# Month: April 2019

### What Are The Liquidity Ratios? – Quick Credits and Quick Loans

Although the business economy is composed of numerous concepts, some of them really complex, there are two of them that you should master from the first day: liquidity and solvency. Although they may seem synonymous, in reality they are not.

And for the operation of your business to be correct, it is not enough that only one of them enjoy good health, but that both must be maintained in appropriate values. In this article we will focus on the liquidity ratios , which are really indicators to know if you have treasury problems in your business.

While solvency refers to the profitability of a company in the long term, what concerns us in this article has to do with the short term. Or what is the same: liquidity, which means the ability of a company to have money available to deal with their immediate payments, such as payroll, suppliers or rent the premises. To measure this, the most popular of the liquidity ratios is the one that responds to the following formula, whose result should be greater than 1: Liquidity ratio = Current assets / Current liabilities

## Other concepts related to liquidity ratios

Unfortunately, cash flows are very variable, so the previous formula can give wrong results depending on the moment in which the calculation is made. That is why we speak of average cash periods . Although it is not a ratio as such, it must be taken into account: it is necessary that the average period of payment to customers be adjusted with respect to the average period of payment to suppliers, employees, etc. Therefore, it is necessary to calculate it.

The coverage ratio is also another very useful indicator to manage, although in this case it is more complex. The central idea is that certain income should serve to 'cover' certain expenses. Stated more specifically:

• Commercial debts must be faced with the commercial activity itself (collection from clients)
• Financial loans must be met with cash flows

The coverage ratio, whose result is the result of the combined calculation of these concepts, aims to keep both balance sheets under control.

## Liquidity ratios: How to get it when there are treasury problems

All businesses, especially at the beginning of their business, have cash or liquidity problems at some time . If it becomes a chronic or permanent problem, the viability of the company will be compromised. If it is a specific problem, no. In fact, there are different ways to solve a particular liquidity problem.

One of them try to convert current assets into circulating money. This is not difficult, unlike the so-called 'immobilized' assets, which require at least a year to complete this process. The problem is that converting these current assets into money can be a strategic problem for the company, since these current assets can be funds reserved for investments or for other structural items.
There is another method, simpler and more immediate, to solve these problems of liquidity ratios. They are microcredits , which can be obtained without bureaucracy in Hank Morgan. Its operation is simple: you request a quantity of money and you indicate a term, you transfer the money to your account in a matter of minutes, you use it in whatever you want and you return it within the indicated date, normally in an immediate future also. Logically, it is a service that has a cost, but it brings important benefits to the company:

• Being a punctual operation (collection and payment in a short period of time), it does not alter another important ratio, which must also be under control for the proper functioning of the company: the financial debt ratio . Long-term bank loans do compromise this indicator.
• They grant low amounts : to process a bank loan, normally a large amount of money must be requested, with the inconveniences that this generates. But these online loans can also be processed if the needs for liquidity ratios are low, precisely what usually happens with treasury problems
• They can be processed for any purpose : while bank loans are usually associated with a specific purpose (acquisition of machinery, vehicles, investments, etc.), in the case of microloans it is not necessary to indicate what their purpose is.
• In many cases the debts incurred by the applicant, be it an individual or a company, are not taken into account . The corresponding delinquent listings would be ASNEF and ASNEF Empresas. Being part of them does not have to be an impediment to access these credits.

In Hank Morgan you can get from € 50 to € 750 immediately, without paperwork or travel, all through the Internet. The return period is never greater than 30 days and the return of the money, except for exceptions, is made in a single payment, which avoids medium and long-term indebtedness of the company.

### The essential :

• Life insurance fees consist of management fees and operating expenses, to which must be added the costs of investment vehicles.
• Pay attention to retrocessions that may skew the recommendations of your bank or financial advisor.
• With Nalo, the fees are up to 2 times lower than those charged by banks and online banks.
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## What are the costs when investing with life insurance?

When you invest with life insurance, the fees are broken down into three parts: contract management fees, transaction fees, and indirectly, investment support fees.

