Tips for Reducing Financial Costs 

Tips for Reducing Financial Costs 

During periods of rapidly increasing costs, finding affordable credit is as important as analyzing the costs of your existing loans in line with changing market conditions and taking actions accordingly. This can result in significant savings in your financing costs.

Control of Revolving Credit Interest Rates

In periods where there is an expectation of decreasing interest rates, revolving credits are preferred as the interest rates fluctuate according to market conditions. While some financial institutions automatically reflect interest rate increases in the system, they may choose to manually adjust interest rate reductions. Due to the complex interest calculation structure of revolving credits, interest control is often not possible.Deferred repayments and delayed implementation of interest reductions can lead to significant interest rate differences in large balance loans. With our developed credit calculation module, you can easily record revolving credit transactions in the system and instantly view interest amounts based on interest and balance changes.

Analysis of Installment Loan Restructuring

There is a common and inaccurate belief that the interest rates of installment loans are primarily collected in the initial installments, leading to the misconception that restructuring the loan after a few installments would result in financial losses. However, due to the gradual reduction of the loan's principal balance and the interest being calculated based on the remaining principal, the interest amount in the early installments is relatively higher. The decision of whether restructuring an installment loan would yield financial benefits depends on factors such as the difference between the interest rate at the time of loan utilization and the current interest rate, loan usage fees, and early repayment penalties. If the conditions are favorable, restructuring an installment loan, even in its later stages, can potentially result in interest savings. For those still skeptical, our credit analysis module allows you to easily generate payment plans for your existing loans and assess the potential interest difference without any changes to your payment schedule based on the new interest rate offer. 

The profits generated from interest rates, especially during periods of rapid decline, can further challenge your belief. If you require further confirmation, your banker will also verify the same figure.

Using the right loan according to your cash flow cycle

One of the biggest mistakes that leads to increase financing expenses is using loans with payment terms that are incompatible with collection periods. 

Most companies that prefer fixed interest and payment opt for installment loans. The biggest mistake made here is the lack of a collection plan that aligns with the installment payment dates. For instance, let's consider that a check is provided as collateral for this loan. If the checks are collected before the installment due date, they will have to wait until the due date, resulting in unnecessary interest payments. On the other hand, if there is insufficient check collection on the installment date, another loan will be taken to make the payment, leading to additional interest payments. Instead, using spot loans or discount loans for each check's maturity date, equivalent to the check amount plus interest, will prevent any loss in loan value. Having a good understanding of financial mathematics can be beneficial here. Banks may have pricing differences between spot loans and discount loans based on their periodic credit marketing policies. Obtaining and comparing prices for both loans is important in terms of financing costs. You can simulate both loans in our financial management system. 

Using the Right Currency for Loans 

One of the fundamental principles of financing is borrowing in line with your income currency. Unfortunately, in the past, many individuals and companies opted for foreign currency loans due to their lower costs. Prior to 2010, there was a significant number of housing loans taken in foreign currency, resulting in substantial losses due to exchange rate fluctuations. As a result, the use of individual loans indexed to foreign currency was prohibited. Although current regulations restrict companies from extensively using foreign currency or currency-indexed loans, some companies still struggle to achieve the proper balance in this regard. It is crucial for companies to adhere to the legal limitations and carefully assess the risks associated with foreign currency borrowing to prevent potential financial hardships.

The most accurate option is to borrow in the same currency as the income rate. For example, if 30% of a company's income is in USD and the rest is in Turkish lira, borrowing 30% in USD and the remaining amount in Turkish lira, with income and expense due dates aligned, will minimize exchange rate risk. Although exchange rates have been constantly increasing in recent periods, it should be considered that the received currency may offset the debt at the time of collection, regardless of the exchange rate.