purchase immediately, rather than hold up the sale with a “wait and see” mentality that often accompanies a dip into cash reserves. It also allows your customers to invest more capital in revenue-generating activities.

Improved cash flow management – With software financing, your customers can conserve capital for reinvesting in their business and improve budgeting accuracy through fixed monthly payments. Financing also makes it easy for customers to access multiple-year budgets by paying for the benefit of your software over its useful life.

Flexible payment structures – Customers can optimize project budgets by taking advantage of the flexible payment structures available through financing to maximize the return on their investment. For example, with software financing, customers can ramp up payments to match the revenue generation of a new technology project that is utilizing the software being financed.

While financing provides a clear advantage for the buyer, when a program is well planned, the list of advantages for software developers, distributors and resellers can be even more beneficial.

Improved Customer Relations

As noted above, financing packages add value for the customer by enhancing their buying power, offering greater flexibility and providing convenience. It also increases their satisfaction through the ability to leverage their budget to acquire the total technology solution – which could include software, hardware, service, support, integration and training – rather than only the parts and pieces they could afford through an outright purchase.

Shorter Sales Cycles

On the sales side, any customer who expresses some interest in a product seems like a good lead. However, there are many times when the question of how to pay for the new software prevents the sale from happening. Time lost on dead-end deals can be eliminated when financing is part of the sale, as the ability to pay is immediately considered in the equation. In addition, many finance companies now offer fast, easy credit and documentation processes, so you can complete a sale quickly and avoid costly processing delays.

Another benefit is that as software needs are being discussed in the sales process, the finance specialist can work with the chief financial officer or accountant to determine which financing option and payment plan best suits business needs and cash flow.

Direct customer financing can also save software vendors millions of dollars each year by reducing the number of days a sale is outstanding. Consider a company with quarterly cash sales of $50 million. On average, it can take 45 days to collect payment. Assuming a borrowing rate of 6 percent, the 45-day lag in payment results in a carrying cost of $371,204. If the same numbers are run with a leasing finance program that generates payment within 2 days, the carrying cost drops $82,253, saving the company more than $288,951 in one business quarter.

The Big Picture

Overall, equipment financing programs can:

Generate larger, more profitable sales faster;

Increase account control;

Improve sales efficiency and productivity;

Lower days-sales-outstanding;

Improve cash flow;

Differentiate your company from its competition; and

Provide complete solutions for your customers.

Taking the Next Step

After identifying an interest in offering flexible financing as part of the sales process, the next step is to develop a finance program. By partnering with an experienced leasing company to develop a finance program for your customers, you can transfer all of the uncertainties of extending terms to your customer to the finance company.

Partnering with an experienced finance company also means you can concentrate on what your company does best – developing software – while letting a finance expert handle the intricacies of a finance program. Put simply, by working with a third party, your company will receive all of the benefits with none of the risk.

Whether you choose to refer your clients directly to your financing program partner or to work with a third-party finance partner to develop an in-house program, it is essential to choose an experienced equipment finance partner. During the sales process, the finance expert will be working closely with your customers, and it’s important that his or her actions and service levels reflect your company’s ability to meet your customers’ expectations. When searching for a finance partner, look for a company that:

Is flexible and willing to work with your management team to develop a program that will meet your financial objectives;

Is experienced in the IT and software finance world, since the sales process, client-decision criteria, and revenue recognition issues are different than that of capital asset sellers;

Provides marketing support and materials to help you promote your financing program

Is willing and able to provide your sales team with materials and training to ensure sales team members are comfortable and easily able to raise financing as an option with their clients; and Is a financially stable, long-term business partner.

Companies in search of a leasing partner can visit Choose Leasing (www.ChooseLeasing.org), a Web site developed by the Equipment Leasing Association, where you can find answers to commonly asked questions about leasing and search for an experienced leasing company specializing in vendor finance programs.

The Basics Of Recreational Vehicle Financing

It is generally regarded that getting a good financing deal on an RV today is far easier than it was before. Recreational vehicle financing has been around since there have been RV units to finance but only recently has there been an influx of flexibility in how it was done. Also, in comparison to before, recreational vehicle financing now is far more direct, straightforward, and simpler. However, it would be good to keep in mind that financing an RV purchase is not exactly the same as financing a car. Some would say it is far more similar to financing a boat.

