Episode 227 Professional English Personal and Business Finance

Disclaimer

I am using an automatic transcript service as it is not possible for me to do it on my own and I cannot afford human transcription at the moment. The service claims to have about 95% accuracy, which means there will still be some mistakes, so my apologies for having a less than perfect transcript, but I hope I can afford human transcription soon and I will solve this problem. However, the service is pretty good, and the transcript is almost perfect.

Transcript

Welcome to a new episode from English plus podcast. Today’s episode is professional English, and we will focus on a topic that has to do with finance. We will talk about personal and business finance. In this episode, we will talk about money and income currency, personal finance, and business finance, where we will talk about capital and revenue.

[00:00:28] And business finance, where we will talk about capital and revenue among other topics. But before we start, let me remind you that you can find the transcript of this episode in a link. I will leave in the description. You will also find a link that will take you to Patreon, where you can support English plus podcasts.

[00:00:46] And by doing that, you will get a PDF practice worksheet custom made for every single episode we create. You will also find a link to English plus podcast mailing list. If you would like to subscribe to our mailing list, you will receive an updated schedule every two weeks. And I will share some of the premium PDF practice worksheet with you every two weeks as well.

[00:01:07] So without further ado, let’s start talking about professional English. Personal and business finance. Now, first let’s talk about money and income and to start, let’s talk about currency. What do we mean when we say currency now, currency is the money used in a country like euros dollars, yen, et cetera. So this is what we call currency.

[00:01:29] And money can come in notes or bank notes or in American English, we say bill and coins. And when we talk about notes, bills, and coins, we’re talking about cash, cash, money, and most money, however consists of bank deposits. And what is the meaning of bank deposits? That’s the money people and organizations have in bank accounts.

[00:01:51] And most of this is on paper. That means it exists in theory only, and only about 10% of it exists in the form of cash in the bank. So that is just a small introduction. Before we start talking about our main topic and that is personal finance. Let’s start with personal finance. Then we will move on to talk about business finance.

[00:02:10] We will find that we have different terms and words we use to describe personal finance and business finance. Now, of course, when we talk about personal finance, we have to talk about income. All the money a person receives or earns as payment is his or her income, but that’s not everything. Of course we have different types of income or different sources of income.

[00:02:33] Now, every person might have one, two or more types of income based on what they do. Now the very first and common thing is the salary. The salary is the money paid monthly by an employer, or we have wages and that is the money paid by the day or the hour, and usually received weekly. So we have a salary and wages.

[00:02:56] Remember the salary is usually paid monthly and the wages are usually received weekly. So that is the first type of income. What else we have overtime? The overtime is the money you receive for working extra hours. We call it overtime, but that’s not all we can have commission as well. Now the commission is not for every job, but for some jobs, it’s the money paid specially to salespeople or agents.

[00:03:24] And that is a certain percentage of the income the employee generates. And then we have the bonus or what is the bonus? The bonus is extra money given for meeting a target or for good financial results. Some companies have this, some companies don’t. But it’s always pleasant to have a bonus at the end of the year or at the end of the quarter, et cetera, based on the company’s policy.

[00:03:45] And then we have different type of income and that’s what we call fees. Now, the fees are different from salary overtime, commission or bonus. This is the money paid to professional people, such as lawyers and architects. So that is different. That’s not a salary that is money paid. In return for a professional service, such as consultancy or upon completing a project, for example, with an architect.

[00:04:10] And then we have social security, social security is the money paid by the government to unemployed and sick people. Now that comes in different forms. And it depends on the country it’s regulations, but in general, that’s what we call social security. And then finally we have the pension. The pension is the money paid by a company or the government to a retired person.

[00:04:33] Now, of course, salaries and wages are often paid after deductions, such as social security charges and pension contributions. Now we talked about the types of income. Let’s talk about. The expenditure or what we call the outgoings now amounts of money that people have to spend regularly are outgoings.

[00:04:54] And here, remember, we’re still talking about personal finance. We’re not talking about business finance. No, let’s talk about these types of outgoings. Now, these include living expenses. And that is obviously the money spent on everyday needs such as food, clothes, and public transport. That’s what we call living expenses.

[00:05:13] And then we have the bills and these are requests for the payment of money owed for services, such as electricity, gas, and telephone connections. So these are the bills. We also have the rent and that is the money paid for the use of a house. Or an apartment and then we have the mortgage. Now the mortgage is the repayments of money borrowed to buy a house or an apartment.

[00:05:37] So here you’re not paying rent. You’re paying mortgage. That means in the end, you will own the house. But when you rent a house, it doesn’t matter for how long you’re not going to own the house. The mortgage is different. And then we have from the outgoings health insurance, and that is money. We pay for financial protection against medical expenses for sickness or accidental injuries.

