Finance, Credit, Investments – Economical Categories

Scientific works in the theories of finances and credit, according to the specification of the research object, are characterized to be many-sided and many-leveled.

The definition of totality of the economical relations formed in the process of formation, distribution and usage of finances, as money sources is widely spread. For example, in “the general theory of finances” there are two definitions of finances:

1) “…Finances reflect economical relations, formation of the funds of money sources, in the process of distribution and redistribution of national receipts according to the distribution and usage”. This definition is given relatively to the conditions of Capitalism, when cash-commodity relations gain universal character;

2) “Finances represent the formation of centralized ad decentralized money sources, economical relations relatively with the distribution and usage, which serve for fulfillment of the state functions and obligations and also provision of the conditions of the widened further production”. This definition is brought without showing the environment of its action. We share partly such explanation of finances and think expedient to make some specification.

First, finances overcome the bounds of distribution and redistribution service of the national income, though it is a basic foundation of finances. Also, formation and usage of the depreciation fund which is the part of financial domain, belongs not to the distribution and redistribution of the national income (of newly formed value during a year), but to the distribution of already developed value.

This latest first appears to be a part of value of main industrial funds, later it is moved to the cost price of a ready product (that is to the value too) and after its realization, and it is set the depression fund. Its source is taken into account before hand as a depression kind in the consistence of the ready products cost price.

Second, main goal of finances is much wider then “fulfillment of the state functions and obligations and provision of conditions for the widened further production”. Finances exist on the state level and also on the manufactures and branches’ level too, and in such conditions, when the most part of the manufactures are not state.

V. M. Rodionova has a different position about this subject: “real formation of the financial resources begins on the stage of distribution, when the value is realized and concrete economical forms of the realized value are separated from the consistence of the profit”. V. M. Rodionova makes an accent of finances, as distributing relations, when D. S. Moliakov underlines industrial foundation of finances. Though both of them give quite substantiate discussion of finances, as a system of formation, distribution and usage of the funds of money sources, that comes out of the following definition of the finances: “financial cash relations, which forms in the process of distribution and redistribution of the partial value of the national wealth and total social product, is related with the subjects of the economy and formation and usage of the state cash incomes and savings in the widened further production, in the material stimulation of the workers for satisfaction of the society social and other requests”.

In the manuals of the political economy we meet with the following definitions of finances:
“Finances of the socialistic state represent economical (cash) relations, with the help of which, in the way of planned distribution of the incomes and savings the funds of money sources of the state and socialistic manufactures are formed for guaranteeing the growth of the production, rising the material and cultural level of the people and for satisfying other general society requests”.
“The system of creation and usage of necessary funds of cash resources for guarantying socialistic widened further production represent exactly the finances of the socialistic society. And the totality of economical relations arisen between state, manufactures and organizations, branches, regions and separate citizen according to the movement of cash funds make financial relations”.
As we’ve seen, definitions of finances made by financiers and political economists do not differ greatly.
In every discussed position there are:

1) expression of essence and phenomenon in the definition of finances;

2) the definition of finances, as the system of the creation and usage of funds of cash sources on the level of phenomenon.

3) Distribution of finances as social product and the value of national income, definition of the distributions planned character, main goals of the economy and economical relations, for servicing of which it is used.

If refuse the preposition “socialistic” in the definition of finances, we may say, that it still keeps actuality. We meet with such traditional definitions of finances, without an adjective “socialistic”, in the modern economical literature. We may give such an elucidation: “finances represent cash resources of production and usage, also cash relations appeared in the process of distributing values of formed economical product and national wealth for formation and further production of the cash incomes and savings of the economical subjects and state, rewarding of the workers and satisfaction of the social requests”. in this elucidation of finances like D. S. Moliakov and V. M. Rodionov’s definitions, following the traditional inheritance, we meet with the widening of the financial foundation. They concern “distribution and redistribution of the value of created economical product, also the partial distribution of the value of national wealth”. This latest is very actual, relatively to the process of privatization and the transition to privacy and is periodically used in practice in different countries, for example, Great Britain and France.

“Finances – are cash sources, financial resources, their creation and movement, distribution and redistribution, usage, also economical relations, which are conditioned by intercalculations between the economical subjects, movement of cash sources, money circulation and usage”.
“Finances are the system of economical relations, which are connected with firm creation, distribution and usage of financial resources”.

We meet with absolutely innovational definitions of finances in Z. Body and R. Merton’s basis manuals. “Finance – it is the science about how the people lead spending `the deficit cash resources and incomes in the definite period of time. The financial decisions are characterized by the expenses and incomes which are 1) separated in time, and 2) as a rule, it is impossible to take them into account beforehand neither by those who get decisions nor any other person” . “Financial theory consists of numbers of the conceptions… which learns systematically the subjects of distribution of the cash resources relatively to the time factor; it also considers quantitative models, with the help of which the estimation, putting into practice and realization of the alternative variants of every financial decisions take place” .