There is a prevalent perception that anyone who buys an RV, even with a financing deal, is going to be a person who pays up on time. The overall reliability of people who opt for recreational vehicle financing gives lending companies confidence in allowing for lower interest rates and terms that are not as harsh as those one might find on a car financing agreement. Monthly payments are also more affordable, thanks to that reputation. As such, if a person is considering purchasing an RV, it would be a good idea to take advantage of that reputation, in conjunction with a good credit rating and a clean credit history. The aforementioned combination could easily land a potential buyer an incredible bargain on their RV purchase.

Another incredible aspect of recreational vehicle financing would be the average number of years for the payment terms. Typically ranging from 10 to 20 years, an RV financing arrangement is considerably longer than that of a car. Also, very few financing institutions lump the interest rates at the start or end of the payment period, which means that the interest is spread out evenly. What that means for the average buyer is the fact that they need not fear suddenly having their budgets constrained by a sudden increase in the interest they have to pay for their new recreational vehicle.

One trait recreational vehicle financing shares with automobile financing would be the emergence of online financing companies. Operating the same way as their automobile counterparts do, RV financing groups are known for being less critical about a person’s credit rating and credit history, provided they have not declared bankruptcy or have defaulted on previous loans. Both car and RV lending companies also share the convenience of speed. It is not uncommon for an online RV financing group to be able to determine within a minute whether or not a potential customer would qualify for a financing agreement based on their limitations and terms. Both car and RV financing groups also share another minor convenience in the fact that neither will attempt to push extras such as insurance or an extended service plan on the buyer the way a dealership would.

With the ease, speed, and flexibility offered by recreational vehicle financing services on the Internet, it is no wonder that there is a slow but steady growth of people turning to online lenders for their financing needs. While the market for recreational vehicle financing is significantly smaller to the market for automobile financing, it is still substantial enough to warrant a number of websites and companies willing to provide their services to prospective buyers. With the price of real estate currently on the rise, some people might turn to RV units as a cheaper, temporary alternative. Naturally, the aforementioned people will come to realize that turning to an RV financing group is the best way for them to minimize their expenses.

Top 10 Best Personal Finance Books of All Time!

As I was arranging the numerous personal finance books I’ve accumulated over the years, I couldn’t help but wonder how I can put everything together in such a tiny little space. Then I asked myself, if I had a very small book shelf that can accommodate only 10 of these books, which books would I choose? I had to think really hard because I love reading books and I’ve learned a great deal about life and money through ALL of them. These 10 books are special in that they have completely altered the way I view money and life! They have inspired me to learn more about money and pursue financial freedom! May these same books help you achieve your financial dreams!

Here are Rich Money Habits’ top 10 best personal finance books of all time!

#10. 8 Secrets of the Truly Rich by Bo Sanchez

This one is special because it’s written by a preacher – and a famous Filipino preacher at that! Bo Sanchez is a best-selling author of inspirational books in the Philippines. This is his first book that openly talks about money, business and investing.

What I particularly like about this book, is that it tackles one of the most critical obstacles in making money – that is, how to reconcile money and religion. Living in the only predominantly Catholic country in Asia, it is very important for me to align what I believe in whether it be on religion or money. Otherwise, I’ll just be confused and end up going nowhere.

The book is full of stories on how daily money habits make you rich or poor. It describes the most common perceptions we have about money. We were taught that money is the root of all evil. When we watch our favorite TV shows, rich people are often portrayed as greedy. They only got rich through “drug” dealing or some other “illegal” means. Due to this stereotyping, some us unconsciously don’t want to be rich! Who would want to be the “bad” guy in our own soap opera called life?! 🙂

As a result, there is conflict inside of us. Some of our internal dialogs are

“I want to be rich…BUT not so rich that my friends would hate me and I would no longer have friends.” err…who wants to be loner?! 🙂

Or the most common,

“I want to be rich…and I’m so desperate the only way for me to get rich is by winning a million dollars through lottery.”

