The Language of Small Business Texts and Vocabulary Training (for students of Economics) Part 1. Учебное пособие

Insurance

ate a good credit control or use a factoring service. However, if you have only one large or a couple of big customers, you should have credit insurance.

7. Public Liability and Product Liability

This will cover your liability if your business causes injury or illness to a member of the public or damage to their property. Product liability insurance covers you for these risks which occur as a result of the goods you are producing, selling or repairing up to a limit each year.

You need to make sure that the amount of cover is high enough. Recent damages in the courts have been as high as £1 million. You may need cover for more than this, depending on your business, especially if you do business in the USA.

Worth getting? Yes. With product liability, you may not need it if your products are very unlikely to cause any damage or if you are in the service business.

8. Professional Indemnity

If you are the sort of business where the end product is expert advice, this insurance can cover you against claims from your clients for damages caused by your negligence or misconduct.

Worth getting? Yes. These sorts of claims are on the increase. 9. Legal Expenses

This insurance would enable you to pay for legal assistance if you are involved in a contractual or employment dispute, plus some other legal procedures.

Worth getting? Probably not. Most legal disputes are generally in the employment field. It would be far better to concentrate on getting well organized in this area to cut the risk of being taken to a tribunal charged with unfair dismissal.

10. Keyman Insurance

If your business is heavily depended on one or a few people for its future success, you can get keyman life insurance, for example, for a sum of £250,000 to be paid to your business in the event of one of those people dying. To get cover, you must be able to prove the person's death would cost your firm money.

Worth getting? Yes.

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11. Other Insurance

There are some other types of insurance which you should consider, depending on your business. These include:

•glass breakage, which is important for shops;

•cover for frozen food;

•computers and computer records;

•fidelity insurance, which covers you against fraud or dishonesty by your employees. It can be taken out for one or more employees or for your entire staff;

•business machines and equipment;

•agricultural and fish-farming operations;

•directors' and officers' liability.

Insurance for You and Your Family

If you and your family are not covered by insurance for various personal mishaps, you may find it difficult to carry on your business, so do not neglect your personal needs. Make sure that you and your wife or husband have enough life insurance to protect you in the event of your early deaths. For this purpose do not go for the sort of life insurance which is really an investment, but go for term insurance, family income benefit, mortgage protection, and so on.

Permanent health insurance would pay out an income if you were too ill to work and could pay for a temporary manager. You should consider this carefully. And do not forget pensions.

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Definitions of terms

Insurance, insce:

1.the practice of sharing, among many persons, risks to life or property that would otherwise be suffered by only a few. This is effected by each person paying a sum of money called a premium which, with those paid by all the others, is put into a “pool” or insurance fund, out of which money is paid to the few who suffer loss.

Abbr.: ins, inse, insur

2.the business of insuring lives and properties against harm, damage or loss in return for payment of a sum of money (the premium) according to the degree of risk,

3.a written or printed contract, called a policy of insurance or insurance policy.

4.the amount for which a life or thing is insured, called the sum insured.

5.the premiums paid for insuring a life or thing.

Insurance policy, insce – a written or printed contract by which the insurer, in return for a payment called a premium, binds himself to pay the person named in the policy, called the insured, when a stated event happens; this event may be the death or injury of the insured, or of some other named person, or damage or loss to the insured's property by fire, by theft or other forms of dishonesty, by accident, or from dangers at sea. There are many variations of insurance policy.

Premium, insce – the money paid by the insured to the insurers in return for insurance cover or benefits payable under the conditions in the insurance policy.

Abbr.: pm, Pm

Insurance broker, insce – a middleman or broker with special knowledge of the insurance market who, not being a direct employee of any insurance company, is free to offer advice to his clients and, as their agent, to negotiate the most favourable insurance contracts for them with the insurers. He is usually paid by commission or fee from the insurers.

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Indemnity:

1.insce – a basic idea in all branches of insurance (except life and personal accident) that the insured should be in the same position after a loss as he was immediately before it, i.e. neither richer nor poorer as a result of the loss.

2.bkg. -a promise to indemnify or compensate a person for expense or loss.

Bad debt, com. & accts. – debts which are likely never to be paid and must be treated as worthless by being entered as written off in a bad debts account.

Bad debts account – a nominal account (since bad debts are an ordinary business expense) to which are debited all bad debts. The total is later debited in the profit and loss account and has the effect of reducing the profit (or increasing the loss) for the accounting period.

Factoring, fm. – an arrangement between a supplier and a special kind of finance house called a factor or factoring company, by which the supplier sells to the factor the right to collect amounts payable to the supplier by approved customers at some future date. Thus the supplier receives payment immediately he supplies the goods, the factor taking full responsibility for collecting the amounts and bearing all losses from bad debts. The factor's charges consist of a fee based on the rate of discount for bills of exchange and added small percentage for collecting the accounts. In Britain, factoring companies are owned by commercial banks and some export houses. Some factoring companies also lend money to suppliers for short periods.

