1. Unit 3 Personal & Business Finance
Mr. Barry
Year 12 Business BTEC

2. AO2
Mr. Barry
Year 12 Business BTEC

3. Cash
Cash is usually the cheapest way to pay because you know exactly how much you have to hand over.
However, accessing cash can be expensive. Your bank may charge a withdrawal fee at their branches or ATM’s, and it can be even more expensive if you use another bank's ATM.
Mr. Barry
Year 12 Business BTEC

4. Debit vs. Credit cards Debit cards
Like an ATM card for immediate withdrawals of cash
Like a check when buying an item. The money used to pay for the transaction is usually deducted from your account within a day or two
Advantages
Easy to obtain
Convenient
Safe
Readily accepted
Disadvantages
No grace period
Less protection
Fees
Book balancing difficult
Mr. Barry
Year 12 Business BTEC

5. Debit vs. Credit cards Credit cards
Allows you to borrow money to pay for goods and services. There will be a limit to how much you can borrow called your credit limit. At the end of each month you can either pay off the full amount you owe or pay an agreed amount
Advantages
Instant cash
Convenience
Record keeping
Low-cost loans essentially
Disadvantages
No grace period
Less protection
Fees
Book balancing difficult
Mr. Barry
Year 12 Business BTEC

6. Other types of cards Pre-paid cards Contactless cards Store cards
Charge cards
Mr. Barry
Year 12 Business BTEC

7. Cheque
To be able to make a payment by cheque a business must have a current bank account and be issued with a cheque book.
A cheque is an instruction to a bank to take money out of the drawer’s account and put it into the payee’s account.
Advantages
Banks will guarantee a cheque up to a certain amount via a cheque guarantee card.
A cheque takes approximately 5 working days to clear
Disadvantages
Business does not receive the money immediately
Cheque could “bounce”
Some banks charge money for cheques
Mr. Barry
Year 12 Business BTEC

8. Credit transfer
Credit transfer allows money to be moved directly from one bank account to another.
Electronic transfer of this kind is used by businesses in different ways:
Many businesses pay their employees each week or month by credit transfer (BACS)
Increasing numbers of businesses pay their suppliers using credit transfer (FPS & CHAPS)
Mr. Barry
Year 12 Business BTEC

9. Additional costs if sending money from country to country
Disadvantages
Additional costs if sending money from country to country
Dependent on technology and in particular internet access
Advantages
Cheaper - The cost savings are numerous especially local credit transfers (normally free)
Faster - money can be sent in real time
Global - transfer between countries easily
Mr. Barry
Year 12 Business BTEC

10. Direct Debit
You instruct the bank to allow the company or organisation who presents the direct debit to say how much money will be taken from your account and when
The payment is on a fixed day usually but the amount varies from month to month e.g. electricity bill (depending on how much you use)
Mr. Barry
Year 12 Business BTEC

11. Advantages and Disadvantages
Mr. Barry
Year 12 Business BTEC

12. Standing order
Is an instruction to a bank to pay an agreed amount of money (Fixed) to another bank account/company/person on a particular date or time.
The standing order will normally pay out the same amount of money on a regular basis, weekly, monthly or annually e.g. Insurance premium, rent
Mr. Barry
Year 12 Business BTEC

13. Advantages and Disadvantages
Mr. Barry
Year 12 Business BTEC

14. Mobile Banking
Mobile banking is a service provided by a bank or other financial institution that allows its customers to conduct a range of financial transactions remotely using a mobile device such as a mobile phone or tablet, and using software, usually called an app, provided by the financial institution for the purpose.
Mr. Barry
Year 12 Business BTEC

15. Advantages and Disadvantages
Anytime Banking
Mobile Banking is Free
Various banking services provided e.g. balance check, payments etc.
Secure Banking
Disadvantages
Specific software only on certain phones e.g. IPhone, Samsung etc.
Not totally immune to all Virus or Trojans
Phishing or “Smishing” can be dangerous and lead to security concerns
Mr. Barry
Year 12 Business BTEC