The great tragedy is never realizing that you don’t have to be a crook, or be greedy, or become unfriendly, or win a lotto ticket to be rich – you only need to build rich money habits!

#9. Multiple Streams of Income by Robert G. Allen

This is one of the books I bought when I was in the US. Since I love reading personal finance books, I ordered a bunch of them online. I was able to get them cheaper because I looked under the “used” books section. Surprisingly, most of them are in relatively good condition and look almost new!

The book was my first exposure to having multiple streams of income. For someone who worked as an employee most of his life, I thought I could only earn from one stream of income – my job! I realized having only one stream of income is not a very good idea because there’s also only one way money can come to me – through my paycheck!

Having multiple streams of income is NOT necessarily having a second job, or even a third! Multiple streams of income building systems so that money can flow through your life. It means, investing both your time and money to learn how to build those systems.

One way could be through real-estate investments where you get a “stream” of income from the monthly rental of your tenants. Another “stream” could be getting portfolio income like “dividends” or “interests” from your stocks or bonds investments. And yet another “stream” could be from royalties you receive from publishing a book or a music recording if you’re a singer. Having a LOT of “streams” where money can come to you is certainly better than relying on just your “job” to make money. The challenge is how to utilize what you have like time, skills, and money to setup these streams of income.

#8. Secrets of the Millionaire Mind by T. Harv Eker

The great thing about the book is it makes you realize what money habits you have developed since the day you were born. It brings out those subconscious thoughts that are hindering you from achieving financial success. Some of the internal dialogs with yourself could be.

“I am not good enough. I’ll never be amount to anything financially.”

Or you might say

“I’m poor because my parents are poor…and my grandfather is poor…and my great grandfather is poor…so I will always be poor…”

You might not be saying it out loud. You might only be thinking about it. Worse, you might not even be aware of it. And you wonder why you’ll not getting anywhere. As T. Harv Eker aptly put it

“…if your subconscious ‘financial blueprint’ is not ‘set’ for success, nothing you learn, nothing you know and nothing you do will make much of a difference.”

#7. The 4-Hour Workweek by Timothy Ferriss

The book speaks about the “New Rich”, a group of people who have the time, money and mobility to spend only 4 hours a week to generate money and live the life they want. The rest of their time is spent on things they love to do like dancing in Buenos Aires, scuba diving in Panama or basking in the Hawaiian sun.

Who wouldn’t want to spend only 4 hours of his time working instead of the usual 40 hours a week? Who wouldn’t want to have the luxury of time to do the things you really love? Who wouldn’t want to take a very long vacation in the beaches of Hawaii while your business is taken care of and money is still coming in?

For employees, it offers practical tips on how to negotiate with your boss for a work-at-home arrangement. It also provides ideas on how to plan your own “mini” retirements so the money is still coming in, without you around. It even discusses how you can “outsource” your life!

The 4-hour workweek is easy to read. The ideas are presented in a simple and uncomplicated manner that you think you’re reading a comic book. The book is conversational and funny. Reading it is like speaking with the author face to face. You might even find yourself occasionally laughing at his jokes. (I know I have) 🙂

#6. Rule #1 by Phil Town

I picked up this book out on a whim when I was at a bookstore in Malaysia. The book explains investing in a very simple and understandable manner. It is not intimidating in any way. After reading this book, it made me realize that I did not need to be afraid of investing. I just need to learn how to do it right.

Rule # 1 is “Don’t lose money.”

Whether the market is going up or going down, don’t lose money. Whether it is a bear market or a recession, don’t lose money. Whether you have billions or just a couple of hundred dollars in investment, don’t lose money.

The book discusses some of the basic myths about investing and provides simple strategies for successful investing while spending only 15 minutes a week. It tells about the five key numbers that really count when determining the value of a stock or business. It even mentions valuable internet tools and the advantages of managing your own investments to achieve your investment goals.

I know there may be other books on investing out there, but so far, this is the only one I’ve come across that made me understand the world of investing a little bit better.