These basic conceptions and quantitative models are used at every level of getting financial decisions, but in the latest definition of finances, we meet with the following doctrine of the financial foundation: main function of the finances is in the satisfaction of the people’s requests; the subjects of economical activities of any kind (firms, also state organs of every level) are directed towards fulfilling this basic function.

For the goals of our monograph, it is important to compare well-known definitions about finances, credit and investment, to decide how and how much it is possible to integrate the finances, investments and credit into the one total part.

Some researcher thing that credit is the consisting part of finances, if it is discussed from the position of essence and category. The other, more numerous group proves, that an economical category of credit exists parallel to the economical category of finances, by which it underlines impossibility of the credit’s existence in the consistence of finances.

N. K. Kuchukova underlined the independence of the category of credit and notes that it is only its “characteristic feature the turned movement of the value, which is not related with transmission of the loan opportunities together with the owners’ rights”.

N. D. Barkovski replies that functioning of money created an economical basis for apportioning finances and credit as an independent category and gave rise to the credit and financial relations. He noticed the Gnoseological roots of science in money and credit, as the science about finances has business with the research of such economical relations, which lean upon cash flow and credit.
Let’s discuss the most spread definitions of credit. in the modern publications credit appeared to be “luckier”, then finances. For example, we meet with the following definition of credit in the finance-economical dictionary: “credit is the loan in the form of cash and commodity with the conditions of returning, usually, by paying percent. Credit represents a form of movement of the loan capital and expresses economical relations between the creditor and borrower”.

This is the traditional definition of credit. In the earlier dictionary of the economy we read: “credit is the system of economical relations, which is formed while the transmission of cash and material means into the temporal usage, as a rule under the conditions of returning and paying percent”.
In the manual of the political economy published under reduction of V. A. Medvedev the following definition is given: “credit, as an economical category, expresses the created relations between the society, labour collective and workers during formation and usage of the loan funds, under the terms of paying present and returning, during transmission of sources for the temporal usage and accumulation”.

Credit is discussed in the following way in the earlier education-methodological manuals of political economy: “credit is the system of money relations, which is created in the process of using and mobilization of temporarily free cash means of the state budget, unions, manufactures, organizations and population. Credit has an objective character. It is used for providing widened further production of the state and other needs. Credit differs from finances by the returning character, while financing of manufactures and organizations by the state is fulfilled without this condition”.

We meet with the following definition if “the course of economy”: “credit is an economical category, which represents relations, while the separate industrial organizations or persons transmit money means to each-other for temporal usage under the conditions of returning. Creation of credit is conditioned by a historical process of fulfilling the economical and money relations, the form of which is the money relation”.

Following scientists give slightly different definitions of credit:
“Credit – is a loan in the form of money or commodity, which is given to the borrower by a creditor under the conditions of returning and paying the percentage rate by the borrower”.
Credit is giving the temporally free money sources or commodity as a debt for the defined terms by the price of fixed percentage. Thus, a credit is the loan in the form of money or commodity. In the process of this loan’s movement, a definite relations are formed between a creditor (the loan is given by a juridical of physical person, who gives certain cash as a debt) and the debtor.
Combining every definition named above, we come to an idea, that credit is giving money capital of commodity as a debt, for certain terms and material provision under the price of firm percentage rate. It expresses definite economical relations between the participants of the process of capital formation. Necessity of the credit relations is conditioned, from one side, by gathering solid quantity of temporarily free money sources, and from the second side, existence of requests of them.

Though, at the same time we must distinguish two resembling concepts: loan and credit. Loan is characterized by:

o Here, the discussion may touch upon transmission of money and also things form one side (loaner) to another (borrower): a)under the owning of the borrower and, at the same time, b) under the conditions of returning same amount or same quantity and quality of the things;

o The loaning of money may bear no interest;

o Any person may take part in it.
With the difference with loan, credit, which is somehow a private occasion of the loan, represents:

o One side (loaner) gives to the second one (borrower) only money, and _ for temporal usage;

o It may not bear no interest (if the assignment doesn’t foresee something);

o In it creditor is not any person, but a credit organization (at the first place, banks).
So, a credit is the bank credit. To our mind, it is not correct to use “credit” and “loan” as the synonyms.
Banking crediting is the union of relations between bank (as a creditor) and its borrower. These relations touch upon:

a) Giving a certain amount of money to the borrower for definite purpose (though, we meet with the so-called free credits, aims and objects of crediting are not appointed in the assignment);

b) Its opportune returning;

c) Getting percentage rate from the borrower for using the sources under his/her disposal.
The essential foundation of the credit essence and its important element is existence of trust between the two sides (in Latin “credo”, from which comes the word “credit”, means “trust”).
From the position of circulation of money forms (in the abstraction, historical process of formation economical relations and social budget and banking systems expressed by them) comparing different definitions of finances and credit, the paradox conclusion appears: credit is the private occasion of finances. And truly, from the position of movement of the money forms, finances represent the process of formation and usage of the funds of cash means. Very often such movements are fulfilled without returning, but sometimes, it is possible to give loans from the budget for the investment projects of other needs. Also, when a manufacture or corporations use their cash funds and we mean the finances of industrial subject, such usage may be realized as inside the manufacture or corporation (there is no subject about returning or not returning of the usage), so gratis under conditions of returning. This latest is called commercial form because of transmitting the sources to others, but even in this occasion, it is the element of financial system of the manufacture and corporation.

