Anyone new to international money transfers could get lost in the sometimes confusing world of financial jargon and require a quick primer on the basics. Some people are drawn to terms like “interest rate,” “exchange rate,” “EBITDA,” and “IBAN.” So, to help you understand what you’re reading, let’s briefly look at the typical terms and conditions of money transfers and see if we can help you avoid getting lost!
Transfer of Funds
Transferring or sending a certain quantity of money from one party to another is a money transfer. People most commonly assume money transfers to be transferred outside the country, yet transfers within the country are also termed money transfers.
Remember that remittances account for more than 4% of GDP in more than 70 nations. Remittances are the country’s primary source of social and economic development. Finally, more than half of all remittances are sent to rural households, which account for 75 percent of the world’s poor and food-insecure people. India (83 billion dollars), China (60 billion dollars), Mexico (43 billion dollars), the Philippines (35 billion dollars), and Egypt (30 billion dollars) were the top five destinations for US dollar remittances in 2020. Egypt ($30 billion), Nigeria ($17.6 billion), Ghana ($4.5 billion), Kenya ($3.7 billion), and Senegal ($2.6 billion) were the top five receivers of aid in Africa.
Beneficiary
The “sender” is a term used to describe someone who sends or transfers money. The recipient, sometimes known as the “recipient,” is the individual you send money to. Individuals or commercial entities can be beneficiaries. An exchange rate is when one currency (or national currency) is exchanged for another in the financial world.
The currency is typically national, but it can also be local (as in Hong Kong) or supranational (as in the euro). For example, in December 2021, euro trading will look like this: On average, one-euro costs 1.13 dollars. On average, one euro is worth 0.85 pounds sterling. You may get an average of 10.39 Moroccan dirhams for one euro. On average, one euro is worth 655.96 CFA francs. On average, one euro could buy $4,475.57.
Interest Rate
the interest rate is the percentage applied to the amount borrowed or paid for the amount saved. As a result, even a minor adjustment in interest rates can significantly affect. Keeping an eye on interest rate swings cannot be overstated. The interest rate is the amount you pay for a loan if you are a borrower. If you save money, you will pay the interest to yourself because the bank will pay your cash to rent.
Trade
The transaction is an English phrase without precise French translation for many in the financial sector. It entails buying financial securities such as stocks, indices, or currencies to resell them at a higher price in the hours, days, or even weeks ahead.
EBITDA
EBITDA (earnings before interest, taxes, depreciation, and amortization) is an acronym that stands for “earnings before interest, taxes, depreciation, and amortization.” The French version of EBITDA, which stands for “profits before interest, taxes, and depreciation,” is EBITDA. In French economic jargon, the phrase refers to a company’s profit before different interest and corporation taxes.
Prepayment
A prepaid fee is what you pay in advance for a service or item you haven’t yet gotten. It is an asset since you have paid for the service in advance, even if it has not been fully utilized. The best example of a down payment is company insurance. You pay first when you sign an insurance contract, but the service is good for the next 12 months. You will have a balance sheet at the end of the year, even if these 12 months do not necessarily correspond to your financial year.
Estimated Liabilities
Prepaid payments are the inverse of accrued payments. It is the amount you owe for services you received in full and the outstanding fee. These costs appear on your income statement as incurred expenses and on your balance sheet as outstanding obligations.
Cash Flow
Cash flow is the entire amount of money pouring in and out of business. You’ve probably heard of this word if you work with companies in any capacity. Companies prefer to have more money come in rather than spend it, resulting in positive cash flow.
Assets Backed by Money
Financial assets are monetary securities or contracts that are intangible. These are assets that the company owns or controls and are considered investments. Fixed, operating, non-current, and current or current assets are all examples of assets.
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