Glossary

Cash flow is the net amount of cash and cash-equivalents moving into and out of a business. Positive cash flow indicates that a company’s liquid assets are increasing, enabling it to settle debts, reinvest in its business, return money to shareholders, pay expenses and provide a buffer against future financial challenges. Negative cash flow indicates that a company’s liquid assets are decreasing. Net cash flow is distinguished from net income, which includes accounts receivable and other items for which payment has not actually been received. Cash flow is used to assess the quality of a company’s income, that is, how liquid it is, which can indicate whether the company is positioned to remain solvent.

Cash flow advice is the process of monitoring, analyzing, and adjusting your cash flows through use of a professional adviser.

A comparison rate is a tool to help consumers identify the true cost of a loan. It factors in the interest rate, fees and charges and displays a single percentage rate that can be used to compare various loans from different lenders.

Credit repair is the process of fixing a bad credit report, for whatever reason it deteriorated in the first place. It may be as simple as fixing mistakes with the credit agencies. Identity theft may require extensive credit repair work. The second form of credit repair is to deal with fundamental financial issues, such as budgeting, and begin to address legitimate concerns on the part of lenders.

Debt consolidation means taking out a new loan to pay off a number of liabilities and consumer debts, generally unsecured ones. In effect, multiple debts are combined into a single, larger piece of debt, usually with more favorable pay-off terms: a lower interest rate, lower monthly payment or both. Consumers can use debt consolidation as a tool to deal with student loan debt, credit card debt and other types of debt.

A debt counsellor is a trained professional but more importantly they are able to emotionally detach themselves from each situation and provide you with good solid advice to assist you.

The reorganisation of debt in any shape or form, so as to provide the indebted party with a measure of relief, either fully or partially, from a huge debt burden. Debt reduction can take a number of forms: reducing the outstanding principal amount (either partly or fully), lowering the interest rate on loans due, extending the term of the loan and so on. 

Creditors may only be willing to consider debt relief measures when the repercussions of debt default by the indebted party or parties are perceived as being so severe that debt mitigation is a better alternative. Debt relief may be extended to any highly-indebted party, from individuals and small businesses, to large companies, municipalities and sovereign nations.

A loan given by a bank, mortgage company or other financial institution for the purchase of a primary or investment residence. In a home mortgage, the owner of the property (the borrower) transfers the title to the lender on the condition that the title will be transferred back to the owner once the payment has been made and other terms of the mortgage have been met.

A home mortgage will have either a fixed or floating interest rate, which is paid monthly along with a contribution to the principal loan amount. As the homeowner pays down the principal over time, the interest is calculated on a smaller base so that future mortgage payments apply more towards principal reduction as opposed to just paying the interest charges. In order to estimate the total cost of your monthly mortgage payments, it’s beneficial to use an online mortgage calculator.

Home mortgages allow a much broader group of citizens the chance to own real estate, as the entire sum of the house doesn’t have to be provided up front. But because the lender actually holds the title for as long as the mortgage is in effect, they have the right to foreclose the home (sell it on the open market) if the borrower can’t make the payments.

A home mortgage is one of the most common forms of debt, and it is also one of the most advised. Mortgage loans come with lower interest rates than almost any other kind of debt an individual consumer can find. 

A life insurance policy that a company purchases on a key executive’s life. The company is the beneficiary of the plan and pays the insurance policy premiums.

Also known as “key person insurance,” “key woman insurance” or “business life insurance.”

A life insurance policy that a company purchases on a key executive’s life. The company is the beneficiary of the plan and pays the insurance policy premiums.

Also known as “key man insurance,” “key woman insurance” or “business life insurance.”

Digital computation system that allows a borrower to project how much the monthly payment will be on a loan and how long it will take to repay the borrowed amount. A loan calculator factors in the repayment of interest and principal on the loan to determine how long it will take to pay off. This is a good tool for potential borrower to use to see if they will be able to afford the monthly payment on the loan. To receive the most accurate number, a borrower would have to ask the lender for the interest rate that they qualify for.

Moneysoft is an online, personal financial management tool that brings together all of your information, from multiple accounts and different locations, giving you one easy-to-use view of your finances.

Refinancing a mortgage means paying off an existing loan and replacing it with a new one. There are many common reasons why homeowners refinance: The opportunity to obtain a lower interest rate; the chance to shorten the term of their mortgage; the desire to convert from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage, or vice versa; the opportunity to tap a home’s equity in order to finance a large purchase; and the desire to consolidate debt. Some of these motivations have benefits and pitfalls. And because refinancing can cost between 3% and 6% of the loan’s principal and —like taking out the original mortgage — requires appraisal, title search and application fees, it’s important for a homeowner to determine whether his or her reason for refinancing offers a true benefit.

Insurance sold to a partnership. Most often, this insurance is purchased to aid the business in continuing to operate in case of the death or dismemberment of one partner. There are two plans most often used in partnership insurance. Under a cross purchase plan, each of the partners purchases life insurance on the other, with themselves listed as the beneficiary. If one partner dies, the surviving partner uses the payout of the life insurance to purchase the deceased partner’s interest in the company. This type of plan works best for a company with only two partners, while an entity plan works better for a team with multiple partners.

When a person chooses to leave the workforce. The concept of full retirement – being able to permanently leave the workforce in old age – is relatively new, and for the most part only culturally-widespread in first-world countries. Many developed countries have some type of national pension or benefits system to help supplement retirees’ incomes.

A series of compliance programs designed to ensure that the revenue the government collects and/or disburses in the form of refunds is accurate and timely, and that it issues disbursement of revenue only to entitled taxpayers.

A self managed super fund (SMSF) is a superannuation trust structure that provides financial remuneration to its members in retirement. The main difference between SMSFs and other super funds is that SMSF members are also the trustees of the fund.

A self managed super fund (SMSF) is a superannuation trust structure that provides financial remuneration to its members in retirement. The main difference between SMSFs and other super funds is that SMSF members are also the trustees of the fund.