What is interest? Account for variation in rates of interest on loans of different kinds.

Interest is the price paid by borrower to the lender for the sue of loan able funds during a certain period. It is normally expressed as a percentage on the funds loaned or borrowed. In the word of Esthan, “Interest is the payment for parting with the advantage of liquid control of money balances.”

According to Betch, “Interest is the price paid for use of money or credit.”

There is an element of monopolistic competition in the money market in as much as different borrowers are charged different rates of interest. It may be noted however, the pure interest tends to be the same if calculated over the same period of time in the same money market. The actual differences that prevail are difference in the degrees of risk involved and inconveniences suffered by the lenders.

Differences in Pure Interest:

If pure interest is calculated over the same period of time in the same money market, it will tend to be the same. It can however differ in different markets on account of the following reasons.

1) Difference in the period of loan: If a borrower takes a long term loan from lender then he will charge a higher rate of interest than what he charges for short period loan. It is because the lender has to part with his money for a longer period, so he must demand a higher rate of interest.

Secondly in long term loan, the risk of the loss of funds due to dishonesty or incapability of the borrower is more than on a short term loan.

Thirdly businessmen demand money for fairly long period in order to invest that fund in fixed equipments, like building, machinery etc, so they are ready to pay higher rate of interest.

Fourthly, the lender hesitates to lockup their money for longer period, keeping in view the various risks involved. Due to all those factors stated above the supply of loan able funds runs short of demand for loan able funds, and the rate of interest goes up. On the other hand for short period, the risk for loss of capital is less than on long period. The supply is generally in excess of demand for this fund. So the rate of interest is usually low.

Short term and long term rates of interest generally move in the very same direction. If short term rate of interest is high, the long term rate of interest is also generally low.

2) Difference due to Distance: Pure interest can also differ due to difference in the distance of money market. It is the desire of every money lender to reduce the risk of non-payment of money. So they will prefer to invest their amounts near at home at a lower rate of interest than at a higher rate of interest at long distance.

3) Difference in Size of Loan: Pure interest can also differ due to the difference in the amount of loan demanded. The higher the amount demanded for loan, the higher the rate of interest and vice versa.

Difference in Gross Interest Rates:

Differences in rates of gross interest are mentioned as below.

1) Difference in the Social Status: If a borrower enjoys good reputation in the society for his honesty and prompt payment of loan or he can offer good security, then he can get loan at a comparatively low rate of interest.

2) Difference in Productivity: If the entrepreneur is satisfied that the investment of borrowed capital in a particular enterprise is profitable, then he will be ready to pay higher rate of interest. But he expects the reward to below, then naturally he will not be willing to pay higher rate of interest. Thus variations in gross interest can also arise due to the difference in productivity. In the words of Richard: “The interest rate charged on individual business is usually determined in the personal negotiation between Bank and borrowers. It reflects such attributes as the borrower’s size and general credit standing, the access to alternative credit source, the size and maturity of loan the character of the borrowers business, the value to the bank of his deposit amount and of other business relationship and the nature of security if any to be pledged.

Do you hate looking after the bookkeeping yourself?

Small business owners and owners of startups take care of almost every aspect of their business; everything from attending to the reception to presiding over client meetings. It is simple; the idea is to not hire too many employees by taking on as many tasks as they can. Many business owners are comfortable doing this unless it is a task they are not familiar with. Unfortunately bookkeeping comes under this list. Clearly it is something better done by bookkeepers, but not all businesses can afford to keep one full time. Therefore they try and do it themselves.  Although many find success in this over a period of time, it is just a time consuming task. It is mundane and commands a great deal of attention.

Do business owners have that kind of time?

No, time has to be made. Business owners hardly have time for sleep let alone time for bookkeeping. They have to make it, much against their will of course. So you must wonder if there is no other alternative. If there is no other way bookkeeping can be done without being a burden on the business owner.

No worries, there is a solution!

Such businessmen can go in and hire a remote bookkeeper. A remote bookkeeper is one who does the bookkeeping through remote access. Remote access is a system that can work as long as there is an internet connection. It is about giving the bookkeeper access to your computer whereby he/she can complete your bookkeeping tasks from right there. This way the documents never leave the safety of your computer. Remote bookkeeping has grown to be a real fad and has become a popular method to get bookkeeping done. It is very flexible, allowing the concerned personal’s to choose the hours and it is extremely cost effective. Business owners only have to pay for the bookkeeper’s time.

With this system in place you can safely transfer the burden of bookkeeping and other related paper work to a remote bookkeeper. 

Bookkeeping for businesses made easy

If you ever thought that you are spending more time for your business bookkeeping than necessary, it is better that you started looking for help from a bookkeeping firm. Because the other alternatives are not very pretty. 

An in-house bookkeeper might seem like a suitable option but then it is going to cost you a lot. If you are ready to pay a fortune to just get your books updated, you can go ahead with this. The cost would include hiring and training, installing computers and software, office space, bookkeeper’s salary and so on. If you think it is worth the cost, you could choose this. In most cases, it is not.

The other option is to use better bookkeeping software. A lot of accounting and bookkeeping applications have been released but the major issue is that they are quite complex. They are great for accountants – they know the language and it is easy for them to use. If you are a non-accountant it is going to be hard for you to get a hang of it. Apart from that it might be expensive. So you got two options ruled out.

But, you have not run out of solutions. You can always try outsourced bookkeeping. The main advantage of outsourcing is the cost reduction. The overheads are reduced since they are working from a different country. Therefore you have professionals working for you at a different place, at a lower cost. Why wouldn't anyone take the offer? Many people feel that outsourcing could be risky but as long as you ensure that all data security measures such as 128-bit encryption, 24/7 surveillance and other privacy policies are in place, you have nothing to worry.

Check out many firms and choose the best outsourced bookkeeping serviceprovider. You will then have more time to take care of your core business. 

Forgetting Your Financial Status No Longer Happens with Online Bookkeeping Service

While it’s quite common that businesses are to save their money to have a long run and at times they have to invest on the same. But still there is few business owners who keep their eyes close on without knowing their own budget. Only when you are to know the income and expenses of your own business you will be able to cut down the costs as well as to make your budget perfect. Still you can lower down your risks. Want to find how? Then here is the solution.

If it was your tax planning never happened, then you’re in the situation to travel ahead from managing your business consistently and in experiencing a larger benefit. Do you want to make your journey of business management in a soothing way? The right thing you have to do is to afford a better bookkeeping service. Proper bookkeeping and effective accounts management can lighten your burden with the day-to-day hassles in your business.

Scratching down your head for simple accounts now seems to be useless. You can now enjoy your dinner with your family, leaving your worries aside. Yes, the professional bookkeepers who are experts in managing all your books keeps you updated with all your daily expenses. No matter how small your transaction is, they keep the receipts of everything. They are supposed to have the knowledge with different accounting software’s too. Your additional funding and extra costs can now merely cut down.

Entrepreneurs can now focus on their core competencies and be relieved from such hassles. At same time, forgetting your financial updates now no longer happens! 
Hiring professional online bookkeeping services makes your business outfit to be the best always!