From the point of cash means movement, main character of credit is the process of formation and usage of the funds of cash means under the conditions of returning and, as a rule, taking the value-percentage. If gating the credit value doesn’t take place (even in the exceptional occasions), according to the movement form, credit becomes a private occasion of finances, as from the net financial funds (consequently from the state budget) the loans which bear no interests may be used. If gating credit value takes place, by the appearance form, credit is discussed to be financial modification.

From the historical point of view, finances (especially in the sort of the state budget) and credit (beginning with usury, later commercial and banking) were developing differently for considering credit to be the part of finances. Though, from the genetic-historical point of view, previous loaners, before giving loan, needed gathering the permanent capital not returning, that is the net financial foundation. The banks analogously needed concentration of the important own capital for influxing the consumers’ means and for getting higher percentage rate under the conditions of returning. Herewith, exactly on the financial basis, in the sort of financial fund (which later partially becomes loan fund) part of the bank capital appears to be the reservation (insurance) part of the fund, which by nature is financial and not loan. So notwithstanding the essential distinctions between finances and credit form the genetic-historical point of view, credit appears to be formed from finances and represent their modification.

From the essential position of expressing economical relations of finances and credit, we meet with cardinal distinctions between these two categories. Which mostly expressed by the distinction of the movement forms notwithstanding they are returnable or not. Finances express relations in the aspects of distribution and redistribution of social product and part of the national wealth. Credit expresses distribution of the appropriate value only in the section of percentage given for loan, while according to the loan itself, a only a temporal distribution of money sources takes place.
Herewith, there is a lot of common between the finances and credit as from the essential point of view, so according to the form of movement. At the same time, there is a significant distinction between finances and credit as in the essence, so in the form too. According to this, there must be a kind of generally economical category, which will consider finances and credit as a total unity, and in the bounds of this category itself, the separation of the specific essence of the finances and credit would take place.

Funding of the cash means is common to the researched economical categories. It takes place in any separate system of finances and credit, which have been touched upon during the analyses of defining finances and credit. Word combination “funding of the cash sources (fund formation)” reflects and defines exactly essence and form of economical category of more general character, those of finances and credit categories. Though in the in economical texts and practice, it is very uncomfortable to use a termini, which consists of three words. Also, “unloading” with an information hardens greatly its influxing into the circulation even in the conditions of its strict substantiation and thoroughness.
In the discussing context we consider:

1) wide and narrow understanding of economical category of the finances;

2) discussing finances in narrow understanding under general traditional meaning;

3) discussing finances, as funding of the cash means, in wide understanding, which concerns finances – in narrow meaning and credit – in complete meaning.
Termini “funding” and its equivalent “fund formation” are used by us as the purposeful structuring of cash means, which is based on two poles – accumulation of money sources (gathering) and its usage for definite purpose in the way of financing and crediting.
We have established a new termini – “finance-investment sphere” (FIS). Analyses about interrelation of finances and credit made by us give us an opportunity of proving, that in the given termini, the word “financial” is used with the meaning of funding cash sources, its purposeful structuring. In this process we consider at the same time financial, credit and investments’ economical categories.

Let’s sum up middle results of discussing new concept – “finance-investment sphere” and discuss its investment consisting parts.

The concept “investments” was brought into the native economical science from the West. In the Soviet economical science they for a long time used in the place “investments” the termini “capital placement”, which expressed the usage of the industrial factors in the sphere of real industrial activities during realization of capital projects. From one glance, this termini in its concept is identical to the “investments”, consequently it is possible to use them as synonyms. Though the termini “investments” and “investing” have the advantage towards the termini “capital placement” from linguistic and philological points of view, because they are expressed with one word. This is not only economical and comfortable in the process of working with the termini “investment” itself, but also it gives an opportunity of termini formation. More concretely: “investment process”, “investment domain”, “finance-investment sphere” – all these termini are much more acceptable.
Changing native economical termini with foreign ones is purposeful, if it really matters (by keeping parallel usage of the native termini for the inheritance). Though we must not change native economical termini into foreign ones all together, when by ordinal traditional language easy to explain private and narrow concrete processes and elements get their own termini. The “movement” of these termini is approved in the narrow professional bounds, but their “spitting out” into the economical science may turn economical language into the tangled slang.

Let’s discuss termini – “investment” and “capital placement’s” usage in the economical literature.
Investments are placement of funds into the main and circulation capital for the purpose of getting profit. “Investments in material assets – are the placements of funds into the mobile and real estate (land, buildings, furniture and so on). Investments in financial assets are the placements of funds into the securities bank accounts and other financial instruments”.