#5. The Richest Man in Babylon by George S. Clason

I came across the Richest Man in Babylon from reading Rich Dad, Poor Dad by Robert Kiyosaki. It tells about the ancient secrets of money. The book coined the phrase “pay yourself first”. In ordinary terms, it means – SAVING. But it is more than that. The book tells that in any trade you’re in, you CAN still “pay yourself first”. Once you have “money” in savings, you can then have that “money” work for you.

But how can you save when your little money is not even enough to survive on? How can you set aside 10% of your income when you’re living on 110% of it? How do you “pay yourself first” when the creditors are coming after you?

Paying yourself first is certainly not easy. It takes tremendous discipline. That’s one of the reasons why it is not popular. But once you get the rich money habit of controlling your money instead of it controlling you, your confidence builds up, you’ll think that if you can do this then you can do anything. And as with anything related to money, it touches everything. Your health improves. You become successful in what you do. People will wonder why you’re always brimming with confidence. You become the richest man in every sense of the word.

Isn’t it better to walk into a store knowing you can buy anything you want because you have the money (saved)? Doesn’t it give you peace of mind knowing that if some emergency occurs, you can readily rely on your saved “emergency fund”? Would it be nice to be able to help your family or those closest to you “financially” for a change? That’s the dream. And it starts with paying yourself first.

#4. The Millionaire Next Door by Thomas J. Stanley Ph.D. and William D. Danko Ph.D.

The book is based on a comprehensive research on the money habits of millionaires. The results are surprising in the sense that majority of those millionaires are not what we commonly expect them to be. As aptly described in the book,

“These people cannot be millionaires! They don’t look like millionaires, they don’t dress like millionaires, they don’t eat like millionaires, they don’t act like millionaires – they don’t even have millionaire names. Where are the millionaires who look like millionaires?”

Many of the “next door” millionaires are first-generation. They did not inherit their riches, they built them. Few of them do not spend more than $100 for a watch. Others don’t even wear a suit to work! They engage in types of businesses which could be classified as dull-normal. Some are welding contractors. Some are rice farmers. Some are pest controllers. Others are coin and stamp dealers.

What separates the “next door” millionaires from the rest is their money habits. They are frugal in nature. They value money. They invest at least 20% of their income. They even have a “go-to-hell fund” which can provide for their expenses for at least 10 years without working at all.

I think the most important lesson from the book is not that we know who the actual millionaires are, but the realization that it could be YOU! If they can do it, so can you! It’s time to build your own rich money habit and be the “millionaire next door”!

#3. Your Money or Your Life by Vicki Robin and Joe Dominguez

I bought this book out on a whim. I was actually looking for the book “Outliers” by Malcolm Gladwell when I saw this book at 20% off.

The book tells about managing not only your money but looking at it in totally different way. Your money is only part and parcel of what your life is. There is also time. There is also your dream! What do you enjoy most? How do you spend your money? What do you do with your time? Would you still do what you do even if you have all the money in the world?

The book emphasizes managing the resources that you have like money and time. It offers very specific tips like monitoring your spending and whether each of those is contributing to your goals or not. It also has some ideas on how to identify exactly what you like to do and manage both your money and time so you can do more of what you love to do and less of what you don’t like to do. It even has some charts to help you picture out and plot where you are and when your freedom day will be.

I think the main message of the book is not to choose money over your life or the other way around – it is to have BOTH.

#2. Rich Dad, Poor Dad by Robert T. Kiyosaki

As mentioned in my personal finance story, this is one of the books that made me realize I really need to develop rich money habits to achieve financial freedom. The book is a story of growing up learning about money from two different dads: one is rich and the other one is poor. The story unfolds to describe the different money habits of the rich dad and the poor dad, each one producing a different financial result.

The book makes the very complex world of money and business seemingly simple. It is so simple that the ideas can be explained to a child using only sketchy drawings. The drawings illustrate how cash flows from your pocket to the bank when you pay your bills, and how it flows from your company to you when you get your paycheck.

What you do with the money after your receive it determines whether you become rich or poor. Do you use the money to buy assets like real estate investments or setup businesses? Or do you use it to buy liabilities like a brand new LCD TV in 12-easy-monthly-payments-with-zero-interest!

The reason I liked the book is because it inspired me to become better and to view business and money in a totally different way. It expanded my understanding of how money really works! Most of all, it gave me the confidence to dream again!

