IT Financing Offers Purchasing and Upgrade Solutions

Numerous businesses will be reliant on the installation of an advanced Information Technology (IT) system in order to remain competitive in their market. Without access to the technology offered by a cutting edge IT system, a business might not be very limited in how it conducts operations. That would definitely present a roadblock when trying to succeed in a competitive market. Also troubling would be the fact an old, outdated IT system can present all manner of security risks.

So, why do so many businesses rely on older, less productive IT systems? The answer is the businesses simply cannot afford to upgrade. Based on current cash flow projections, the business must remain reliant on using the IT infrastructure it currently has in place. Or does it? For those businesses wishing to upgrade but are short on available funds, it is possible to explore options for IT financing.

Financing IT Equipment Is No Different Than Procuring Other Types of Loans

The way the financing agreement works is a business would apply to borrow funds from a service that specializes in long or short term funding for IT needs. The borrower may seek full or partial financing for a purchase and then make the monthly payments as specified in the financing agreement. Access to such lending capital ensures that IT needs never have to be ignored due to cash flow concerns and liquidity never has to placed at risk in order to purchase new equipment.

That said, this type of IT financing is only one method. There is another way it can be done.

IT Financing as a Line of Credit

A service that offers financing for Information Technology may also present an agreement that comes in the form of a line of credit. Basically, when the time comes when your business needs to purchase new IT equipment or technology, funds can be accessed through a pre-approved line of credit. In addition to employing the line of credit to cover equipment costs and purchases, the line of credit can be used to cover repair work, software upgrades and other IT needs. Best of all, a line of credit can be accessed at any time. So, when a business requires immediate financing, it can simply take advantage of its available credit line.

The Benefits of Working with an IT Financing Service

In addition to gaining access to funds and protecting cash flow, there are other benefits that can be gained from working with a reputable financing service. The service could offer flexible payment plans. This can allow a business to better budget itself when it is seeking to upgrade or replace its current IT technology. Down payments may not be required which further lessens the costs of procuring financing. For those businesses in need of it, it might be possible to be afforded off balance sheet financing.

IT financing definitely offers a solution to concerns over the costs associated with maintaining an IT infrastructure. All business reliant on a reliable IT system should definitely take note of what financing options are available.

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Financial Definitions; A thru E

The ever increasing number of investment products and financial services in the marketplace today can be confusing. We have put together this glossary of financial definitions designed to help you understand some of the more common investment and financial terms you may encounter. Your financial advisor can explain these terms more completely and discuss with you those which are relevant to your situation.

Accrued Interest – The interest due on a bond since the last interest payment was made. The buyer of the bond pays the market price plus accrued interest.

Acquisition – The acquiring of control of one corporation by another. In “unfriendly” take-over attempts, the potential buying company may offer a price well above current market values, new securities and other inducements to stockholders. The management of the subject company might ask for a better price or try to join up with a third company.

ADR – American Depositary Receipt – a security issued by a U.S. bank in place of the foreign shares held in trust by that bank, thereby facilitating the trading of foreign shares in U.S. markets.

American Stock Exchange (AMEX) – The second largest stock exchange in the United States, located in the financial district of New York City. (Formerly known as the Curb Exchange from its origin on a Manhattan street.)

Amortization – Accounting for expenses or charges as applicable rather than as paid. Includes such practices as depreciation, depletion, write-off of intangibles, prepaid expenses and deferred charges.

Annual Report – The formal financial statement issued yearly by a corporation. The annual report shows assets, liabilities, revenues, expenses, earnings – how the company stood at the close of the business year, how it fared profit-wise during the year and other information of interest to shareowners.

Arbitrage – A technique employed to take advantage of differences in price. If, for example, ABC stock can be bought in New York for $10 a share and sold in London at $10.50, an arbitrageur may simultaneously purchase ABC stock here and sell the same amount in London, making a profit of 50 cents a share, less expenses. Arbitrage may also involve the purchase of rights to subscribe to a security, or the purchase of a convertible security – and the sale at or about the same time of the security obtainable through exercise of the rights or of the security obtainable through conversion.

Assets – Everything a corporation owns or due to it: cash, investments, money due it, materials and inventories, which are called current assets; buildings and machinery, which are known as fixed assets; and patents and goodwill, called intangible assets.

