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How to Evaluate Bond Issues and Interest Rates

When simplified, the investment markets can be broken down into two types: equity and debt. Equity investments are purchases of stock in a company and represent a part ownership of the business. Stockholders may or may not receive annual dividends. Debt investments, on the other hand, represent a loan to the company with the corresponding return plus interest expected. A bond holder is entitled to regularly scheduled interest payments. Debt investments are considered a little more secure than stocks, but there is risk associated with any investment.

Debt investments are commonly known as bonds. Bonds can be issued by federal, state and local governments as well as by corporations. There are advantages and disadvantages with either. For example, if you invest in a federal bond issue, the interest income you receive on this investment is generally not taxable on the state and local levels. Similarly, state and local bond issue interest income is generally not taxed on the federal level. Corporate bond interest income is taxed everywhere.

It’s a good idea to get an interest rate education before investing in debt instruments. In the United States, the Federal Reserve Bank (or, the “Fed”) sets interest rates. They do this at a meeting held every six to eight weeks in which the national economy is evaluated. They then decide what to do with interest rates. This decision is based on many factors, but primarily the rate of inflation being experienced.

If inflation is on the rise, the Fed may raise interest rates. This makes the supply of money (in the form of loans) a little tighter and harder to come by, which, in turn, slows the inflation. If there is no or very little inflation, interest rates will probably remain as they are. If there is deflation, or a slowing economy, the Fed may attempt to stimulate it by lowering interest rates, allowing more people to borrow, hence stimulating the economy.

The reason you need to know about what’s happening to interest rates before you invest in bond issues is because the prices of bonds are directly related to the current available interest rates. In general, if the interest rates are rising, the price of the bonds is falling and vice versa. Of course this means next to nothing if you intend to hold the bond to maturity. This is notable only if you, like most bond investors, tend to hold it a shorter time, selling it before maturity. So if you sell a bond before maturity during a period of rising interest rates, the value of the bond may be less than it was when you purchased it.

The main features of a bond issue that you need to know are:

Coupon Rate – This is the interest rate that will be paid to you on this loan. You should also know when it is paid. Usually this is once or twice per year on specified dates.

Maturity Date – This is the date the loan becomes due and payable. On this date the company will pay back the principal you loaned to them.

Call Provisions – Some bonds come with a right of the borrower to pay back the loan proceeds early. Some are non-callable. Those that are callable are usually paid back at a higher price than you paid originally when the early option is exercised. Note that when a bond issue is callable and interest rates are falling, the company will often find it financially advisable to buy back your bond with the proceeds from a new bond issue at the new lower rates.

The biggest risk in bond investment is that the issuer will go out of business. This is why federal bonds are so popular; there is virtually no chance of the federal government going out of business! Federal treasury bonds are amongst the most secure investments you can make. Corporate bonds, however, are a different story. Any company can go out of business for any number of reasons. If you have an investment in a company’s bonds when this happens, your investment is almost worthless almost immediately. Bondholders DO have priority over stockholders, though, and will get paid first. Senior bondholders can even lay claim to physical assets upon liquidation of the company.

Bonds are a good fairly safe investment as long as you take these risk factors into effect. A good mix if corporate, federal and local government bonds is advisable. Even throwing some junk bonds with high interest rates could be profitable. Diversification lowers risk, even in the bond market.

Solve Funding Issues to Finance SME’s Growth Plans

SME’s are developing rapidly and flourishing enormously worldwide. Since its initiation and establishment, there some extremely important and basic requirements to be met and adopted. These requirements include; infrastructure and employment requirements, a developed information technology infrastructure along with funding sources, which is the most important aspect of the sustainability of these SME’s.

Funding sources are the strengthening pillars for such small and medium-sized enterprises.

SME (small to medium enterprise) is a convenient term for categorizing businesses and other organizations that are somewhere between “small office-home office” (SOHO) size and the larger enterprise.

Unavailability of timely and adequate funds has an immense adverse effect on the growth of these SME’s which in turn affects the growth of the Indian economy. Such insufficient funding sources serve as the crucial barrier in the development and sustenance of SME’s.

The economic development in India is hugely dependent on the performance of small or micro and medium enterprises. They are the powerhouse of innovation, entrepreneurial spirit and enormous talent, which is required for the nation’s development in the economic sector.

Indian SME sector:

This sector contributes to the industrial output, provides employment to masses. They also contribute widely in exports. These organizations produce quality products for national and international markets.

The presence of SME’s is greatly acknowledged. The manufacturing sector is rapidly advancing because of the contribution of these organizations.

Undoubtedly, these SME’s are performing their best, despite their limited sources. Still, there are multiple cases of these organizations facing funding issues.

The solution for funding issues faced by SME’s:

The government has been taking initiatives like setting up the National Manufacturing Competitiveness Council, announcing National Manufacturing Policy (NMP) and much more to energize and boost the manufacturing sector.

Banks have made stable strides to support SME’s. However, such approaches by banks for funding are limited and restricted because by controlling and managing risk, they ultimately create value. Thus, banks are not always a rightful solution as a funding source.Access to capital markets is rare, in the case of SME’s. Therefore, such organizations hugely depend on borrowed funds from some financial institutions and banks.

Mostly commercial banks provide extended working capital and financial institutions provide investment credits. Universal banking services, working capital, and term loans are becoming available for SME’s for funding.Meanwhile, the traditional requirements of finance are still actively in use, for creating the asset and working capital.Globalization is generating a demand for introduction and development new financial and support services.

