Back-to-back credit

A documentary credit issued on the back of, and against the security of, another credit (master credit) on the understanding that reimbursement will stem from documents presented under the master credit. Both credits cover shipment of the same goods.

Back-up

Temporary archive copies of parts of your work. Often saved onto floppy disks or on a zip drive. 

BACS Ltd

Formerly known as the Bankers Automated Clearing Service, BACS Ltd is an organisation owned by a group of banks and building societies. It provides a clearing service for electronic transactions and the management and provision of related payment services and networks to the UK banking industry. See ACH.

BACS Payment

A BACS payment is an electronic instruction to credit a payee's bank or building society account in the UK with a specified amount in a sterling or euro denomination. The service is facilitated by BACS ltd and works on a three day clearing cycle.  

Balance Sheet

A statement of the financial position of the business at a specified date in the past. This date is often the financial year-end for accounting purposes. It provides a snapshot of the creditworthiness and value of the business at that date. It is one of the three main financial statements legally required to be produced by a company (the other two being Profit & Loss Account and Statement of Sources and Applications of Funds). The balance sheet is split into liabilities (monies invested, monies owed to creditors, reserves for tax bills, provisions for staff pensions etc.) and assets (land and buildings, plant and machinery, stock, cash, investments and amounts due from debtors). It will also give details of how the company is funded by shareholders' funds and debt at that point in time.

Balloon Rental or Payment

A larger rental or payment normally paid at the end of the leasing or loan period. This results in lower normal payments and can aid business cash flow. 

Bandwidth

The capacity of a telecommunications link - how fast data can be moved around. Measured in hertz (Hz) and megahertz (MHz) - the more the better. 

Bank Base Rate

The rate of interest used as the basis for the interest charged by the banks on much of their variable rate lending. The variable rate is quoted as a percentage margin over base rate. Alternatives include LIBOR. 

Bankers Draft

A cheque issued or drawn by a recognised bank and treated as cleared funds. You can obtain a draft (or banker’s draft) from your bank for a small fee. This is useful for making large value payments where cleared funds are required and where it maybe risky using cash (a personal cheque is not treated as cleared funds you have to wait for the cheque to clear before being able to use the funds).

Bank Giro Credit System

A manual transfer of funds between banks and branches. 

Bank Reference

An enquiry made upon the business's ability to meet a specified commitment over a period of time. The business has to give permission for the enquiry to be made. The bank will respond to the enquiry in writing. 

Bank-to-Bank Guarantee

A Guarantee issued by one bank (Issuing Bank) to another bank (Beneficiary) as security for general banking facilities given by the latter to a mutual customer.

Base Rate

The interest rate which banks and finance houses use as a basis for calculation of interest charges. Base rates fluctuate from period to period in line with general interest rates as set by the Monetary Policy Committee (MPC) at the Bank of England.

Base Rate Cap

A base rate cap (BRC) is an instrument used to guarantee the maximum rate of interest a borrower will pay on a specified principal amount, for an agreed period of time. It is used to protect an overdraft or loan where the interest charged is linked to the Base Rate.

Beneficiary

For a Documentary Credit this is a payee or recipient, usually of money. The person to whom a documentary credit is addressed and who may benefit from it on utilisation. Also known as the Seller. For a Guarantee this is the party who derives the benefit of the Guarantee.

BIC

Bank Identifier Code A universal code, issued by SWIFT, for identifying financial institutions. It assists in the automation of payment messages in banking and related financial environments.

Bid

The price at which the bank is prepared to buy an asset (e.g. currency) or pay a fixed rate of interest. 

Bid Bond/Guarantee

A Guarantee issued in support of a contract bid demonstrating the bidder’s willingness to enter into a contract if its bid is successful.

Bidder

A party who submits a bid to a potential buyer in response to the latter’s invitation to bid/tender for goods or services. 

Bill for collection (BC)

Document(s) or cheque submitted through a bank for collection of payment from the drawee.

Bill of Exchange (Draft)

A written order issued and signed by one party and addressed to another, requiring the addressee to pay on demand, or at a fixed or determinable future time, the amount of the bill to or to the order of a specified party, or to the bearer. Usually submitted with shipping documents.

Bill of Lading (B/L)

A document issued by the shipping company to the shipper which operates as an acknowledgement that the goods have been received on board. It shows details of the goods, vessel and port of destination. It evidences the contract of carriage and conveys title to the goods.

Bill Receivable (BR)

Bills of exchange that are financed by the receiving branch of a bank are treated as Bills Receivable by both the remitting branch and the receiving branches.

Black-Scholes Model

The original option pricing model developed by Fischer Black and Myron Scholes in1973. Forms the basis of option pricing today. 

Blank Endorsed

A term used where a bill of lading is made out to order or shipper’s order and the shipper has signed the reverse, it is said to be blank endorsed. The bill of lading then becomes a bearer instrument and the holder can present it to the shipping company to take delivery of the goods. 

Bond

See Guarantee. 

Book Debts

This provides cover against the loss of records of your debtors as your business could lose money if records of debtors were destroyed. Often it would be impossible to trace the debts and at other times the cost of reconstructing the information on the debtors could be very expensive. Cover is for finance that has already been incurred as opposed to future plans.

Breached

When a limit is surpassed. This can be the market moving through a predetermined level, or a credit line being over-used.

Break-even

A calculation of the approximate sales volume required to just cover costs, below which production would be unprofitable and above which it would be profitable. Break-even analysis focuses on the relationship between fixed costs, variable costs, and profit.

Browser

The program that is loaded on your PC that allows it to interact with the World Wide Web. E.g. Internet Explorer (Microsoft) and Netscape's Navigator.

Bug

An error in the original coding. In theory will be fixed before the software is released….If not will be solvable by a 'fix' or 'patch'. 

Bug Fix

Correction of a mistake in the original coding of a computer program. Also known as a patch.

Building Sum Insured

Building Sum Insured relates to the total rebuilding cost of your buildings, including outbuildings and perimeter walls along with permanent fixtures such as doors and sanitary fittings. The value should take into consideration materials, labour, VAT, debris removal and professional fees such as architects, surveyors and solicitors fees for which you as owner are responsible.

Bunker

An on-site fuel tank, common in haulage and distribution businesses and on farms.

Business Angels

Business Angels are individuals who invest in businesses on their own behalf either individually or as part of a syndicate. They are prepared to take more risk than a corporate lender and will normally take an equity stake in the business in return for their investment and seek some involvement typically as a non-executive director.

Business Day

In the foreign exchange markets, typically a day on which the banks in the relevant country are open to make and receive payments in its currency. 

Business Description

This should describe the nature of your business activities.

Business Incubation Unit

A specialist business centre, with small to medium sized units. Often located near hi-tech businesses or universities. Usually well equipped technologically, and sometimes with specialist facilities. Often have administrative support as part of the package.

Business Interruption

Also known as `Loss of Profits` cover, this insurance seeks to replace Profits lost due to interruption to the business caused by such things as fire, theft or flood.

Business Plan

A document prepared by a company's management, detailing the past, present, and future of the company. It is often created when the business is looking to attract capital investment, but it should be used as a key business tool on an ongoing basis. 

Business Use

This is use by the policyholder for their own business to travel to more than one place of work and between places of work. Online motor insurance with HSBC does not provide cover if the car is used for any form of selling, soliciting for orders or for the collection of monies. If you want to arrange this cover, you can call us on 0800 085 5522, from 8.00am to 8.00pm Monday to Friday and from 9.00am to 4.00pm on Saturday.