#1. Think and Grow Rich by Napoleon Hill

Think and Grow Rich is one of the first books I’ve read about money. The main message of the book is that you have to “think” about money first before it becomes real. It is a direct translation to the phrase “what your mind can conceive, your body can achieve”. When you really think about money and you have this “burning desire” to make it real, all the universe conspires to build the means to bring it to you.

Money is, first and foremost, only an idea. It is not real. The money you hold when you buy a bag of grocery is only as real as the “mutual” agreement you have with other people that the paper you’re holding is worth something of value equal to that you’re buying.

The book doesn’t say “Work Hard and Grow Rich”. Working hard means different things to different people. For an employee who doesn’t like what he’s doing and only get paid very little, everything is “hard work”. For someone who love what he does, “working hard” is not in his vocabulary.

How to Pick the Personal Finance Book That’s Right For You

In 1997 I picked up my first personal finance book, The Millionaire Next Door. I had heard that the book revealed to the world that millionaires were cheap folks who drove old cars and didn’t send their kids to college. Nothing could have been further from the truth. In fact the book revealed to me the common qualities of millionaires and that becoming one is not that far fetched an idea. They have certain characteristics and habits and developing them is the surest way to join the ranks of the world’s millionaires.

Truthfully, personal finance books are a dime a dozen. You cannot roll a boulder without hitting one. What makes one book better for you than another? Since 1997 I have read 10-15 personal finance books per year. Well over 100 books later, there are only 10 who have made a genuine difference in my life. The rest were filler. At 10 dollars a book that is a lot to spend on filler.

How can you pick the right book for you and still keep your money in the bank? No, I am not just going to suggest that you get a library card. Wasting time on the wrong book is just as bad as wasting money. There are a few simple steps to follow that will help you pick the right book for the stage you are in life.

Ten action steps for selecting the right book for you:

1) Before you go to the bookstore or the library, decide what is most important for you at your particular point in time. Are debt elimination, starting a savings plan or investing most important for you?
2) Look for a book that teaches a new concept about an idea. In its first few pages, Rich Dad, Poor Dad introduced the balance sheet in simple, easy-to-understand way.
3) Look through the table of contents. Is there a chapter there that appears to address your problem? If so scan that chapter to make sure it contains information valuable to you.
4) Is there a glossary of terms? Or will you need to have your financial dictionary or Internet connection handy to understand your book?
5) Read the preface, does the author communicate his or her purpose for the book and is it in line with your personal philosophy?
6) Is the author’s language style appropriate for you? In the 1990’s personal finance books were written for baby boomers in their late 30s and older. The language was pretty staid. Today’s personal finance books are written for Gen x, Gen y, and Gen Whatever. The language style is more aggressive.
7) Is the book filled with exercises you won’t do? Be honest here. One of the main reasons that people don’t finish a personal finance book is because it is filled with exercises they won’t do. These exercises are very different from action steps, the steps designed to help you remedy your current situation. Exercises in personal finance books are often aimed at helping you figure out how desperate your current situation is. If you didn’t already know how desperate your current situation was, you wouldn’t be looking for a personal finance book in the first place. You need action steps not psychoanalysis.
8) What are other people saying about the book? The Internet allows any one to connect with book reviews. Folks are generally pretty open about their situations. Has the book you are considering helped someone in a situation similar to yours?
9) Is the book simply a rehash of something you have already read? Many financial books, especially books by the same author, are merely “also-rans”, books that rehash the same material repackaged for a different audience.
10) Is the book an end in and of itself or simply a promotional piece for a financial seminar? I cannot stress this enough. You are looking to solve your current financial situation through education not become part of some author’s marketing machine.

Once you master the basics there is much in the world of money mastery to know. Right now my focus is on books that teach new concepts about work, play and life. Just because I find a book intriguing I don’t run out and buy it. Instead, I place it in my queue and wait. I am always reprioritizing and looking at the materials I already have; if that book is relevant in 30 days, I will put it in my active queue to purchase and read.

Using the 10 steps I just outlined will help you gain the most book for your buck, avoid the unnecessary and redundant purchases, save you time and help you keep more of your money in the bank.