We don’t meet with the termini “investments” in the earlier economical dictionary, but we meet the combined termini “investment policy” – the union of the industrial decisions, which guarantee main directions of the capital investments, the activities of their concentration in the determinant suburbs, on which the reaching of planned rates of development of the society production is depended, balancing and effectiveness, getting more and more production and profit of the national income for every lost Ruble”. For today, in the most actual definitions, the capital investments are bounded only by financial means, when not only financial, but also the investment of natural, material-technical and informational resources takes place. Labour resources take an actual place in the investment process. They themselves fulfill this or that investment process.

A positive side of the discussed definitions is that they connect investment policy and capital placements (investments):

- economical development according to the key directions to the concentration;

- providing high rates of economical growth;

- raising an economical effectiveness, which is expressed:

a) by growing the throw off of the production and national income for every lost Ruble;

b) by fulfilling the branch structure of the investments;

c) by improving their technological structure;

d) by optimization of their further production structure.

Compared with such definition of the investments (capital placement) the definition of investments in the dictionary attaching the “Economics” seems to be unimproved: “investments – the expenses of gathering production and industrial means and increasing material reserve”. In this definition current expenses (production expenses) are mixed with the investment (capital) expense. Also, not the investment expenses but (though the investments are followed by the appropriate expenses) exactly advancing. It differs from the expenses by that the means (means) are put by returning the advanced values, also, under the conditions of growth, to which the concept-advanced capital is corresponding. the advancing may be realized in the money, natural-material and informational forms.

Except the termini “investments”, there are two more termini related with the investment. They are shown below.

“Human capital investment” – any activity provided for rising the workers labour productivity (in the way of growing their qualification and developing their abilities); at the expenses of improving the workers’ education, health and raising the mobility of the working forces”. It is very useful to use the mentioned termini, though it needs one correction: the human capital investments do not concern only workers, but also the servants, representatives of every kind of labour.
“Investment commodity, capital goods – a capital.”

In the official manuals of political economy of the reformation time the capital investments are discussed as “expenses for creating new main funds and widening, reconstruction and renewing the active ones”. In this definition the investments (capital placements) during separation of the forms (types) of further production of the main funds are bounded only by main funds (without increases of the circulation funds and insurance reserves):

a) creating new ones;

b) widening;

c) reconstruction;

d) renewing.

Also, the concept of the industrial gathering appears, at the expenses of widening of basic, circulation funds and also insurance reserves takes place”.

You’ll meet below the definitions of investments from “the course of economy”: the investments are called “placements of fund into the basic capital (basic means of production), reserves, also other economical objects and processes, which request long-termed influxing of material and cash means. “According to the division of capital into physical and money forms, the investments too must be divided into material and cash investments”.

They apportion investment commodity, to which belong industrial and nonindustrial building objects, vehicles purposed for changing or widened technical park and the furniture, increasing reserves and others.

“They call the total investments of production an investment product, which is directed towards keeping and increasing the basic capital (basic means) and reserve. Total investments consist of two parts. One of them is called the depreciation; it represents important investment resources for compensation of renewal till the level of before industrial usage, wearing out and repairing of the basic means. Second consisting part of the total investments is represented by net investments – capital investments for the purpose of increasing basic means”. Depreciation is not a compensation resource of wearing the basic funds out, but it is the purposeful financial source of such resources.
Human capital investment is “a specific kind of investments, mostly in education and health protection”.

“Real investments are the investments in the economical branches and also, they are kinds of economical activities, which provide influxing the increases of real capital, that is increasing material values of the industrial means”. We can agree with such definition with one specification that material and nonmaterial values too belong to the real capital (wealth), consequently science-researching experimental-construction results, various information, education of he workers and others. Such service as organization of the excitable games, also the service of redistribution social wealth from one private person to another (except charity).

“Financial investments represent placement of funds into the shares, obligations, promissory notes, other securities and instruments. Such investments, of course, do not give increases of the real material capital, but they help getting profit, consequently at the expenses of changing the course of the securities in the time of speculation, or distinguishing the course in different places of sell and purchasing”. We share wholly such definition, hence it follows that financial investments (if it is not followed by real investments as a result) do not increase real material wealth and real nonmaterial wealth. According to this context, the expression below is very important: “we must distinguish financial investments, which represent placement of the funds in the ways of selling and purchasing the securities for the purpose of getting profit and financial investments, which become cash and real, moved to real physical capital.”

In the “economical course” quoted before long and short-termed investments are separated. Recognizing the existence of the bounds between them, the authors ascribe short-termed investments to “one month or more” investments. If we get such conditioned criteria, that we can call the investments which overcome the terms of some months, long-termed ones, which is very doubtful and we don’t agree with it. A long-termed character of the fund placement is a significant feature of the investments (short-term doesn’t combine with the concept of investments). Principally, it would be better to point out quick compensative, middle termed compensative and long-termed compensative investments:

- less then 6 months – quick compensative;

- from 6 months up to the year and a half – middle termed compensative;

- more then the year and a half – long termed compensative.

We stopped at the definition of the investments in the capital work “economical course” for the special purpose, as, in it the author tried to discuss the concept of investments systemically and quite completely, herewith the book is published just now.