Assignment – Notice to an option writer that an option holder has exercised the option and that the writer will now be required to deliver (receive) under the terms of the contract.

Auction Market – The system of trading securities through brokers or agents on an exchange such as the New York Stock Exchange. Buyers compete with other buyers while sellers compete with other sellers for the most advantageous price.

Averages – Various ways of measuring the trend of securities prices, one of the most popular of which is the Dow Jones average of 30 industrial stocks listed on the New York Stock Exchange. The prices of the 30 stocks are totaled and then divided by a divisor that is intended to compensate for past stock splits and stock dividends and that is changed from time to time. As a result, point changes in the average have only the vaguest relationship to dollar price changes in stocks included in the average.

Balance Sheet – A condensed financial statement showing the nature and amount of a company’s assets, liabilities and capital on a given date. In dollar amounts the balance sheet shows what the company owned, what it owed, and the ownership interest in the company of its stockholders.

Basis Point – One gradation on a 100-point scale representing one percent; used especially in expressing variations in the yields of bonds. Fixed income yields vary often and slightly within one percent and the basis point scale easily expresses these changes in hundredths of one percent. For example, the difference between 12.83% and 12.88% is 5 basis points.

Bear – Someone who believes the market will decline.

Bear Market – A declining market.

Bearer Bond – A bond that does not have the owner’s name registered on the books of the issuer. Interest and principal, when due, are payable to the holder.

Bid and Asked – Often referred to as a quotation or quote. The bid is the highest price anyone wants to pay for a security at a given time, the asked is the lowest price anyone will take at the same time.

Block – A large holding or transaction of stock – popularly considered to be 10,000 shares or more.

Blue Chip – A company known nationally for the quality and wide acceptance of its products or services, and for its ability to make money and pay dividends.

Blue Sky Laws – A popular name for laws various states have enacted to protect the public against securities frauds. The term is believed to have originated when a judge ruled that a particular stock had about the same value as a patch of blue sky.

Bond – Basically an IOU or promissory note of a corporation, usually issued in multiples of $1,000 or $5,000, although $100 and $500 denominations are not unknown. A bond is evidence of a debt on which the issuing company usually promises to pay the bondholders a specified amount of interest for a specified length of time, and to repay the loan on the expiration date. In every case a bond represents debt – its holder is a creditor of the corporation and not a part owner as is the shareholder.

Book Value – An accounting term. Book value of a stock is determined from a company’s records, by adding all assets then deducting all debts and other liabilities, plus the liquidation price of any preferred issues. The sum arrived at is divided by the number of common shares outstanding and the result is book value per common share. Book value of the assets of a company or a security may have little relationship to market value.

Broker – An agent who handles the public’s orders to buy and sell securities, commodities or other property. For this service a commission is charged.

Brokers’ Loans – Money borrowed by brokers from banks or other brokers for a variety of uses. It may be used by specialists to help finance inventories of stock they deal in; by brokerage firms to finance the underwriting of new issues of corporate and municipal securities; to help finance a firm’s own investments; and to help finance the purchase of securities for customers who prefer to use the broker’s credit when they buy securities.

Bull – One who believes the market will rise.

Bull Market – An advancing market.

Callable – A bond issue, all or part of which may be redeemed by the issuing corporation under specified conditions before maturity. The term also applies to preferred shares that may be redeemed by the issuing corporation.

Capital Gain or Capital Loss – Profit or loss from the sale of a capital asset. The capital gains provisions of the tax law are complicated. You should consult your tax advisor for specific information.

Capital Stock – All shares representing ownership of a business, including preferred and common.

Capitalization – Total amount of the various securities issued by a corporation. Capitalization may include bonds, debentures, preferred and common stock and surplus. Bonds and debentures are usually carried on the books of the issuing company in terms of their par or face value. Preferred and common shares may be carried in terms of par or stated value. Stated value may be an arbitrary figure decided upon by the director or may represent the amount received by the company from the sale of the securities at the time of issuance.

Cash Flow – Reported net income of a corporation plus amounts charged off for depreciation, depletion, amortization, and extra-ordinary charges to reserves, which are bookkeeping deductions and not paid out in actual dollars and cents.