Definitions of terms

Страхование – система экономических отношений, включающая образование за счет предприятий, организаций

инаселения специального фонда средств и использование его для возмещения ущерба в имуществе от стихийных бедствий

идругих неблагоприятных (случайных) явлений, а также для оказания гражданам (или их семьям) помощи при наступле- нии различных событий в жизни. В страховании обязательно наличие двух сторон – страховщика – специальной организа-

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ции (государственной или акционерной, взаимной и др.), ве- дающей созданием и использованием денежного фонда; стра- хователя – юридического или физического лица, вносящего в названный фонд установленные платежи. Характерные черты страхования: целевое назначение создаваемого фонда, расхо- дование его ресурсов лишь на покрытие (предоставление по- мощи) в заранее оговоренных случаях; вероятностный харак- тер отношений, поскольку заранее не известно, когда насту- пит соответствующее событие, какова будет его сила и кого из страхователей оно затронет; возвратность средств, т. к. они предназначены для выплаты всей совокупности страхователей (а не каждому страхователю в отдельности).

Страховая премия – очередной денежный взнос страхо- вому обществу, производимый страхователем; взносы обеспе- чивают покрытие возможных рисков.

Страховой полис – полис, документ страхового органа, подтверждающий сделку о страховании.

Summary

1.Не откладывайте оформление страховки.

2.Воспользуйтесь услугами страхового агента, который бы действовал за вас.

3.Ищите совета не у одного агента, а у нескольких. Инте- ресуйтесь расценками на каждую необходимую вам страховку.

4.Не пренебрегайте личной страховкой. Страхование жизни для вашей семьи, страхование здоровья и пенсий должны быть тщательно продуманы, чтобы определить необходимый вам уровень. Воспользуйтесь услугами не- зависимого посредника, который имеет квалификацию консультировать по этим вопросам.

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Unit 7.

Forecasting

Forecasts are the kernel of your business. They are the basis on which you raise money, negotiate premises and order raw materials. These are only a few of the decisions which need to be made in advance with only your forecasts as guidance on how much is needed. Making a wildly inaccurate forecast can, for example, lead to raising insufficient funds. When the business fails to meet expectations and begins to run short or money, it may prove impossible to raise further funds. Lenders are very wary of handing out more when forecasting has proved to be mistaken. The result could be liquidation, or bankruptcy if you are a partner or sole trader, and the end of your dreams.

However, making no forecasts at all is even sillier. You would have no guidance on when to take certain basic business decisions.

Given the importance of attaining a reasonable estimate of future sales, costs and cash balances, it follows that making the forecasts is a process which should not be hurried or treated casually. You must constantly strive to seek information on which forecasts can be based; you must constantly curb your overoptimism which can lead to estimated sales figures that are too high and estimated cost figures that are too low. Question your first forecasts for the realism of their assumptions, before accepting any figure as a part of the final forecasts.

Nevertheless, it is realistic to accept that some of the figures will be nothing more than a best guess given the current state of information available to you. However, your figures should have some grounding in fact, so when you present your case to your bank manager or other source of finance you can support the figure when challenged.

It is important to make the forecasts on your plan realistic so that if your business idea does not hold water, you can discover

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this at the planning stage. You do not want to discover two years down the track that your business will not work, after you have committed money, time and effort. Do not underestimate the mental anguish and financial problems which can be caused by a struggling business.

Cash Flow Forecast

The first point to note is that cash and profit are not the same thing at all, so the two forecasts may be quite different.

A cash flow forecast is quite simply a record of when you think you will receive cash in your business and when you think you will have to pay it out. In your business plan, you should include monthly cash flow forecasting for at-least one, preferably two years ahead. Depending on the size of your business, you may also need to include yearly cash flow forecasts for three years beyond that, totalling five years of forecasts in all.

Detailed Calculations for Cash Flow Forecast

Do the cash flow forecast for your chosen accounting year. If, for example, you choose to end your accounting year at the end of April, your cash flow forecast will run from 1 May to 30 April.

It is important to make realistic assumptions about when you will receive the cash, or when you will have to pay it out. The purpose or the forecast is to throw up when your need for cash is at its greatest, so you can demonstrate what your funding requirements are.

1. Opening bank balance

This shows how much is actually in your business bank account at the start of each period. If you owe your bank money (have an overdraft), show this by putting the figure in brackets. If your forecast is made before you start trading, the opening bank balance is likely to be nil.

Your opening bank balance for one period will be the closing bank balance for the previous period.

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2. Cash from sales

In here would go any cash you expect to receive when you sell your product, not in payment of an invoice you send out. If your business is a shop, most of your sales will be cash ones, and so this would be the biggest element of your cash receipts.

If you are registered for VAT, enter the figure you expect to receive, including VAT.

3. Cash from debtors

If you sell your product and do not receive payment at once, but instead send out invoices, you would enter here when you expect to receive the cash. Someone who owes you money (for example, has not yet paid your invoice) is a debtor. You should aim to get your invoices paid as quickly as possible, but most of your customers will expect to delay payment of your invoice by at least one month.

If you are registered for VAT, enter the figure you expect to receive, including VAT.

4. VAT (net receipts)

If you are not registered for VAT, ignore this section. If you are registered for VAT, you will only expect to receive cash from the VAT system if for some reason your purchases, on which you can clame back VAT, are greater than your sales on which you have charged VAT.

This might happen as a rare occurrence if you have spent a lot of money while starting up, before your sales have got going. Another possible reason for this could occur if your sales are seasonal but your purchases are not. It could also happen if your sales are zero-rated, in which case you do not have to charge VAT on your sales, but you can claim it back on your purchases.

You may make your returns for VAT on a quarterly basis, so allow for this in your cash flow.

5. Other receipts

Put here any miscellaneous receipts of income which you expect to occur.

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