Can Muslims invest in gold

The success of your business depends on you maintaining a healthy cashflow. You want to have money available in order to pay your bills and your staff on a weekly or monthly basis, along with having capacity for growth.

It doesn't matter how great your product or your marketing might be. The foundation of success for businesses, and the reason why some don't make it, is cashflow. The moment you don't have the money in the bank to pay your staff, suppliers or tax bills, you could be in big trouble. Cashflow planning helps you to see this coming, giving you time to take action.

Cashflow planning is essential

It's much more comfortable when you have consistent, positive cashflow. There are no moments of panic when you fret over how you'll pay a particular commitment. You have more time to plan ahead, to have an eye on the future rather than worrying about today.

Consistent, positive cashflow doesn't just happen. Being profitable doesn't guarantee that your business will always have the cash to meet your commitments. Income from sales doesn't always flow in fast enough to cover payments you need to make. Achieving a steady cashflow requires planning. It starts by making a cashflow forecast.

Prepare a cashflow forecast

A cashflow forecast is a plan of the money your business expects to receive and to pay out in the near future. It helps you to predict how much money will be in your bank account at any point in time. A cashflow forecast is usually broken down into months or weeks to make it easier to plan.

To construct your cashflow forecast you'll want to use a spreadsheet or a cashflow planning tool. Your accounting system can provide useful information about your past cashflow but it's not so helpful for predicting the future, because it's based on transactions that have already occurred.The benefits of preparing and maintaining a cashflow forecast include:

• You have better control over your business finances.
• It helps you to make realistic decisions about spending.
• You can plan for the future more easily.

Your cashflow forecast is just that - a forecast. The reality will turn out differently, although a well-prepared forecast won't be that far off what actually happens.

Use a forecast to make better business growth decisions

Growing a successful business requires you to make choices. If your business model is sound it's likely your business will expand naturally, at least in its early days. However, it won't be too long before the rate of growth levels off, as you've satisfied the initial levels of demand. Maintaining growth, or restarting it, requires decisions and actions that will bring in more customers and extend your opportunities to earn more revenue.

Your cashflow forecast will help you to assess the impact of these decisions. It allows you to model what's likely to happen in the future, as you incur more costs with the objective of growing sales.The forecast will help you determine the costs and benefits of actions such as:

• Launching a new marketing campaign.
• Taking on a new member of staff.
• Selling a new product.
• Purchasing new equipment.
• Expanding into a new geographical area.
• Raising additional working capital.

Forecasting requires making some estimates about likely future income based on your choices.

How to build a cashflow forecast

Whatever tool you use to build your forecast, it will have three basic sections. These are:

• Incoming cash
• Outgoing cash
• The net balance

Step 1 - Incoming cash

This section is a list of your different sources of income. Depending on how you sell, you may want to break this down into different categories based on the type of income, such as cash sales, credit sales, credit card settlement and the like.

Not all incoming cash is from sales. You may also receive cash from loans, equity investments, tax refunds and other sources.

Once you've completed this section, you should have a clear idea of how much money you expect to receive on a weekly or monthly basis, over the period of the forecast. Typically, a cashflow forecast will look six months to a year ahead, and longer for bigger projects.

Step 2- Outgoing cash

In the same way, list all the payments made from your business. Be sure to include every form of payment, and take care to include irregular or annual payments. To help you check that you've not missed something, take a look at your accounts for the previous year to see what payments were made.

Payments you're likely to have in this section include:

• Stock purchases
• Payroll
• Tax payments
• Loan repayments
• Asset purchases
• Expense reimbursements

Once you've completed this section you should have a total for the cash outgoings on a weekly or monthly basis.

Step 3 - Net balance

The net balance is the difference between the total incoming cash and the total outgoing cash. If you add your opening bank balance, the cashflow forecast will now give you an estimate of how much money you will have in your bank account on any particular day.

In a strong, healthy business the net balance should be positive. If it's not, the forecast will help you to identify the reason. It may be that you're investing in business growth, which will bring in more future sales income but involves advance costs. The forecast will help you identify whether you need to source short or medium-term funding from elsewhere, and the scale of that funding.

Common problems with cashflow forecasts

Errors occur in cashflow forecasts because the process involves making estimates and it often relies on data that's input into a spreadsheet manually, rather than taken directly from your accounting system.

