Bank Draft Monetization - All You Need To Know About

 

 Bank Draft Monetization - All You Need To Know About

Bank Draft Monetization is the process of converting or establishing something into legal tender. While it usually refers to the coining of currency or the printing of banknotes by central banks, it may also take the form of a promissory currency.

The term "monetization" may also be used informally to refer to exchanging possessions for cash or cash equivalents, including selling a security interest, charging fees for something that used to be free, or attempting to make money on goods or services that were previously unprofitable or had been considered to have the potential to earn profits. And data monetization refers to a spectrum of ways information assets can be converted into economic value.

Now, since it is already a form of payment, and not a debt obligation, aside from the simple act of deposit it into a bank account, how else do you monetize it? You cannot because IT IS ALREADY MONEY.

So the question is, how come so many people is still here offering to monetize them? Ahhh! Good one! It is not because someone crafted a nice letter disguising a Bank Draft like if it was a Letter of Credit, that it automatically becomes one, it is still a cheque, and you can still deposit it, get 100% of its value, and get over with it; so why there are so many of them around? Fraudsters know nothing so they create false documents, and then wanna-be brokers and other fraudsters, take them for real, start making offers, and here we are, with a seudo-product in a seudo-market, where very few know the truth...

So read it here and now: Do you have a Bank Draft and want to monetize it? Simply deposit it into a bank account and that will be all. But you have some very nice letter saying it is for "credit enhancement" or some other obscure purpose? That is false; just deposit the thing, which then will be probably false too. But if your document is real, forget about looking for a monetizes, just deposit it, get 100% of its value, and disregard the mystery about how to monetize a Bank Draft Monetization.

When government deficits are financed through debt monetization the outcome is an increase in the monetary base, shifting the aggregate-demand curve to the right leading to a rise in the price level. When governments intentionally do this, they devalue existing stockpiles of fixed income cash flows of anyone who is holding assets based in that currency. This does not reduce the value of floating or hard assets, and has an uncertain impact on some equities. It benefits debtors at the expense of creditors and will result in an increase in the nominal price of real estate.

This Bank Draft Monetization transfer is clearly not a Pareto improvement but can act as a stimulus to economic growth and employment in an economy overburdened by private debt.  It is in essence a "tax" and a simultaneous redistribution to debtors as the overall value of creditors' fixed income assets drop. If the beneficiaries of this transfer are more likely to spend their gains this can stimulate demand and increase liquidity. It also decreases the value of the currency - potentially stimulating exports and decreasing imports - improving the balance of trade. Foreign owners of local currency and debt also lose money. Fixed income creditors experience decreased wealth due to a loss in spending power. This is known as inflation tax.



 

Advantages of Long Term Notes (LTN)

Long term notes are really beneficial and companies or business organizations that need some operating capital may use or obtain a loan through any of the options of notes payable.

What is a Long term notes

Well, it is basically a written promise where you promise to pay a certain amount of money on a specific future date. However, there are two types of notes payable option available for you—short term and long term. Long term notes (LTN) are due after one year.

There are a lot of advantages of the long term one and here are those –

The ownership interest – This note payable method offers you the benefit of ownership interest. That means you don’t have to give away any ownership interest to the lender. You, as a borrower don’t have to worry about providing any other ownership to the lender.

The interest rate – This payable method has a fixed interest rate. So you can plan and budget your payment according to the interest beforehand. And above all, the due date you get is a long term and there are no possibilities of being tied up into any current assets. That means the risk of loan default gets reduced and the debt capacity increases. What you benefit from it? Firm’s overall financial stability.

Tax Deduction – When you take a loan in interest, it can be paid or can be deducted from your company’s income taxes. This is the reason when you use the long term option, you get benefited and people find the long term payment option to be quite attractive.

Less Paperwork – Long term payable option doesn’t require much paperwork. Raising long-term debt capital does not require any paperwork to be filed with state and federal authorities. It also doesn’t require any kind of pre -approval from the authorities and the investors.

These are a few benefits of the long term debt capital and firms and companies are being benefited by the note payable since a long time. Whether it’s long term or the short term note payable, the instrument can help you grow in your business. We, “The Hanson Group of Companies” provide you a group of some of the best financial options for you.