#### Contract Management Fees

The life insurance policy's management fees remunerate the insurer, the broker or the bank for their day-to-day management of the contract. They are proportional to the total amount of savings achieved on the contract. Their amounts usually differ according to whether they concern the part of the investments made in the fund in euros (guaranteed capital funds), or on the units of account.

#### Operating costs

Many life insurance contracts still have entry fees. These are charges levied for each new payment, in proportion to the amount paid. Some contracts also have arbitrage fees. You pay these fees when you change the allocation of your investments. All players in life insurance do not charge a transaction fee. However, this is often the case in network banks and private banks.

#### Investment management fees

In life insurance, you can invest in the fund in euros but also in many other investment vehicles that are called "units of account". These are generally investment funds, ie "baskets" of stocks or bonds. The fees of the investment media pay the investment funds for the management of these baskets of securities. These costs do not relate directly to the life insurance policy, so they are rarely explained by the bank or the insurer. They nevertheless decrease the performance of your investments and are not negligible. The best way to know the fees applied to each fund in your allocation is to refer to the KIID (Key Investor Information Document).

#### Mandate fees

It is possible with many life insurance players to have a contract under mandate management. That is to say to delegate the management of his life insurance. Additional fees must be added.

## Retrocessions and conflicts of interest

These "hidden" fees, collected by the investment funds, are also used to remunerate your bank, your broker or your adviser in the form of retrocession. In other words, in addition to the fees posted on the life insurance policy, your bank receives a portion of the fees charged on each fund.

In addition to the lack of transparency, it is difficult for your advisor not to encourage you to choose a fund based on the retrocession it will receive. This is all the more true as some funds have much higher retrocessions than others. They can account for more than half of management fees on investment vehicles.

Finally, be aware that many banking groups have their own investment funds. Some even offer only investment funds managed by their subsidiary.

In order to limit these conflicts of interest, a European directive, MIF 2, calls for the abolition of retrocession. However, this directive is still not applied in the context of life insurance.

## Comparison of fees applied by life insurance players in France

#### Traditional actors: network banks and private banks

Traditional players are generally the ones with the highest fees, averaging fees for a unit-linked contract of 3 , 9% per year (by smoothing transaction costs). On average, the fees of these banks break down as follows:

• management fees for your life insurance policy: between 0.9% per year for the euro fund share and 0.9% for the unit-linked portion;
• agency fees: 0.87% per annum;
• upfront charge: up to 4.5% per installment;
• arbitration fees: 1.58% by arbitration;
• media management fee: 1.72% per annum.

These high fees translate into poor performance returned to investors.

#### Banks online

Online banks have reduced the cost of a life insurance policy by eliminating transaction costs. On the other hand, they still practice high management fees composed of:

• management fee for your life insurance policy: 0.75% on average per year for the euro fund and 0.7% for the unit account;
• media management fees: 1.7% on average per year;
• agency fees: 0.1%;

Thus, in total, the average cost of a life insurance contract taken out in an online bank is 2.65% per year on the units of account.

Discover the FinTechs of the investment: the robo-advisors

## Nalo and fees

#### Fees

With Nalo, your unit-linked investments generate average fees of 1.65% per year versus 2.65% in an online bank. Despite lower fees, we offer better support. We regularly optimize your investments according to the economic situation, we adapt your investments according to your patrimonial situation and we secure them gradually according to your investment horizon.

It is thanks to the advanced use of technology and the use of index-based investment vehicles (also known as ETFs ) that we offer you a better service at a better price.

In detail, the costs break down as follows:

• 0.85% per annum for the management of life insurance (unit of account and funds in euros);
• 0.55% per annum of additional management fees associated with the management of the units of account;
• only 0.25%, on average for investment media.

#### The choice of transparency

Nalo is a company independent of any bank and any other financial institution. This allows us to advise you without conflict of interest. We are against retrocessions, so we select your investment vehicles independently, only for their potential performance.