Category Archives for "Finance Options"

Commercial Bill Of Exchange Melbourne: Definition, Perks and Disadvantages

Commercial bill of exchange guide


A commercial bill of exchange refers to a formally written order which binds a party or organization to pay a sum of money to another party on a given date. A bill of exchange can be transferred and can compel one party to pay a third party that was not involved during the process of its formulation. In essence, bill of exchange is a post dated check and usually it does not give interest. However, it may generate interest in case it is not paid on the predetermined date. Bill of exchange enables a trading partner to be paid for its value of goods or services by the business partner.

Advantages of bill of exchange

Commercial bills of exchange have several merits to the parties involved.

1. It provides a framework enabling business transactions between the bank and the borrower.

2. Moreover, bill of exchange provides a convenient means for acquiring goods and services on credit and payment on an agreed later date.

3. Another advantage of using bill of exchange is that it offers a conclusive proof and evidence of transaction. In the event one party fails to make payment, one can follow a legal channel to get justice.

4. In addition, bill of exchange is easily transferrable. This enables the parties involved to settle their bills easily.

5. The other advantage is that it gives the user an easy way of cashing money before date by discounting besides being negotiable.

Disadvantages of bill of exchange

However, bill of exchange also has several disadvantages.

1. The bank can only discount the bill after they are fully satisfied that the other party is reliable and his or her credibility is not in question.

2. Moreover, incase where the bill is dishonored the charges will fully be transferred to the party involved. This is often a burden to the party.

3. Another demerit is that the payment dates are fixed and any default may lead to the party being extra charged.

Alternative forms of finance

The alternative forms of finance are channels that are not within the normal traditional finance system. They include bitcoin, business lending, cryptocurrencies, mini bond and social impact bond. Others include shadow banking, community shares and private placement among others.

Types of loans

There are several types of loans depending on the specific intention or use of the loans. Student loans are given to students to help them cover education cost.

Student loans exist in two forms: federal student loans and private student loans. Federal student loan attracts low interests rates is has friendly repayment terms.

Another type of loan is mortgage loan which is distributed by banks to allow the borrowers to buy homes they cannot afford to buy in cash. Mortgages also attract low interest

Auto loans allow individuals to acquire vehicles on loans from the bank or from the car dealers directly although the car dealers usually give loans with a higher interest.

Secured loans are given to borrowers but it is tied on the property of the individual borrowing. The amount of loan given depends on the value of the property of the individual borrowing.

On the other hand, unsecured loans are not tied to the property of the individual borrowing. Unsecured loans are tied on the amount of income and a solid payback plan.

A more commonly used form of loans is personal loans which are often use for personal expenses and do not have a given purpose. Personal loans are attractive because they can help individual in setting off an immediate need.

Small business loans are convenient for entrepreneurs and aspiring business persons to help them in expanding the businesses. Small business loans are best forms of loans for starting small scale businesses.

The other form of loans commonly used is borrowing from friends. It is not a good form of loan since when one fault in payment it may strin relationship. It is better to use a promissory note to bind the parties involved.

Cash advance is also a form of a loan that can be used by some parties as a short term loan against a credit card. It can be used pay for services and goods through the bank.

Interest rates

Most commercial bill of exchange companies charges an interest rate of three to twenty five percent of the loan depending on the company. Other charges may include charges on default payment, late payment and not submitting right information to the bank.


Bill of exchange involves remitting some money to a client on a specified date. It enables the payee to receive some specified amount of money on loan to pay for his or her goods and services. Bill of exchange has both advantages and disadvantages. In essence, it helps many people to acquire goods and services and make their payment later.

Business Credit Cards For Melbourne Small Businesses

What is a Business Credit Card?

A business credit card is simply a credit card that is used for business purposes rather than individual’s personal use. They are available to many business types and sizes. Aside from everyday use, they aid businesses in building a credit profile in order to improve the future credit borrowing terms.

Business Credit Card Application Process

In most cases, business credit cards are offered by many lending institutions. Their application process is much similar to that of a standard credit card application. The application by business borrowers can be done with or without an employer identification number. This makes it easy for all business types to obtain a business credit card.

In order to obtain a business credit card, you must complete an application. Their application is easier compared to non-revolving business loans due to the fact that the process is automated with an immediate credit decision. Also, they come with numerous added benefits. Due to this, business credit cards have slightly higher interest rates compared to traditional loans. However, credit card debt is usually unsecured, and this raises financing costs because of the higher risks for lenders.

Business credit cards can be applied with an employer identification number in case a business borrower has one or even use his personal social security number. The lenders majorly base their underwriting analysis on the information included in the new credit card application. In most cases, businesses are not subjected to minimum requirements required for credit scoring, income, and revenue analysis so they must depend on the backing of a personal guarantee. A business card provision is a personal guarantee that holds the person applying for the credit card liable for card fees and payments.

Advantages of a Business Credit Card

1. Easy qualification

Qualifying for a business credit card is much easier compared to a bank loan. If you have a small business that is well established or reasonable personal credit, then most credit card organizations will be happy to extend the credit card for your use.

2. Access to easy financing

If you are running a small business, then you will need access to cash for daily operations. However, lack of enough cash will bring some challenges during the purchase of items. In this case, a business credit card will come in handy when you need equipment, business supplies or even capital improvements.

3. Rewards

Most credit card companies offer incentives and rewards for using their own business credit cards. You can earn cash, airline miles among other rewards for making purchases using your business credit card.

4. Build credit

It can help you in building and improving your business credit. This can be advantageous if you apply for any bank loan in the future.

Downsides of a Business Credit Card

1. Personal credit issues

Majority of the business credit cards need a personal guarantee, meaning that you must give out your social security number as well as previous credit history to qualify. However, this can bring some issues for your personal credit along the way then credit companies report your business activities on the personal credit, or even become liable for over extended or late credit.

2. High priced financing

Financing purchases through business credit cards are very expensive. This is because you end up paying some higher interest rates, late fees and also high annual fees to have the card.

3. Less purchase protection

If you use a personal credit card, then most credit organizations will provide purchase protection. However, this protection is not the same when it comes to business credit cards. This brings more difficulties when returning purchased goods, reversing fraudulent charges and even correcting billing errors.

4. Security issues

The use of business credit cards includes the possibility of some fraudulent charges, especially from a stolen card number. Ensure you keep your credit card safe and also be careful about how you provide your card number online.

Business Credit Card Interest Rates

Business credit cards have interests rates that vary from one bank to another and one card to another. Majority of the lenders offer a wide range of business credit that is aimed at different business types, and some credit cards have specific eligibility criteria such as minimum turnover.

Top companies that offer business credit cards in Australia

  • Bank of Melbourne at a purchase rate of 9.99% and an annual fee of $55
  • Bank west at a purchase rate of 11.99% and an annual fee of $99
  • Newcastle permanent at a purchase rate of 9.99% and an annual fee of $55