Following Reasons to Start An Offshore Bank Account

 

An offshore bank account is an account which is set up outside the country of residence of the account holder. Offshore bank accounts are available to anyone who is interested. There are many reasons why one may choose to open an offshore banking account. Here are a few reasons you why you need to start an offshore bank account –

1. One of the main reasons for opening an offshore banking account is that developing countries are often characterized by political and economic instability. There might be situations where you may have to take some desperate measures which might affect your savings. By opening an offshore bank account you become client of a reputable multinational financial institution that provides additional safety and security in case of financial crisis. An offshore bank account reduces dilute your political risks. 

2. Some of the foreign offshore banks are far better than your country. They might have some better investment opportunities, better interest rates or sometimes even better finance systems. These offshore banks are much cautious and more responsible about your hard earned money.

3. Opening an account in an offshore bank will protect your assets from overzealous government agencies. So, to save your hard earning money you can deposit your assets in an offshore bank account without any hassles.

4. When you hold an offshore bank account, there is a benefit of currency diversification. It protects your purchasing power and internationalizes your savings. 

5. The interest rate for your savings is higher when you have an offshore bank account. When you do a bit of market research, you can see that there are banks in abroad, that pay a higher interests rate and that can benefit you a lot more than your domestic bank account.

6. Some of the offshore banks provide you health insurance and other services when you open a bank account. There are a lot of possibilities you get by opening an offshore bank account.

The Banks Instruments is providing you great opportunities of Offshore Bank Account Openings and you sure won’t like to miss the chance.

 

What Is Proof of Funds (POF) & Where to Use It?

 

A Proof of Funds Letter is not commonly used in consumer products for purchases and financing. It may also be used in the preliminary stages of credit enhancement when applying for financing or attempting to engage a party for several purposes. In commercial financing a POF helps meet underwriting reserve requirements. Proof of Funds, sometimes referred to as a POF.
 
What is a ‘Proof of Funds’ (POF)?
It is a financial document, usually a statement or letter, which shows one party to the next to complete a given transaction. It is most often provided by the account holder's bank in the form of a bank letter specific to the transaction.

A POF may also be used in the preliminary stages of credit enhancement when applying for financing or attempting to engage a party for several purposes. Most Proof of Funds statements are based on a cash account, or the funds in a cash-backed bank account requiring account verification.
 
Proof of Funds Uses

It is used by those clients that are entering in a trading platform, whereby the trader is eligible to trade securities. Proof of funds can be your own, leased or borrowed.

If you are trying to get into a trading platform be sure before you purchase Proof of Funds for platforms or real estate transactions or offer your proof of funds as evidence that you have money to trade, ask the agent, broker or platform manager what the process of the transaction is.

Individuals can purchase or lease proof of funds on a short term or long term basis's on paper if necessary. Providers for proof of funds can provide as little as $10,000 up to $10,000,000 and more depending on the supplier for the Proof of Funds.
 
There are a few ways acceptable to lenders and sellers to show P.O.F.

Bank Statements or Bank Verification

Brokerage Account Statements or Verification

Escrow Account Verification

Long term note (ltn) - A Safer, More Effective Investment

 

Long term note (ltn) is a type of note that has all the features of a corporate bond, but is sold in much higher frequency. Corporate bonds offerings are made every three or four years while medium term notes are often sold on a weekly basis. 

These notes mature within nine months to 30 years, though maturities between 10 and 30 years are becoming most common. When you look into investing in these notes, you will only be dealing with the highest-quality companies that exist. With this kind of investment, you can appreciate a better return than if you simply maintained a savings account that earned interest over time.

These notes are considered to be a customized investment that lasts for a fixed period of time between two and eight years. The interest rate during this time remains constant, and your investment is repaid at the conclusion of the period.

Annual interest earned from the account is credited directly to you. The minimum amount you must put into investing in these notes is generally around $1,000 and there is no upper limit. Their concept took shape in the early 1980s as a way to fill the gap between short term and long term investments. The best word used to describe this kind of investment is flexible.

There are many benefits of investing in Long term note (ltn). First, since they are not traded like stocks, periods of fluctuation in the stock market do not affect your investment. This makes them a very secure choice to invest in. 

Also, its market gives investors a vast array of opportunities to put their money, including banks and other financial institutions, corporations, the federal government, and utilities. The chance to diversify risk is desirable, and these options allow for that.

When investors know that a note is a LTN, this gives them a basic idea of what the maturity is going to be when they are comparing the price of that note to other types of fixed income securities. When all else is equal, then the corporate rate on the LTN is typically going to be higher in comparison than the coupon rates that are achieved with shorter term ones.