We’ll return to the discussion the definition economical category of “investments” in different publications in the following chapter. The definitions given here are quite enough for having a notion of the level of lighting up the given category in the economical literature.
What conclusions may be made according the definition of the mentioned economical category in the published works, except the made notions and specifications?

There is quite deeply, concretely and thoroughly defined the concept of “investments”, different definitions in the economical literature; but mostly in every works about the investments discussed by us until now, there is not opened the essence of investments as an economical category. In every monograph , even if it has a title investment, as an economical category , there is given only the definition, concept of investments. But, as the Academician Vasil Chantladze explains, “a concept is a discussion, which proves something about the distinguishing feature of the researched object. A concept out of much essential characteristic features represents only one, and essential in it is only – definition”.

But the categories are much wider; it is “a key, the most fundamental concept of every science”. Economical categories theoretically represent real, objectively existed productive relations. A category is the defining of occasions of existed characters, connections, relations of the objective world. Generally, any educational process is fulfilled by the categories, which give opportunities for dividing the processes and occasions semantically, for expressing the definitions of a subject and realize their specific peculiarities and economical relations of a material world.
Our goal is exactly to substantiate investments – as an economical category and also, as a financial category in the narrow understanding.

Here we apply for another manual thesis made by the academician Vasil Chantladze: “every financial relation is an economical one and every financial category is and economical one, but not every economical relation and economical category is financial relation and financial category”.
In the process of defining the investments, it is important to take in mind the sides of resources, expenses and incomes, because investment, from one side, is the result of the manufacture’s activity, and, from another one, – a part of income, which, in this case, is not used for usage.
Another occasion: it is advisable to discuss investments in two aspects: as a category of reserve and flow, which will reflect exactly the connection between “placement of funds” and “investments”.