Cash Sale – A transaction on the floor of the Stock Exchange that calls for delivery of the securities the same day. In “regular way” trade, the seller is to deliver on the third business day, except for bonds, which are the next day.

Certificate – The actual piece of paper that is evidence of ownership of stock in a corporation. Watermarked paper is finely engraved with delicate etchings to discourage forgery.

Certificate of Deposit (CD) – A money market instrument issued by banks. The time CD is characterized by its set date of maturity and interest rate and its wide acceptance among investors, companies and institutions as a highly negotiable short-term investment vehicle.

Certified Funds Specialist (CFS)- This designation is for financial planners and investment advisors who focus more on investments using mutual funds. The CFS designation indicates advisors who are qualified to consult with clients on the advisability and costs of acquiring or retaining mutual funds in their investment portfolio.

Christian Financial Planner – A financial planner that follows financial wisdom in the Bible for their clients. The Bible has over 2000 verses that deal with finances on subjects such as: budgeting, planning, saving, eliminating debt, investing and inheritance.

CFTC – The Commodity Futures Trading Commission, created by Congress in 1974 to regulate exchange trading in futures.

Collateral – Securities or other property pledged by a borrower to secure repayment of a loan.

Commercial Paper – Debt instruments issued by companies to meet short-term financing needs.

Commission – The broker’s basic fee for purchasing or selling securities or property as an agent.

Commission Broker – An agent who executes the public’s orders for the purchase or sale of securities or commodities.

Common Stock – Securities that represent an ownership interest in a corporation. If the company has also issued preferred stock, both common and preferred have ownership rights. Common stockholders assume the greater risk, but generally exercise the greater control and may gain the greater award in the form of dividends and capital appreciation. The terms common stock and capital stock are often used interchangeably when the company has no preferred stock.

Competitive Trader – A member of the Exchange who trades in stocks on the Floor for an account in which there is an interest. Also known as a Registered Trader.

Conglomerate – A corporation that has diversified its operations usually by acquiring enterprises in widely varied industries.

Consolidated Balance Sheet – A balance sheet showing the financial condition of a corporation and its subsidiaries.

Consolidated Tape – The ticker tape reporting transactions in NYSE listed securities that take place on the NYSE or any of the participating regional stock exchanges and other markets. Similarly, transactions in AMEX listed securities, and certain other securities listed on regional stock exchanges, are reported on a separate tape.

Convertible – A bond, debenture or preferred share that may be exchanged by the owner for common stock or another security, usually of the same company, in accordance with the terms of the issue.

Correspondent – A securities firm, bank or other financial organization that regularly performs services for another in a place or market to which the other does not have direct access. Securities firms may have correspondents in foreign countries or on exchanges of which they are not members. Correspondents are frequently linked by private wires. Member organizations of the NYSE with offices in New York City may also act as correspondents for out-of-town member organizations that do not maintain New York City offices.

Coupon Bond – Bond with interest coupons attached. The coupons are clipped as they come due and presented by the holder for payment of interest.

Covered Option – An option position that is offset by an equal and opposite position in the underlying security.

Crown Financial Ministries – A Christian ministry started by Larry Burkett and Howard Dayton to help equip Christians become better financial stewards. They offer help in Biblical financial management such as: budgeting, debt elimination, saving, investing and inheritance.

Cumulative Preferred – A stock having a provision that if one or more dividends are omitted, the omitted dividends must be paid before dividends may be paid on the company’s common stock.

Cumulative Voting – A method of voting for corporate directors that enables the shareholders to multiply the number of their shares by the number of directorships being voted on and to cast the total for one director or a selected group of directors. A 10-share holder normally casts 10 votes for each of, say 12 nominees to the board of directors. One thus has 120 votes. Under the cumulative voting principle, one may do that or may cast 120 (10 x 12) votes for only one nominee, 60 for two, 40 for three, or any other distribution one chooses. Cumulative voting is required under the corporate laws of some states and is permitted in most others.

Current Assets – Those assets of a company that are reasonably expected to be realized in cash, sold or consumed during one year. These include cash, U.S. Government bonds, receivables and money due usually within one year, and inventories.

Current Liabilities – Money owed and payable by a company, usually within one year.

Day Order – An order to buy or sell which, if not executed, expires at the end of trading day on which it was entered.

