Business finance explained
The terms in a loan offer, in plain English: security, guarantees, hire purchase and working capital.
What is a debenture? How lenders take security over a company
How a lender takes security over a company’s assets: fixed and floating charges, registration at Companies House and ranking in insolvency.
Personal guarantees for business loans: what a director is signing
What a director takes on by guaranteeing a business loan: the assets at risk, the limits of regulation and the questions to ask first.
What is hire purchase? How it works for business vehicles and equipment
How a business buys vehicles and equipment over time: ownership, hire purchase against leasing, regulation and tax points.
What is working capital? The formula, the cycle and how to fund a gap
The working capital formula with a worked example, the cycle behind it, late payment rights and the ways to fund a gap.
What is a proforma invoice? What it is for and why it is not a VAT invoice
What a proforma invoice is for, why it is not a VAT invoice, and how it differs from a quote and from the invoice that follows.
APR explained: what it means on a business loan
What APR means, how it differs from the interest rate, why business loans may not quote one and how to compare the real cost of offers.
Balance sheets explained: how to read one and what lenders look for
How to read a balance sheet, the simple checks behind it and what lenders look at when you apply for business finance.
Break-even point: how to work out yours
How to work out the break-even point in units and pounds, with a worked example and what changes the answer.
Business credit scores: what they are and how to check yours
What a business credit score is, what feeds it, how to check yours and how to improve it.
Debtor days and creditor days: how to calculate and improve them
How to calculate debtor days and creditor days, read the gap between them and shorten the cash flow cycle.
Free cash flow: what it is and how to calculate it
What free cash flow is, the formula, a worked illustration and why it can be negative even when a business is profitable.
Gross profit margin: formula, example and why it matters
The gross profit margin formula with a worked example, how it differs from markup and net margin, and ways to improve it.
How to value a business: the main methods
The asset, income and market methods for valuing a business, how debt changes the answer and when a professional valuation is worth having.
Interest cover ratio: what lenders are testing
The interest cover ratio formula, a worked illustration, how it differs from debt service cover and what to do if it is thin.
Late payment interest: what you can charge a business customer
The statutory rate for late business payments, the fixed compensation sums, a worked calculation and when a payment counts as late.
Loan to value explained for business borrowing
How loan to value is calculated, why lenders use it on secured business finance and what affects the ratio.
Net profit: what it is and how to work it out
What net profit is, the formula with a worked example and how it differs from gross profit, taxable profit and cash.
Open banking for business lending: what you are agreeing to share
What you agree to when you connect your business bank account for a loan application, and the checks to make first.
Payment terms: what to put on your invoices
What payment terms are, what to write on an invoice, how the UK 30 and 60 day rules work and how your terms affect cash flow.
Profit and loss accounts explained
What a profit and loss account shows, how to read each line, how it differs from a balance sheet and what lenders look for.
Return on capital employed: formula and what it tells you
The ROCE formula with a worked illustration, where the figures sit in your accounts and what a high or low result can mean.
Secured vs unsecured business loans: how to choose
What security means, how charges and personal guarantees work, and how to weigh a secured business loan against an unsecured one.
Soft and hard credit checks: the difference for business borrowers
How a soft credit check differs from a hard one, what each does to your file and how to apply without piling up searches.
What is a CCJ? County Court Judgments and your business
How a county court judgment is made, how long it stays on the register, what to do if you get one and how it can affect business finance.
What is EBITDA? How to calculate it and how lenders use it
What EBITDA stands for, how to calculate it from net profit or operating profit, what it misses and how lenders use it.
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