A Latin Impact on the Finance Industry

Financial Institutions are a fantastic business model to learn from when considering ever changing market conditions. Their traditional target markets are stable, but, the needs of an emerging market, the Latino market is extremely underserved. It is certainly not for lack of money. Many Latinos have zero debt and healthy saving habits. The question arises, are financial institutions doing enough to serve this population? Are they adapting to the Latino needs? The answer is complicated.

There are two types of Latinos in the USA. One is the immigrant seeking a better life and wanting the American dream, whether they came through the proper channels or not it is irrelevant. The second, are the Latinos that are born here. These are two very different groups of people with different needs and goals. Most immigrants bring their culture, traditions, and customs with them to the US. Those born here develop a blended culture that is both Latino and American.

Financial Institutions are taking notice and making strides to accommodate this very economically influential population. The main reason is that there is a lot of investment in education and developing trust. An untold detail is that in Latino countries, people do not trust banks and financial institution because of corruption. Everything is paid in cash and there are no debt or traditional credit scores. This means that the Latino community have cash, probably stored under their mattress or in a shoe box. This is very dangerous considering that a house fire could burn an entire life savings. Another scenario is they could become a target for robbery. This is a foreign concept for Americans. What is happening is a huge learning curve, educating them on the process of building credit, saving their money in a financial institution, getting loans (mortgage, car, etc.), and most important having trust in the financial institutions.

The younger generations that are born here learn from their parents and surroundings. There is still a disconnect from the importance of financial products, building credit, and how that process works. Many of these young people are just translating for their parents, explaining financial products, and become an intermediary for conducting business. You will notice an increase in bilingual support at many financial institutions for this reason. There is still a lot of work to do in this regard, and this process will take time.

However, more and more financial institutions are offering products specific to Latinos. Information is becoming available in Spanish and more financial institutions are hiring bilingual and multi-lingual speakers. It will be interesting to see how we as a country adapt to this important demographic. It is truly an untapped market that has an important function in our economy for growth and stability.

Bold Money Conversations That Can Change Your Life

I recently returned from Kendall SummerHawk’s Feminine Money Mastery event, where women from all around the globe (and a few cool guys as well) gathered to improve their relationship with money. One of the most interesting aspects of this conference for me was learning to identify where we need to have “courageous money conversations” in our lives. These conversations are the ones we often avoid, as they bring up all sorts of disempowering money beliefs. We discussed how to make these conversations a routine practice and give them a methodology so that they aren’t as daunting to embark upon.

Powerful conversations can follow a format that eases some of the tension. Follow these steps and engage in, rather than avoid, the money talks that change your life.

1. Take a moment before the conversation to breathe and set your intention for the way you want the discourse to go. Decide on the outcome you want ahead of time and be very clear in your own mind before the other person is present.

2. Be free from emotion and set the agenda with the other party. Inform them as to the reason for the discussion, the outcome you desire, and the discussion points you plan to cover.

3. Stop and listen. Make sure the other party has a chance to say their piece and that they know you hear them. Repeat back and summarize their ideas – whatever you can do to establish that you understand what they are saying.

4. Offer several options for resolving the situation in various ways, if at all possible.

Find agreement, even if it’s to go to another decision-maker, and detail the subsequent steps, including who will do what, by when. Be sure to close the conversation positively.

After returning home from the conference, I immediately put this methodology to use and had two such conversations. I have been breathing a sigh of relief ever since! While it is important to take on these conversations under any circumstances, if you are intent on making a career shift or growing your business, this is a skill that is especially helpful and will pull you forward dramatically.

When you avoid courageous money conversations, you can be inadvertently sabotaging your own success. For example, a mom was recently telling me about her daughter, who has a job she loves. She is appreciated by her employer, coworkers, and customers, and received a promotion four months ago. She has not, however, received a salary increase to go with the promotion. Instead of having the conversation that needs to be had about the salary increase, she decided to look for another job. Objectively, this seems ridiculous, but she is so averse to having the necessary salary conversation that she has created a story in her head about what this all means and is taking a somewhat misguided action in response. For her, she believes it may actually be easier to land a new position than to have a money conversation where she would be championing her value to the company.

Similar to this case, when I work with clients, I often see two primary challenges:

1. Putting a voice to owning their value, and believing it as well. Examples include stating their fees, saying no to a discounted fee, or negotiating their salary.

2. Speaking honestly about an issue that makes them feel vulnerable. For example, discussing business plans with a spouse or renegotiating a loan they are having trouble paying.

Of course, taking a stance for your money will feel awkward at first. However, once you get a few of these conversations under your belt, you will be looking ahead for the next one! It’s about building a muscle over time that will increase your power across the board. Don’t be afraid to jump in headfirst – I promise you will be glad you did.

Michelle is the CEO and founder of Limit Free LifeĀ®, a coaching and personal development company designed to help clients discover and transition into careers or business ventures that satisfy their souls. As a former CPA, business consultant and now a certified business coach,she combines a strong background in finance and transition management with an intuitive coaching style.

Is Invoice Finance a Credible Alternative to Bank Loans?

Invoice finance (IF) is not considered a credible source of finance among some business owners because of its relatively high cost and onerous terms. Is this perception justified? I will argue it is not with the introduction of single invoice finance.

What is invoice finance?

It is the sale of a company’s sales ledger for cash providing an ongoing source of cash as invoices are issued to customers by the company. The company might retain the collection of cash or transfer this and the associated credit risk, to the funder.

Some conventional IF facilities can impose numerous types of fees and charges, and require security and a commitment from the company to sell the its entire sales ledger to the finance company.

Some companies offer a refreshing financial alternative, offering to buy just a single invoice and charging as few as just one fee and generally offering a more flexible funding alternative.

What is single invoice finance?

As its name suggests, it is the purchase of one invoice for cash from a company. The company does not need to sell any further invoices so single invoice finance can be used by companies to raise cash as they need it. Also, they might not need to provide security such as a debenture or a personal guarantee.

Single or multiple IF are effective tools for cash management because they liquidate illiquid assets i.e., they convert debtors into cash. The cash realised can be reinvested by the company in profitable projects or used to pay back expensive debt.

Some borrowers might argue that on an annualised basis, the cost of invoice finance is high compared to a conventional loan. That comparison is like comparing apples to oranges because the two financing instruments work differently. A loan is a continuous source of finance whereas single invoice finance is discrete – providing finance for up to 90 days or less. Annualisation of the cost of invoice finance is not therefore consistent with its use.

Though the interest rate on a loan might look relatively attractive, the cost of arranging and administering it must also be factored in, such as the arrangement, commitment, non-utilisation, and exit fees, plus servicing charges and legal costs of documentation. There might also be costs to pursue and recover bad debts, or to pay for credit protection. Invoice finance has its own arrangement and administration costs that might be more or less than a bank loan.

Invoice finance is therefore a credible alternative to a loan because:

it converts a company’s debtors into cash that may then be reinvested to potentially generate positive return for the company.
the company can transfer debtor credit risk.
it avoids using up a bank’s limited credit capacity for a company and
it diversifies the company’s sources of funds so reducing its reliance on the banking sector.
companies can use it to raise cash as needed
security might not be needed