Vocabulary notes

investment banker – инвестиционный банкир

venture – рискованное предприятие; коммерческое предприятие

venture capital – венчурный капитал; рискованный капитал

angel – «ангел», финансовый покровитель

institutional source – (зд) институциональный (учреждённый) инвестор

in a typical scenario – по обычному сценарию, как правило

investing public – инвесторы

Small Business Administration – администрация по делам малого бизнеса

start-up –1) вновь созданная компания 2) стартовый капитал

TEXT 2

THE NATURE OF MONEY

Money is anything generally accepted as a means of paying for goods and services. Before it was invented, people got what they needed by trading their services or possessions; in some primitive societies, this system of trading, or bartering, still prevails. However, barter is inconvenient and impractical in a modern industrial society, where many of the things we want are intangible or require the combined work of many people.

When the Phoenicians created money millennia ago, it was worth its weight in gold or silver or copper. But people grew tired of all that metal ripping holes in their pockets, and governments consolidated, becoming stable enough to earn the trust of their citizens. So paper IOUs were issued. Henry Ford Sr. once said that if the people of the nation actually understood our banking and monetary system, there would be a revolution the following morning. Perhaps he was referring to the fact that money is simply a representation of value and is built on faith.

To be an effective medium for exchange, money must have certain characteristics: It must be divisible, portable (easy to carry), durable, and difficult to counterfeit or secure, and it should have a stable value. When people lose faith in the value of their money, they begin to abandon it and look for different ways to store their wealth, such as precious metals. Additionally, money must perform three basic functions: First, it must serve as a medium of exchange – a tool for simplifying transactions between buyers and sellers. Second, it must serve as a measure of value so that you don’t have to negotiate the relative worth of dissimilar items every time you buy something. Finally, money must serve as a temporary store of value – a way of accumulating your wealth until you need it.

Vocabulary notes

bartering – обмен, осуществление бартерной сделки

Phoenicians – финикийцы

millennia (pl от millennium) – тысячелетия

IOU = I owe you – долговая расписка

Henry Ford Sr. – Генри Форд-старший

faith – вера, доверие

divisible – делимый

durable – прочный, долговечный

counterfeit – поддельный, подложный

secure – надёжный; надёжно защищённый

abandon – отказываться; оставлять

dissimilar – разнородный, несходный

TEXT 3

CREDIT OUT OF CONTROL

By Mark Powell

Regulation is taboo to the business community, but do we need more control over credit? Indeed, if everyone were to demand immediate payment in cash, the world would literally go bust. But as Trevor Sykes points out in his book “Two Centuries of Panic”, “there are few faster ways of going broke than by buying goods and then passing them on to customers who cannot pay for them”. As if getting orders wasn’t tough enough, these days getting paid is even tougher. And with the amount of cross-border trade increasing every year, credit is rapidly going out of control.

In Germany, Denmark and Sweden, whose governments strictly regulate business-to-business relations, companies pay on time. They have to. Late payers may actually be billed by their creditors for the services of a professional debt collector. But in Britain companies regularly keep you waiting a month past the agreed deadline for your bill to be paid. That’s why a Swedish leasing agreement can be drafted on a single page, but a British one is more like a telephone directory. The French and Italians too will sit on invoices almost immediately and push creditor companies to the brink of bankruptcy.

So how can the risk of bad debt be minimized? From the supplier’s point of view, pre-payment would be the ideal solution: make the customer pay up front. But it is a confident supplier indeed who would risk damaging customer relations by insisting on money in advance. For the goodwill of your biggest customers – those who by definition owe you the most money – is vital to securing their business in the future. And the prospect of a bigger order next time puts you in a difficult position when payment is late again this time.

We might expect modern technological advances to have eased this cashflow situation, but they haven’t - quite the reverse. In the past it was common for companies to employ credit controllers who carefully processed letters of credit and bank guarantees. Now you get a telephone call, the computer runs a simple credit check and you deliver straightaway. Buyers have almost instant access to goods … and to credit.

Be prepared for losses as for more and more companies it’s a no-win situation. Charge interest on outstanding debts, and you risk alienating customers with genuine cashflow problems. But cut your losses by selling those debts on to a factoring agency, and it’ll be you, not your debtor, who ends up paying the factor’s commission. In order to recover what you’re owed you’ll effectively have to write some of it off. Such is the delicate balance of power between debtor and creditor. For though debtors do, of course, show up in a company’s current assets, it is hard cash, not promises to pay, that finances new projects. People forget their promises and creditors have better memories than debtors.