[00:05:58] And finally, of course we have the tax and that is the money paid to finance government spending. So here, we talked about personal finance. We talked about the different types of income and the different types of outgoings and what we call each. And this is very important to know the different types so that we know how to call them and how to talk about them.

[00:06:18] But with that being said, that will be enough about personal finance. Let’s move on to talk about business finance, and we will start with talking about capital. Now, what is capital? When people want to set up or start a company, they need money. And this money they need to start. The company is called capital.

[00:06:35] Now companies can borrow this money and this is called alone. And companies usually borrow it from banks. Now the loan must be paid back with interest. Now, what is the interest? That’s the amount paid to borrow the money. Of course, the bank is not going to lend money to companies for free. There is this amount paid to borrow the money, the extra charge, which we call the interest.

[00:06:59] Now this is one form of capital. This is one form of raising capital to set up or start up a company, but that’s not everything. Capital can also come from issuing shares or equities or what we call in American English stocks. And what are these? These are certificates representing units of ownership of a company.

[00:07:18] Now the people who invest money in shares are called shareholders, or as we said, stocks in American English. So they are stockholders and these people own part of the company based on how many shares or stocks they own. Yeah, the money they provide is known as share capital. That’s what we call it in business finance, the kind of capital that comes from shares from shareholders.

[00:07:44] That’s called share capital, but that’s not everything individuals and financial institutions. Called investors can also lend money to companies by buying bonds. What are bonds? Bonds are loans that pay interest and are repaid at a fixed future date. And that’s another means of financing a company. And now we will move to talk about debt.

[00:08:08] Now that is the money that is owed that will have to be paid to other people or businesses. That’s what we call a debt. Now in accounting companies, debts are usually called liabilities. That’s the term they use in business finance to talk about companies’ debts. Long-term liabilities include bonds and short-term liabilities include debts to suppliers who provide goods or services on credit.

[00:08:33] And what is the meaning of providing goods or services on credit? That means they give it to you without taking money right away. And these goods or services will be paid for later. Now, the money that a business uses for everyday expenses or has available for spending is called working capital. Or what we call funds.

[00:08:52] So these are essential terms. You have to understand when you want to talk about business finance, and especially when you want to talk about capital, what capital is, how companies raise capital and the liabilities and debt companies. Oh, other people and businesses. And now let’s move on to talk about.

[00:09:10] The revenue now, the revenue is another term we use in business finance, and that is all the money coming into a company during a given period. That’s what we call a revenue now, revenue minus the cost of sales and operating expenses, such as rent and salaries is known as profit. So when you deduct the cost of sales and operating expenses from the revenue you have, what is known as profit.

[00:09:36] Or we can call it earnings or net income. Now the part of its profit that accompany pays to its shareholders is a dividend. Remember we talked about shareholders or stockholders. Of course, these people expect at the end of the year or at the end of each quarter to get paid and they get paid a certain percentage from the profit, from the overall profit.

[00:09:57] The company makes this part of profit that accompany pays to its shareholders is called a dividend. Now companies pay a proportion of their profits to the government as tax, of course, to finance government spending, and they also retain or keep some of their earnings for future use. And that’s what we call retained earnings, which belong to the owners of the company.

[00:10:20] And now let’s move on to the last point of today’s episode. And that is. The financial statements. Remember, we’re still talking about business finance. Now. Of course, there are a lot of financial statements and they can be very complicated and very difficult to explain in one episode or even a series of episodes.

[00:10:36] But we will just learn about the most common ones and the more important ones to be honest. Our companies give information about their financial situation in what we call financial statements. Now the balance sheet, and that’s the most important financial statement of a company shows the company’s assets, the things it owns and its liabilities, the money it owes and its capital.

[00:10:59] So here we have three things. The assets, the liabilities and the capital, that is the balance sheet. And then there is the profit and loss account, and this is how we call it in British English. But in American English, it is called income statement, the profit and loss account, or the income statement shows the company’s revenues and expenses during a particular period, such as three months or a year.

[00:11:23] Now, usually we have that every three months and we call it a quarter. But of course we have it as well every year, and that is the yearly income statement or profit and loss account. So with that being said, that will be everything I wanted to share with you in today’s professional English episode, about personal finance and business finance.

[00:11:42] I hope you found the information interesting, even for the ones who are not working in finance, but these are words that we encounter everyday. And we need to understand these things. When we see them, we need to understand what they mean. So before I leave you like me to remind you that you can find the transcript of this episode in a link, I will leave in the description and you can also find two more links, one to Patri on where you can become a patron of the show, support us and get a PDF practice worksheet.

[00:12:08] With every single episode we create. And there is the other link to our mailing list where you can get updated schedules every two weeks and selected PDF practice worksheets that I will share with my mailing list subscribers. This is your host, Danny. Thank you very much for listening to another episode from English plus podcast.

[00:12:26] I will see you next time.