Problems to look out for in your cashflow forecast include:

• Overlooking VAT on sales, purchases and tax payments.
• Inaccurate information about future receipts and payments.
• Big differences between actual and estimated sales.

It takes time to build and refine an accurate cashflow forecast. Don't be surprised that you need to alter yours often, adding in unexpected receipts and payments.

Keep your forecast up to date

Because your cashflow forecast is based on estimates and assumptions, it will very quickly differ from what actually happens. This means you should update it regularly and often. A well-run business will maintain their cashflow forecast several times a week, perhaps even daily, to keep it as accurate as possible.

Cashflow planning is a vital business activity that you can't afford to overlook or put off. If you're planning to grow your business successfully, the time you put into cashflow forecasting is a wise investment.

Ethical business funding from Qardus

We support growing businesses by providing growth finance of between £50k to £200k on terms of between 6 and 36 months. This finance is helping UK-based small and medium-sized companies to expand their operations and their market share.

We fund businesses that have demonstrated their capability with a proven product and management team. Our clients are drawn from many different industries, but our ethical position means we cannot work with companies involved with products considered detrimental to the welfare of society, such as gambling, alcohol and tobacco. This is because we operate based on Islamic community principles. Our funding process is certified as Sharia-compliant.

We work with businesses and their owners both inside and outside the Muslim community. Any business that operates in line with our ethical values is welcome to apply for funding.

If your business is looking for growth funding that's fast, affordable and ethical, get in touch with us today.

Unsecured loans are popular with businesses looking to raise money. The borrower receives a lump sum of cash, from their bank or other lender, and they repay it over a number of months or a few years. The money is put to work in the business and if all goes well, it should help generate revenues and profit that enable repayment of the loan plus any associated costs.

What is an unsecured business loan?

An unsecured business loan is where a business borrows money without providing security. This security is usually in the form of an asset, such as a building or valuable piece of equipment, which the business owns. This asset becomes a form of guarantee to the lender. Should the business be unable to repay the loan, the lender is given the right to take control of the asset and use it to recover some or all of the debt - typically by selling it.

An unsecured business loan is not linked to an asset in this way, which means the lender is taking a greater risk. If the business can't afford to repay the debt it will be more difficult for the lender to get the money back.

In recent years, it's become common for company directors to sign personal guarantees when taking out an unsecured loan. This gives the lender more confidence they have some recourse should the business become unable to make repayments.

Reasons for taking an unsecured business loan

One of the main reasons why businesses borrow is to fund growth plans. This growth requires investment in advance - it could mean opening a new office, hiring new staff or purchasing new equipment. Many businesses don't have the working capital needed for such investment, meaning they need to find a way to raise the funds. An unsecured loan is a common choice.

As part of the growth plans the business owner will usually have prepared a business plan. This sets out how they intend to spend the capital they have borrowed and includes a budget for repayments.

If a business wants to borrow because it faces cashflow difficulties in its daily operations, it's unlikely to be approved for an unsecured loan. Before they agree to make a loan, potential lenders will perform a series of checks on the business and business owners, in order to assess the credit risk. This includes looking at the firm's credit history, its credit rating, and reviewing information supplied by the business such as financial accounts, budgets and cash flow projections. These checks help the lender to quantify the financial health of the business.

For businesses facing short-term cash flow problems, other forms of funding could be more accessible, such as invoice finance or merchant cash advances.

Benefits of an unsecured business loan

Ideal for smaller amounts - Unsecured loans are typically for smaller amounts, usually less than around £15,000.

Quicker to arrange - Because the amounts are smaller and there are no assets involved, the legal and financial application processes are faster. It's often possible to arrange an unsecured loan in just a few days.

Good for businesses with trading history - Finance providers look more favourably on businesses and owners who can demonstrate a history of growth over a number of years. Such businesses will have a better credit score, because they have managed their finances well.

Assets not put at risk - An unsecured loan leaves control of all the assets with the business.

Alternatives to an unsecured loan

While they can be a convenient way to raise money for your business, an unsecured loan is not always the most cost-effective solution, as the fees tend to be higher to reflect the risk to the lender. These loans can also be hard for startup businesses to access, because they lack the trading history needed to demonstrate creditworthiness.