 

Standby Letter of Credit (SBLC) - Monetizing Instruments

The Standby Letter of Credit (SBLC) is classified as a "letter of credit" (LC), also called "documentary letter of credit" (DLC). It is a term widely used to secure payments in national and international trade. Monetizing is one of the parts of SBLC and is the act of converting a banking instrument to legal tender that can be used the same as cash.

Whether you are trying to fund your own projects or you are looking for ways that you can utilize your different monetizing instruments to invest in projects of any kind. Bank instruments can be a good choice for savings as they have a higher yield than a traditional savings account.

The SBLC monetization process usually begins when the owner realized they need money and do not have any immediately liquid assets accessible. An institution that offers a service of monetizing instruments will buy the letter for an amount less than what it guarantees. It is a type of lucrative business.

If you are ready to begin monetizing your instruments, you are going to want to make sure that you are dealing with the right broker. You will want to be sure, however, that you are dealing with a broker that has a good relationship with some major banks.

Stay away from small lenders and credit unions that may seem fragile. The good news is that there are a number of good brokers out there that develop good relationships with the banks. They are able to purchase various instruments for you.

Here are some tips to help you be successful when monetizing instruments for investment purposes:

•Always figure out what types of instruments you are looking to monetize: It will be up to you to determine what you will cash in to get the funding that you are looking for.

•Make sure that fees get deducted from proceeds that are generated from the funding.  There are no upfront costs when you are monetizing instruments for your various needs.

•Read terms and conditions of the contract carefully and fully.  Take the time to review every single detail so that you know what you are getting into and what is expected of you.

•These tips should give you a much better chance at success when you are monetizing instruments of investment for your various needs.

SBLC and Its Importance – The Need

 

When you opt for international trade, it creates risks for both the parties. Both the buyer and the seller go through the issues like different language, customs and currency and it is obvious to be skeptical in this regard. However, the international trade does bring a lot of benefits to both the parties and that is the reason why the international trade is popular among people.

While both the parties seek for transaction benefits, the same way they also look for a protection which is very important in order to get a smooth transaction. The best way to protect the transaction and the trade is to use the bank instrument called Standby Letter of Credit (SBLC).

So what is SBLC?

SBLC or the standby letter of credit is basically a bank instrument that is used for the repayment of the goods and services used by the buyer. Getting confused? Think about a situation where you are doing an international trade. Now think that you have already used the services and goods from the seller, but when the time comes you are unable to pay the money to the buyer. What will you do? The bank however, comes to your rescue and issue a bank guarantee known as the SBLC.

The SBLC is basically a bank guarantee that is provided by the bank which says the bank will pay on behalf of the buyer to the seller in case the payment is default.

However, there are a few differences between an SBLC and a letter of credit. Where the LOC or the Letter of Credit treats both the buyer and seller equally; the SBLC outs the buyer in a slightly lower position.

There are a lot of benefits of using the SBLC. They are as followed –

You get more protection – A lot of people use SBLC because of the protection that it provides. However, another best thing about these bank instruments is the ability to provide simplest way of transaction to the seller like a bank transfer. The more protection to the seller is they are sure that they will definitely get the money due. If the buyer doesn’t pay, the bank will.

Low cost – SBLC fees are quite lower than compared to other bank instruments and that is one of the reasons people use SBLC.

A bridge of trust – Sellers tend to go for business with unknown people who have an SBLC. This is another great thing about the SBLC.
 

What Advantages Do You Get From The Medium Term Notes?

 

Cost effective, efficient and beneficial financing is what everyone looks for in an investment and the medium term note is just that investment. People who are using MTN the right way are getting lots and lots of advantages from the same.

So what exactly is the Medium term note?

The note which usually matures in tenure of 5-10 years is a Medium term note or (MTN). A corporate MTN can be continuously offered by a company to investors through a dealer with investors being able to choose from differing maturities, ranging from nine months to 30 years, though most MTNs range in maturity from one to 10 years.

What are the advantages that one gets?

There are plenty of advantages of using the MTN and one of them is the choice that an investor can make. If you are investing in an MYN program, you can choose between short term and long term investment.
 

This can actually be quite ideal for situations where the investor’s goals fall into a time frame beyond those offered by certain municipal bonds or short-term bank notes without having to commit to the long-term note options. 

The businesses however, can benefit from MTNs based on their ability to provide a consistent cash flow from investors. Additionally, businesses can choose to offer MTNs with or without call options.

In other words, MTN programs are quite important if you want the cash flow of your business to keep growing. Here are a few advantages that the MTN program provides you –

Convenient – The MTN program is quite convenient and one can use the program in any sort of ways they want. Most importantly, these are flexible programs that are designed keeping everyone’s interests in mind.