Natural Skin Care – More Than Skin Deep

Does Natural in Skin Care naturally mean Good?Although Webster defines “natural” as “not artificial, synthetic, [or] acquired by external means,” it is the rare cosmetic ingredient that fits that description. Even water used in cosmetics is generally distilled, deionized, or otherwise purified. All along the continuum of “natural” products, choices have been made to emulsify, stabilize and preserve–to make the products smooth and creamy, keep them fresh, and give them an acceptable shelf life. Even if consumers want products that need to be refrigerated, distributors and retailers will not order them because of the added costs of shipping, storing and greater liability. A growing number of consumers who seek that kind of freshness have been firing up their blenders and following recipes for homemade treatments.1[1] Even these, however, call for essential oils, alcohol, glycerin, lanolin, etc., which are a long way from their natural origins. As reported in Strong Voices, the newsletter of the Breast Cancer Fund, “Approximately one-third of cosmetics and bodycare companies position their products as natural in one way or another . . . But, as you might expect, some companies are more natural than others” (Volume 7, Summer 2005).Most people who seek out “natural” products are looking for ingredients whose sources they recognize, and that is why many companies now list the source along with the scientific name of the ingredient, as in sodium laurel sulfate (from coconut), or lanolin (from wool). Turpentine comes from pine trees. My grandmother, born in 1901, swore that turpentine helped her arthritic hands, and she may have rubbed them with lard (from bacon) afterwards to keep them as soft as I remember. Perhaps lard and turpentine are “natural,” but are they good for the skin, and along with that, what is the definition of “good?” Again, there are no simple answers. If you have found this article through the Eco-Mall, it is safe to assume that you seek out skin care that:(1)     is friendly to the environment (“eco-friendly”);
(2)     does no harm to animals (commonly referred to as “cruelty-free”); and
(3)     does no harm to the human body and ideally does good (is “body-friendly”).Let us examine “natural” skin care in light of each of these issues.Eco-Friendly
An issue rarely addressed by the cosmetic industry is whether products are environmentally friendly. The LA Times2[2] has reported that consumer products, including cosmetics, pump 100 tons of pollutants daily into southern California’s air, second only to auto emissions. These pollutants come not just from the propellants in sprays and aerosols, but also from fluorocarbons, ethanol, butane, acetone, phenols and xylene. Here’s how it works: These chemicals evaporate, and when the sun shines they combine with other pollutants to form ozone, a primary component of smog that can cause headaches, chest pain and loss of lung function. This happens outdoors and indoors, which can severely compromise the air quality in our homes and offices.There is a class of chemicals called PPCPs (pharmaceutical and personal care products) that until recently have received relatively little attention as potential environmental pollutants. PPCPs comprise all drugs (prescription and over-the-counter), diagnostic agents (e.g., X-ray contrast media), nutraceuticals, and other chemicals, including fragrances, sunscreen agents, and skin anti-aging preparations. When phthalates, for example, get into rivers and lakes, they are known to affect the reproduction of aquatic species; and musk fragrances are known to bioaccumulate.3[3] Skincare products may contain botanical ingredients grown with pesticides and chemical fertilizers that are not friendly to the environment, and some may use genetically modified plants in their botanical ingredients.Cruelty-Free
“Cruelty-free” is generally understood to mean that the products are not tested on animals; sometimes also that there are no animal-derived ingredients in the products. Taken literally, this would imply the absence of lanolin (from wool), beeswax or honey, dairy products, etc. Some labels specifically state there are no animal ingredients.Body-Friendly
We suggest four criteria for evaluating “body-friendly” skin care products:·         Toxicity
·         Occlusiveness
·         Comedogenicity
·         Effectiveness1.ToxicityIn our July article we discussed several ingredients which we prefer to avoid in skin care products. To recap, we listed mineral oils, petrolatum, propylene glycol, parabens, phthalates, SLS and SLES. We also called sunscreens into question.Toxicity (to humans) of skin care ingredients may be divided into three distinct categories:4[4]a.        Carcinogenic, referring to ingredients contributing to cancer
b.       Endocrine-disrupting, which refers to chemicals that disturb the body’s hormonal balance, and may interfere with its ability to grow, develop, or function normally. Endocrine disruptors may also be carcinogenic.
c.        Allergenic, irritating or sensitizing, meaning consumers may have allergic reactions or contact dermatitis (itching, redness, rash, etc.). Individuals with multiple chemical sensitivities may become very ill when exposed to certain of these chemicals.There are many “natural” skincare companies who include parabens, SLES, and other of these ingredients in their products.A general note about preservatives: By their very nature preservatives are toxic. They must be toxic to bacteria, molds and yeast to keep the products from spoiling. Another preservative that is gaining use as an alternative to parabens is diazolidinyl urea. This preservative has not been banned from use in Europe, although some authors claim it is carcinogenic because it is a formaldehyde donor. Although formaldehyde is a chemical which occurs naturally in the human body, formaldehyde in the gaseous state is a known carcinogen. From all studies we have read, diazolidinyl urea, when it forms formaldehyde, does not form formaldehyde gas. Nonetheless, when used in high enough concentrations, or even in low concentrations by persons who are especially sensitive to it, diazolidinyl urea-along with almost every other preservative-has been shown to cause contact dermatitis. There are also “natural” products who claim to use no preservative. Most of these contain grapefruit–or other citrus–seed oil extract. As mentioned in Part I of this series, cosmetic chemists I have spoken to insist that these citrus seeds would turn rancid if they were not sprayed with preservative; that that preservative is concentrated in the oil when it is extracted; that this preservative in the extract is what is actually preserving the skincare product; and that the preservative used is generally a paraben.There are also skincare products that are sold in sealed containers with airless pumps or sprayers. Although it can add significantly to the cost of a product, this type of packaging and delivery is highly desirable, as it keeps air and airborne contaminants out of the product and makes it possible to significantly decrease or even eliminate the use of preservative.Of the large list of possible cosmetic ingredients, a relative few individually pose high risk, but many people use an array of products every day. It may be that these risks are adding up, or that single ingredients react with others to create toxic combinations, known as synergistic toxicity.2.Occlusivity
The skin is the body’s largest organ. The lungs breathe, and so does the skin, so to speak: The “breathing” skin provides an exit for toxins and chemicals–respiration in the form of perspiration. Lotions and salves that occlude this exit may initially soften the skin by keeping moisture from escaping, but may actually inhibit the overall health of the individual, besides weighing down the skin and causing it to sag and age. Nutrients applied to the skin that improve the skin’s health may have a positive effect on the whole body, because they are absorbed into the bloodstream through the skin. When we choose body-friendly skin care, two important criteria come into play: that the products not be toxic to our skin or our bodies, and that they not be occlusive-allowing nutrients in and toxins out.5[5] The bonus comes when the ingredients that are allowed in also bring the skin into balance and nourish it. This is the topic of Part III of our series of articles: What Nutrients and Ingredients are Important for Healthy Skin? (late September 2005). Here we address ingredients common to “natural” skin care that may be occlusive and/or comedogenic.Look up “occlusivity” on the web and you will find hundreds of references to occlusivity and its benefits. The reason companies tout the benefits of occlusivity is that it holds water in the skin. When water can’t escape, the skin stays soft and moist, and that sounds like a good thing. Imagine wrapping your skin with plastic wrap and wearing it around all day-an extreme example of occlusivity. Pretty soon it would start to stink in there as the toxins that usually escape with perspiration and generally evaporate into the air get trapped between the skin and the plastic. Now imagine that those same toxins can’t leave the bloodstream because the skin’s normal respiration is blocked. Where will they go? In some cases, they fester under the skin and form deep-down blemishes; in extreme cases, where occlusive lotions are used all over the body for extended periods, they may deposit in the liver and add to the body’s toxic load.Sometimes it may be beneficial to use occlusive salves for a limited time. If you want to climb Mt. Everest, for example, or ski at high altitude where the air is thin and dry and you are close to the sun, it’s a good idea to wear a lotion that holds the water in the skin. For babies with diaper rash, it’s good to use a salve that keeps the water away from the skin! For most of us, these are not constant conditions, and treatments that hold water in over time are undesirable.
Standard cosmetics experts may disagree with this reasoning. Paula Begoun in Don’t Go to the Cosmetics Counter Without Me (5th ed., 2001) states: “According to many ‘natural’ cosmetics companies, mineral oil (and petrolatum) comes from crude oil (petroleum), is used in industry as a metal-cutting fluid, and therefore can harm the skin by forming an oil film and suffocating it. . . . This foolish, recurring misinformation about mineral oil and petrolatum is maddening. After all, crude oil is as natural as any other earth-derived substance. . . Mineral oil and petrolatum . . . can keep air off the skin to some extent, but . . . it doesn’t suffocate the skin!” (pp. 11-13). She also states that antiperspirants “cannot absorb into the skin . . .” (p. 14). I maintain that anything rubbed onto the skin will be absorbed, as long as the molecules are small enough to pass through the skin membrane; this is how patches work to deliver medication. Although Begoun makes a good point that crude oil is “natural,” I believe in making educated choices of which earth-derived substances we apply to the skin, and crude oil is not on my list.It should be noted that there are degrees of occlusivity: If an ingredient is occlusive when used by itself, it will be less so when used in combination with non-occlusive ingredients. A small amount of beeswax used to emulsify jojoba and water will be far less occlusive than rubbing beeswax alone onto the skin. With that in mind, besides mineral oil and petrolatum, here are some of the more common occlusive ingredients found in “natural” skin care:a.        beeswax and other waxes
b.       castor oil
c.        cocoa butter
d.       dimethicone
e.        honey
f.         lanolin
g.       sunflower oil and other vegetable oils3.        Comedogenicity
Unlike occlusive oils like mineral and sunflower oil, which do not penetrate, comedogenicity refers to the tendency of a substance to get into the skin’s pores and clog them. This is especially bothersome in face care products, where clogged pores may lead to acne and blackheads. The word comedo is the medical term for blackhead, so comedo+genic means “friendly to blackheads.” Some cosmetic-ingredient glossaries equate “non-comedogenic” with “non-occlusive,” but that is a misunderstanding; while beeswax, mineral oil and zinc oxide (among others) are known to be occlusive, they are non-comedogenic. This is because they lie on top of the skin and do not penetrate. Others, like sunflower oil, may be both occlusive and (somewhat) comedogenic. Below is a list of the relative comedogenicity of some common “natural” cosmetic ingredients6[6] (source: http://www.geocities.com):Very Comedogenic
Somewhat Comedogenic
Not ComedogenicCapric/caprylic triglyceride
Anhydrous lanolin
Allantoin
Cocoa butter
Avocado oil
Beeswax
Lanolic acid
Capric & caprylic acid
Cyclomethicone & Dimethicone
Linseed oil
Castor oil
Ethanol
Olive oil
Coconut oil
Glycerin
Peach kernal oil
Corn oil
Jojoba
Sweet almond oil
Grape seed oil
Kaolin (clay)
Glyceryl stearate
Mineral oil (USP)
Hexylene glycol
Oxybenzone
Lanolin alcohol & oil
Panthenol
Mineral oil, cosmetic grade
Petrolatum (USP)
Mink oil
Polysorbates
Peanut oil
Propylene glycol
Safflower oil
SD alcohol
Sesame oil
Sodium hyaluronate
Sunflower oil
Sodium PCA
Tocopherol (vitamin E)
Sorbitol
Squalane
Titanium dioxide
Waxes
 