Alternatives to unsecured loans include:

• Equity finance, such as funding from an angel investor or venture capitalists.
• A private loan, from friends or family.
• A secured loan.
• An overdraft facility with your bank.
• A mortgage on property.
• A startup loan, designed for very new businesses.
• Peer-to-peer crowdfunding.

The range of funding options continues to increase, with a growing number of fintechs bringing innovation to the business finance market.

Funding for growing businesses from Qardus

We help business owners get access to growth finance. The funding we provide is ​of between £50k and £200k on terms of between 6 and 36 months.

You can use this finance for a variety of business purposes, such as purchasing new equipment or other assets, hiring and training new employees, investing in improved processes or boosting your inventory. Our funding allows business owners to invest for growth. Because we want to see businesses do well, we work with firms that have a proven product and a strong management team.

Our clients are drawn from across the UK, operating in different industries. What they have in common, in addition to their growth ambitions, is a commitment to the wider community, good governance and strong ethical principles.

The funding we provide is certified Sharia-compliant, meaning it's operated in line with Islamic finance principles. This does not mean it's only available to Muslim-owned businesses. Many of our clients are outside the Muslim community but they share our values, and operate in industries we are open to supporting.

If your business is looking for growth funding that's fast, affordable and ethical, get in touch with us today.

IS THERE A HALAL INDEX FUND?

Yes, there are many options these days for those looking for halal index funds.

Index funds have long been known as one of the best and easiest ways to invest your money. The increase in the availability of halal index funds, that is funds that comply with Islamic Sharia rules, means that there is an even greater opportunity to maximise your investments without breaching Islamic finance principles.

Halal index funds enable investors to invest in a wider selection of stocks all within one fund.

WHAT ARE INDEX FUNDS?

An index fund is essentially a fund that follows what is known as a benchmark index, for example, Nasdaq 100, FTSE 100, and the S&P 500. Index funds are a portfolio of stocks and bonds.

Index funds are generally regarded as a passive form of investing. What this means is that investors who invest in index funds do not have to actively manage their investments.

The index fund will aim to mirror the index they track, they do not need to be actively and constantly managed.

Exchanged traded funds (ETFs) are those funds that are traded on exchanges and usually ETFs will track a specific index. EFTs offer investors a basket or bundle of assets that can be traded. The result is that the portfolio is diversified and the risk is deemed to be low, especially in times of economic growth.

Index funds are popular with all kinds of investors from angel investors, stock investors, new investors, and those looking for responsible investment options.

Difference Between Mutual Funds And Index Funds

The main difference between mutual funds and index funds is that mutual funds need a great deal more active management by fund managers. These fund managers actively choose the investments and manage the mutual fund and this leads to increased management fees and costs.

Before making any kind of investment in index funds you should make some inquiries about the fund, read online information from the relevant website and try and look into the methodology the fund uses (this includes yield, capitalisation, and price).

HOW DO INDEX FUNDS WORK?

Index funds work by investors investing their money in to an index fund that has been created. The money is then used to invest into the companies that comprise the particular index fund chosen. This means investors are able to diversify their portfolios and invest in companies they want to.

For example, if an investor invests money in the S&P 500. This index fund essentially tracks the performance of 500 of the largest companies in the USA. The S&P 500 is one of the largest and most popular index funds on the market.

Investing in companies via index funds means that investors' money is linked to, and tied up with, the performance of the companies within the fund. Many of these index funds have a very wide range of companies within the fund.

INDEX FUNDS WHAT ARE THE RISKS?

As many of the most popular index funds are diverse, this means they are less risky for investors. The reason the risk is lowered with index funds is that there are usually many companies within the fund, so all the investment is not tied up with the performance of one company.

Index funds are known for offering what is considered to be a broad market exposure for investors, with very low operating costs and risk. Index funds are popular with people who want to use the fund as a pension and plan for retirement.

Index funds are normally managed by a fund manager whose employment is based on ensuring that the fund is managed and tracked properly.

Sharia Principles Relating To Index Funds

The Sharia rules that relate to investment funds are the same rules that apply across all financial transactions. Understanding these halal investing principles is essential before choosing where to put your money.

