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Finance Terms UK

We've put together a hub for all the finance terms you'll need to know for running your business.

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Our reviews are based on realtime feedback 

Our reviews are based on realtime feedback 

It's important to understand all the key financial terms when running a business - even the most experienced of us need to be reminded of a definition every now and then!

To help, we’ve put together a list of the most common terms you're likely to come across as an SME and how to understand them for future use.

Current Ratio - Current ratio compares a company’s current assets to its current liabilities, essentially measuring a company’s ability to fulfil short-term financial obligations.

Compound Interest - Compound interest is a very common concept in the world of finance, and refers to the interest on savings being applied based on the initial sum as well as the accumulated interest from previous periods.

Profit and Loss Statement - Also shortened to P&L statement, and similar to income statements, this document reports on the costs, expenses and revenues accrued over a selected time frame.

Quick Ratio - Quick ratio, sometimes knows as the quick assets ratio or the acid test, is a way to identify and indicate a company’s short-term liquidity – its ability to meet it’s short-term obligations.

Fiscal Policy - Fiscal policy refers to a government’s approach to public spending and taxation, and how these influence economic conditions such as inflation, employment, and demand for goods and services.

Debt to Equity Ratio - The debt to equity ratio, also known as risk ratio, is a calculation used to appraise a company’s financial leverage based on its shareholder equity.

Merchant Cash Advance - If a business takes payments for its goods or services via a card terminal or through an online payment process then merchant cash advances are a way of raising unsecured finance.

Balance Sheet - Similar to bank statements, balance sheets are a financial statement that reports a company’s assets, liabilities and owners’ equity at a particular point in time.

Bank Statement - A bank statement is a document that details and summarises all your transactions, and is prepared and sent to you by your bank at the end of every month.

Working Capital - Working capital is a measure of a company’s financial health and shows the difference between current assets and current liabilities.

Business Model - A business model refers to a company’s plan to ensure successful operation and profitability.

Capital Employed - Capital employed, also known as funds employed, is a figure commonly used to measure a company’s profitability and efficient use of capital.

Gross Margin - Gross profit margin, also known as gross margin, is a financial metric used to measure just how effective and efficient a business is at managing its operations.

Intangible Assets - Intangible assets are those assets that are not typically physical in nature and have no material substance. Almost all intangible assets will have no physical form but will provide value to businesses and their owners.

Liquidity Ratio - A liquidity ratio is a measurement which is used to indicate whether a debtor will be able to pay their short-term debt off with the cash they have readily available, or whether they’ll need to raise additional capital to cover the amount.

Return on Equity - Return on equity (ROE) is a financial measure that provides investors with insight into a company’s profitability in relation to stockholder equity.

Return on Investment - Return on investment is a performance measure used to calculate exactly how effective your investments into your business are at generating income.

Supply Chain Management - Supply chain management is, simply put, the management of the flow of goods and services and includes all the processes that transform raw materials into final products.

Net Income - Net income, which is also sometimes referred to as net earnings, is revenue minus expenses, interest and taxes.

Opportunity Cost - Opportunity costs are what investors and investing businesses used to describe the gains or benefits that those investors and businesses lose out when they choose one opportunity over the other.

Pro Rata - Pro rata essentially means allocating something in equal proportions, or ensuring someone is receiving their fair share.

Liquidity - Liquidity describes a business or person’s ability to easily convert assets into cash to spend or invest as needed.

Insolvency - Insolvency is a situation that occurs when a company or individual can’t pay their debts or creditors in full when they are due.

Gross Income - Gross income refers to the total pay an individual receives before taxes and other deductions, and can also refer to the gross income of an organisation or business.

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  • Have you thought about Invoice Finance as a cash flow solution for your business?

    Invoice finance allows you to release cash quickly from your unpaid invoices.

    As your lender, we can release up to 90% of your invoices within 24 hours. On payment of the invoice from your customers, we will then release the final amount minus any fees and charges. There are different types of invoice financing options available to businesses depending on the situation and the level of control they require in collecting unpaid invoices.

    We are an invoice financing company who offer a solution whereby payments are collected on your behalf managed by our team of expert credit controllers so you can focus on running your business. Our Confidential Invoice Discounting solution is offered to businesses who want to maintain their own credit control processes, therefore this remains strictly confidential so your customers are unaware of our involvement.

    The benefits of invoice finance companies such as Hitachi Capital
      • Boost your cashflow without having to wait up to 120 days for your customers to pay you
      • An invoice finance company with a revolutionary digital onboarding process, giving you quicker access to funds and the ability to take on new business remotely during this lockdown period
      • Release up to 90% of the invoice straight away, and the final 10% when the invoice is settled
      • No need to chase your invoices, we can do it for you
      • 6 month trial period followed by a rolling contract

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Why choose Hitachi Capital as your invoice factoring company?

      • A 6 month trial period so you can be sure the product is right for you
      • Followed by a 6 month rolling contract – we don’t tie our clients in for long periods
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Smarter, Faster and Simpler Cashflow Finance with Hitachi Capital

Smarter, Faster and Simpler Cashflow Finance with Hitachi Capital

Smarter, Faster and Simpler Cashflow Finance with Hitachi Capital

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