“Note: Even somewhat or very comedogenic ingredients can be present in non-comedogenic formulas when used at percentages low enough that the end formula won’t clog pores” (ibid.). The important point is to look at their relative position in the ingredients list. If a comedogenic ingredient is toward the top, then it is probably present in a quantity large enough to clog pores. Unfortunately it is impossible from the ingredients list to know whether for example ingredient #5 represents 20% of the formula or 2%. Thus we need to be able to trust the manufacturer when the label states “non-comedogenic.”4.        Effectiveness
Let us assume that every skincare company’s raison d’etre (before or after the profit motive) is to create products that make the skin feel and look good, and that probably means it’s soft and not dry. Add some additional goals–anti-aging, anti-acne, skin-smoothing–and you’ve covered most of the bases. Most skincare products, “natural” or otherwise, achieve these goals by using occlusive ingredients that hold moisture in and keep the skin soft and “plump.”
If, however, we are looking for the beauty of overall glowing good health in the skin, we need to ask for more than this from our skin care.We agree with Charles DePrince, president of GoForLife Labs, who states: “The idea of ‘natural’ could mean a product containing all natural ingredients; however, I believe there should be a more significant meaning to the idea. I think the natural course to attaining beauty is a healthier and potentially more lasting one than with the use of harsh or radical treatments such as Botox, face lifts and peeling. The ‘natural’ idea would be to support the living and natural cells of our skin with nutrients that could support such things as the body’s natural ability to retain moisture, to support natural collagen development, or to reduce hyperpigmentation. This way, by supporting the natural health of the skin, I believe the cumulative effect would be to develop healthier skin as both the path to and result of beauty.”7[7]