They include the following:

• There should be no element of interest (riba)
• The investments should be ethical and should enhance communities and society in keeping with the social justice element of Islamic finance
• There should be no element of speculation or gambling (maisir)
• Both parties in the transaction should share the risks and profits
• There should be no transactions involving uncertainty (gharar)
• There must be asset backing - this means that every financial investment and transaction must relate to a tangible asset
• The industries, business, and companies within the fund should not be deemed to be impermissible in Islam

WHAT INDEX FUND IS HALAL?

The aim of halal index funds is to create long term appreciation of the investment funds via a diversified portfolio. Revenue is generated if the portfolio increases in value.

This portfolio is securities and investments are compliant with Islamic finance investment principles as laid down by Sharia laws.

Two of the largest index funds are the HSBC Islamic Global Equity Index Fund (halal) and the Vanguard FTSE 100 Index Fund. In the United States, the Dow Jones Industrial Average is one of the most popular funds to invest in. However, there are other index funds that meet the Sharia principles of halal investment. The numbers in the name often refer to the number of companies included within the index. For example, the FTSE 100 includes the largest 250 companies that are currently listed on the London Stock Exchange.

Before investing, always make sure you have done your due diligence and that the index fund you are investing in has been certified as compliant with Sharia rules.

For Muslims, the main incentive for investing in halal index funds is that they comply with Islamic finance rules and regulations. Any stock or bond within a halal index fund needs to be compliant with Sharia rules relating to investing.

ADVANTAGES OF INVESTING IN HALAL INDEX FUNDS - IS INVESTING IN A FUND HALAL?

One of the main advantages for any individual investing in a halal index fund or product is knowing that you will be investing your money in funds that comply with Sharia principles. Halal index funds also take care to ensure that the money is not invested in industries prohibited by Islamic finance principles (such as the gambling, alcohol, and porn industries).

For investors who want to invest in an ethical way that does not adversely impact society, then halal index funds offer the opportunity to do that. The relevance of halal index funds has grown significantly in recent years with the increase in demand for Sharia compliant and ethical investment options.

There is a great deal of global movement towards more responsible investing and halal index funds meet the criteria for ethical investing.

In the United Kingdom, index funds are regulated by the Financial Conduct Authority.

Considerations For Investors Wanting To Invest In Halal Index Funds

Investment in any kind of fund comes with its own risks. You should always seek to do as much research as possible before you invest.

Some of the key risks relating to halal index funds include:

• Risk of the investment value going down
• Exchange rate risks - if the economy and the markets are volatile then the exchange rates could fluctuate and affect your investment gains
• Tracking risks - whilst index funds will track the index, you should expect to see occasional differences in the gains
• Operational risks - as with any fund, halal index funds could be subject to operational and compliance risks which could affect any profit or return generated

LOOKING FOR THE RIGHT HALAL INDEX FUND - IS THE S&P FUND HALAL?

In addition to the points raised above, if you want to invest in a halal index fund then you should look specifically for:

• Confirmation/documentation that the index fund has been certified as being compliant with Sharia rules
• The scope for diversification - the greater the diversification the lower your overall risk
• Fund fees - check what fees your investment will incur
• Foreign companies - looking at companies abroad is a great way of diversifying your portfolio and finding halal investment funds
• Minimum investment levels - check to see if there is a minimum investment level required for the fund you are interested in. Many halal index funds are accessible and have reasonable charges for every level of investor
• Information - check what information is available on the index funds you are interested in. If you have any questions find an expert who can help you with your queries

As halal index funds grow in popularity across the globe it is important to find the fund that works best for you. Currently, Apple is deemed to be one of the largest holdings in the S&P Shariah Index.

SAVING VERSUS INVESTING IN INDEX FUNDS?

Whilst is it always a good idea to have savings, if you are comfortable with taking small risks and want to diversify your investment portfolio, then halal index funds are the way forward.

If you are risk averse and do not want to deal with any market fluctuations, then it is probably best for you to maximise your savings. However, in the current economy savings are not the best way to use your money. Also, for Muslims who are not permitted to make use of high interest savings accounts, looking into index funds is a good way of earning revenue from the money they have.

Halal index funds are a great way for beginners to invest in the stock market. Index funds enable investors to own a share in a company for relatively low cost.

The company that manages the fund will do all the running around and hard work so you do not have to.