Dealer – An individual or firm in the securities business who buys and sells stocks and bonds as a principal rather than as an agent. The dealer’s profit or loss is the difference between the price paid and the price received for the same security. The dealer’s confirmation must disclose to the customer that the principal has been acted upon. The same individual or firm may function, at different times, either as a broker or dealer.

Debenture – A promissory note backed by the general credit of a company and usually not secured by a mortgage or lien on any specific property.

Debit Balance – In a customer’s margin account, that portion of the purchase price of stock, bonds or commodities that is covered by credit extended by the broker to the margin customer.

Delayed Opening – The postponement of trading of an issue on a stock exchange beyond the normal opening of a day’s trading because of market conditions that have been judged by exchange officials to warrant such a delay. Reasons for the delay might be an influx of either buy or sell orders, an imbalance of buyers and sellers, or pending corporate news that requires time for dissemination.

Depository Trust Company (DTC) – A central securities certificate depository through which members effect security deliveries between each other via computerized bookkeeping entries thereby reducing the physical movement of stock certificates.

Depreciation – Normally, charges against earnings to write off the cost, less salvage value, of an asset over its estimated useful life. It is a bookkeeping entry and does not represent any cash outlay nor are any funds earmarked for the purpose.

Director – Person elected by shareholders to serve on the Board of Directors. The directors appoint the president, vice presidents, and all other operating officers. Directors decide, among other matters, if and when dividends shall be paid.

Discount – The amount by which a preferred stock or bond may sell below its par value. Also used as a verb to mean “takes into account” as the price of the stock has discounted the expected dividend cut.

Discretionary Account – An account in which the customer gives the broker or someone else discretion to buy and sell securities or commodities, including selection, timing, amount, and price to be paid or received.

Diversification – Spreading investments among different types of securities and various companies in different fields.

Dividend – The payment designated by the Board of Directors to be distributed pro rata among the shares outstanding. On preferred shares, it is generally a fixed amount. On common shares, the dividend varies with the fortunes of the company and the amount of cash on hand, and may be omitted if business is poor or the directors determine to withhold earnings to invest in plant and equipment. Sometimes a company will pay a dividend out of past earnings even if it is not currently operating at a profit.

Dollar Cost Averaging – A system of buying securities at regular intervals with a fixed dollar amount. Under this system investors buy by the dollars’ worth rather than by the number of shares. If each investment is of the same number of dollars, payments buy more shares when the price is low and fewer when it rises. Thus temporary downswings in price benefit investors if they continue periodic purchases in both good times and bad and the price at which the shares are sold is more than their average cost.

Dow Theory – A theory of market analysis based upon the performance of the Dow Jones industrial and transportation stock price averages. The theory says that the market is in a basic upward trend if one of these averages advances above a previous important high, accompanied or followed by a similar advance in the other. When the averages both dip below previous important lows, this is regarded as confirmation of a downward trend. The Dow Jones is one type of market index. (See: NYSE Composite Index)

Earnings Report – A statement – also called an income statement – issued by a company showing its earnings or losses over a given period. The earnings report lists the income earned, expenses and the net result. (See: Balance Sheet)

Equipment Trust Certificate – A type of security, generally issued by a railroad, to pay for new equipment. Title to the equipment, such as a locomotive, is held by a trustee until the notes are paid off. An equipment trust certificate is usually secured by a first claim on the equipment.

Equity – The ownership interest of common and preferred stockholders in a company. Also refers to excess of value of securities over the debit balance in a margin account.

Ex-Dividend – A synonym for “without dividend.” The buyer of a stock selling ex-dividend does not receive the recently declared dividend. When stocks go ex-dividend, the stock tables include the symbol “x” following the name. (See: Cash Sale, Net Change, Transfer)

Exercise – Action taken by an option holder that requires the writer to perform the terms of the contract.

Exercise Prices – The prices at which an option may be exercised. Also called strike prices.

Expiration Date – The date the option contract expires.

Ex-Rights – Without the rights. Corporations raising additional money may do so by offering their stockholders the right to subscribe to new or additional stock, usually at a discount from the prevailing market price. The buyer of a stock selling ex-rights is not entitled to the rights.

Extra – The short form of “extra dividend.” A dividend in the form of stock or cash in addition to the regular or usual dividend the company has been paying.

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