Cost effective – Unlike other investments r programs, the MTN program is actually quite cost effective and easy to use.

Long term funding benefits – When you use MTN for the long term process, you are benefited by its funding and that is one of the most important advantages that you get.

Opportunistic financing – Once the initial documentation has been agreed, it can form the basis of a number of different future issues at very short notice. This allows a treasurer to take advantage of favorable market conditions when the company has a known funding requirement.

You can use the MTN program in two ways – long term and short term. It completely depends on you. However, make sure that you do not accept any deals of investment without understanding the whole process completely.
 

Monetizing Bank Guarantee – Mistakes You Should Avoid

 

There are a lot of people who invest in bank instruments and get benefited by the same. When it comes to monetizing the bank instruments, there are plenty of things you should always keep in mind.

There are some of the terms where the monetization can be arranged against financial instruments such as BG’s- Bank Guarantees, MTN’s- Medium Term Notes, SBLC’s- Standby Letter of Credit, LOC’s- Letter of Credit, CD’s- Certificate of Deposit, Zero Coupon Bonds, Treasuries and other instruments as well. The only thing that is important is that these instruments must be owned and not leased. 

The first timer, who goes for bank guarantee monetization, sometimes makes a few mistakes which actually shouldn’t be done. These mistakes can prove to be quite harmful for your investment and this is the reason why you should avoid these. Here are a few things you should avoid while monetizing a bank guarantee –

Buying a Neutered Bank Guarantee – You should never buy a neutered bank guarantee. A lot of financial institutions offer neutered BG and when someone doesn’t have much idea of investing in one, they end up buying a neutered bank guarantee. This is the reason why you should be pretty informative about where you are investing and ask your agent or the bank every little detail you might need before making an investment.

Buying a leased Bank Guarantee – Buying a leased Bank Guarantee is another mistake you make while monetizing your BG. Always remember that a leased BG cannot be monetized at all. Make sure when you buy any kind of Bank Guarantee, it should not be leased or should not contain the word “leased” on it. If you buy such BG, you have nothing but a worthless piece of paper. You cannot use the paper anywhere. Therefore you should make sure that you know exactly what you are buying and be cautious of the terms and conditions of the same.

If the procedures don’t match, don’t buy it – When you see that the delivery process of the issuer of the Bank guarantee doesn’t match with the procedures of the people who helps you monetizing the Bank Guarantee, then do not buy that BG. If you do so, you may not be able to be benefited with the monetization and that will end up hurting your profit as they are not compatible with each other. Both the parties will end up blaming each other and you will be the one to suffer.

 

SBLC and Monetizing SBLC

 

Funding or monetizing SBLC is one of the most profitable things any business man can do for his business. The best thing about monetizing SBLC or any other bank instrument is that you earn a form of trust among your sellers and that helps you a lot in your business both locally and internationally.

There are plenty of bank instruments like the Bank Guarantee, SBLC, Letter of Credit and many others which can be monetized and used for the benefit of your business. However, speaking of Standby Letter of Credit Monetization can be termed as quite an ideal deal for clients looking to Discount, Monetize, or create an immediate Non Recourse loan against a Leased Standby Letter of Credit (SBLC) that they control.

There are a few kinds of SBLC that you can monetize and they are –

• Bank SWIFT
• Euroclear
• DTCC
• Bloomberg

These can vary depending on the type of bank and institution you are approaching

There are plenty of reasons why anyone should be monetizing an SBLC – one of the most important things about funding or monetizing an SBLC is that it allows you to gain the required trust from the lender or the seller. What SBLC does is that, it provides a guarantee to the seller that in case you are unable to pay the seller; your bank will pay on behalf of you.

However, as the SBLC providers issue one of these letters to the seller, agreeing to make payments for the goods being sold if the buyer defaults. This way, the seller feels secure in the purchase because the bank is obligated to pay if the buyer fails to. In short, it ensures payment for the product being sold.

Although this is a great way to be secured, a lot of people don’t yet know the importance of monetizing the SBLC. The most important reason you need them that it is a security which allows you to be on the good side of the buyer because whenever anyone sells something, they want to be sure the buyer can pay them back in full like they promised. The seller may be unwilling to complete the transaction if you can’t prove that you can pay them back. You need something that proves you can pay what’s due, which is when standby letters of credit become necessary.

Buying or selling SBLC is one of the best decisions any buyer can make. Make sure to get the most out of it.