The RBI should issue necessary guidelines to all banks on credit flow. Moreover, the Government should work rigorously to create an environment conducive for growth for the SMEs that restrains the need for capital and debt.

Setting up SME-targeted banks that provide priority to lending to the SME sector.

Financing schemes for SMEs can be formulated and be beneficial. These might be highly risky, but promises great returns. There is also a need for a reduction in the interest rates. SMEs has been paying high-interest rates for bank loans. The loan structure should restructure, on an urgent basis as lower interest rates are an extremely important need for SME’s.

Delayed payments are yet another major area of concern for SME’s that lead to reduced working capital.

Recycling of funds and various business operations are majorly affected due to delay in dues settlement. Defaulting customers are mostly large enterprises and the SMEs due to fear of losing business are not able to report against them.

An automated portal could be established by the government, wherein SMEs makes available their customer detailings.The government can also send automated reminders to defaulting organizations, in the cases of payment defaults.

As it is well known all over that, for the government, the Budget is an occasion to set up new financial goals and economic goals, allocate financial resources and provide policy directions. During Budget presentations, the Finance Minister announces new policies, schemes, projects and allocates finance for the development of several sectors of the economy, to meet the overall goals of socioeconomic growth.

For SMEs, the potential sources of finance are very limited. However, their usefulness is limited because of mostly practical problems. Crowdfunding also supplies chain financing are some funding sources.

Some more funding sources for SME’s

The owner, family, and friends of SME

An excellent source of finance. Mostly, such investors, invest not just for financial gains and are willing to accept lower returns than other investors. However, the key limitation, for most of these organizations, is that, that the finance they can build personally, from friends and family, is limited.

Trade credit

SMEs can take credit from their respective suppliers. It is however just short-term and, if the suppliers are big companies who have identified and categorized them as potentially risky SME, the possibility to extend may be limited, for the credit period.

The business angel

A wealthy individual who is willing to take the risk of investing in SMEs. However, they are just found in rarity. Once such an individual is interested they can become useful to the SME, as they have great business plans and contacts.

Factoring and invoice discounting

These sources help the organizations to raise finance. It is only short-term and is mostly more costly than an overdraft. However, with the SME growth rate, their receivables will grow thereby the amount they can borrow from invoice discounting will also rapidly growing.

Leasing

Leasing assets is a better option rather than buying.them, as it avoids to raise the capital cost. However, leasing is mostly possible on tangible assets.

Listing

An SME can become quoted by acquiring a listing on the stock exchange. Thus, raising finance would become less of an issue. But before listing can be considered the organization must grow to the considerable size that a listing is feasible.

Supply chain financing

SCF is new and is somehow different than the methods of traditional working capital financing, such as offering settlement discounts, as it promotes collaboration between the buyers and sellers in the supply chain.

The venture capitalist

A venture capitalist organization is mostly a subsidiary of a company that has worthy cash holdings and might need to be invested. Such subsidiaries are at high-risk, potentially high-return part of their investment portfolio. To attract venture capital funding, such organization has to have a business strategy and idea, that may help to create, high returns that the venture capitalist is seeking. Thus, operating in regular business, venture capitalist financing may be impossible for many SME’s.

The above mentioned are the various solutions for SME’s to deal with the issue insufficient funding sources.

Tracking and Managing Help Desk Trouble Tickets Or Support Issues With Hosted SharePoint Template

Free SharePoint Software Template for Tracking and Managing Trouble Tickets or Help Desk Support Issues

Help desks are the pivotal point for end user and customer support. An effective help desk management software system is a key factor determining the success of a support department and needs the ability to track all help desk support issues or trouble tickets from opening to escalation to resolution. Well managed help desk services ascertain maximum return on investment in systems and technology.

Organizations are looking at deploying robust web-based Help Desk solutions which are cost effective and easy to implement. In order to gain better control of help desk activities, it is essential to have a system in place that provides all relevant information pertaining to each service request. For improving operational efficiencies, it is important to constantly provide adequate support and enhanced service to end users and customers. The help desk system should provide end-to-end visibility of help desk issues or trouble tickets, thus allowing tracking of issues and reducing time taken for resolution.

Windows SharePoint Services 3.0 hosting software provides application templates that enable organizations to manage their day-to-day operations. The Help Desk application template is one of Microsoft’s SharePoint software templates that aids in effective help desk management. The Help Desk software template manages the entire process of handling service requests right from the time a request is raised till such time that it is resolved. Team members can login to the Help Desk site to identify open service requests. The template also helps in identification of root cause of issues. It allows tracking the status of each trouble ticket or service request to the support desk. Thus, unresolved trouble tickets or service requests can be identified and the necessary action taken. The template features role-based dashboards which provide information on performance history of customer service representatives. This helps the management to track the overall metrics of team performance.

Windows SharePoint Services 3.0 software templates are included free of cost with hosted SharePoint software service plans. These templates help in maintaining a collaborative environment and facilitate information sharing. These applications can be easily scaled to meet your business requirements. The basic hosted SharePoint software plans cost only $8.95 per month with access for unlimited users from hosted SharePoint service providers such as Apps4Rent. Also available additionally is a free set of 40 SharePoint software hosting templates developed by Microsoft. The SharePoint software hosting templates are available instantly after signing up for a low price SharePoint hosting plan. They include variety of features like dashboards, alerts, discussion and surveys.