Establishing Business Credit – The Seven Steps to Success

Business versus Personal Credit:Personal – Personal credit building starts when an individual provides their social security number and applies for their first credit card. At that point a credit profile is started with the personal credit reporting agencies in the region of the country in which they reside. This profile, also commonly known as a “credit report”, is built with every credit inquiry, credit application submitted, change of address and job change. The information contained in the report is usually reported to the credit bureaus by those businesses issuing credit. Eventually, the credit report is viewed as a statement or report of an individual’s ability to pay back a debt, and is the key tool to access and grant credit.Business – When a business issues another business credit, it is referred to as trade credit (credit from vendors or suppliers). Trade, or business, credit is the single largest source of lending in the world, but it typically not reported to the business credit agencies by most small businesses. The data regarding trade credit transactions must be submitted and then is accumulated by the business credit bureaus to create a business credit report using the business name, address and federal tax identification number (FIN). The credit bureaus use this data to generate a historical report about a company’s business credit transactions and payment history. Typically, the businesses issuing credit rely on the business credit report to determine the credit they are willing to grant and the amount of the credit limit. Additionally, many businesses (suppliers/vendors) will submit credit reference applications to the key suppliers of the business as a method to obtain payment patterns as part of the credit granting process.The major credit bureaus are:Dun & Bradstreet
Business Credit USA
Corporate Experian
Small Business Equifax
TransUnion (Personal)The information provided to the business credit bureaus (primarily D&B) is sent in voluntarily, as businesses are not required to report. Therefore, credit bureaus may never receive any information about the business transactions on credit and a business could go for years accumulating business history without being reported to the credit bureaus and establishing a positive business history of sound credit practices.Establishing Business Credit History:Business credit scores range on a scale from 0 to 100 with 75 or more considered an excellent rating. Personal credit scores, on the other hand, range from 300 to 850 with a score of 680 or higher considered excellent. With today’s tighter credit scrutiny the higher the credit score, the more likely an individual or business is to obtain credit and at more favorable terms (interest rate and contract length).While it is important to know that there are many factors http://www.myfico.com that affect a credit score; it’s based on more than just whether you pay your bills on time (still very important). The credit score will be affected by the amount of available credit you have on bank lines of credit and credit cards, the length of time you’ve had a credit profile, the number of inquiries made on your credit profile, paying the bills on time, bankruptcy, as well as other considerations.The typical American consumer credit report receives two to three credit inquiries per year and usually has 11 credit obligations – typically broken down as 7 credit cards and 4 installment loans. Business owners are not your typical consumer, because they carry both personal and business credit. This typically doubles the number of inquiries made to their personal credit profile and the number of credit obligations they carry at any given time, all of which negatively impact the personal credit score. Additionally, because business inquiries and personal inquiries are not separated on the personal credit report, the personal credit scores are negatively impacted. As mentioned earlier, using the personal credit history to get credit for their business, businesses are not able to build their business history/score, all of which could help attain critical business credit in the future.A critical mistake many business owners make is using their personal information to apply for business credit, leases and loans. This practice has the resultant impact of potentially lowering their personal credit score, while not building a business credit history and business credit score.A key to establishing credit for the business and a profile and score is to find companies (UPS, FEDEX, etc.) or your key supplier and vendors that will grant credit for your business without using your personal credit information and then report the payment experiences to the business credit bureaus. By reporting the information to the proper credit bureaus, those companies will help the business establish a business credit profile and score.The Seven Steps to Success:1. Company Legal Structure – The business must be a legal entity unto itself in order to establish business credit. Therefore, it is recommended to form a corporation (C Corp) or LLC (discuss with your CPA the advantage/disadvantages of a C Corp versus LLC) as opposed to structuring your business as a sole proprietorship or partnership. Formation of a sole proprietorship or partnership, dictates that personal credit information could be included on the business credit report. Additionally, as a sole proprietor or partner in a partnership, you are personally liable for the debts of the business and all your personal assets are at risk in the event of litigation.Corporations and LLC’s, on the other hand, provide the business owners liability protection, and can build a business credit profile that’s separate from the personal credit profile. Therefore, apply for credit under your business’s name and find businesses will to grant credit without a personal credit check or guarantee.2. Register with Business Credit Agencies – The best known business credit bureau is Dun & Bradstreet. Dun & Bradstreet has a process on their web site to establish a D-U-N-S number (a specific 9 digit number related to your business) and instructions how to establish a business credit rating. It is strongly recommended that you contact D&B and follow their process to establish business credit. The following is from the D&B web site:How do I get started with D&B? With our unsurpassed global data collection system, D&B continually gathers the data that initiates the creation of business credit profiles on new companies. Many kinds of activities can trigger a profile on a new company, such as incorporating your business, applying for a loan, getting a business telephone number, taking out a lease on office space – even just when another company seeks information from D&B about your business. Still, a new business may not have a complete business credit profile. Getting a D-U-N-S Number from D&B – the worldwide standard for business classification systems – is an essential part of helping you establish your business credit profile and will ensure that when a company looks you up in the D&B database they will find you. In some cases, a D&B D-U-N-S Number is so a requirement for doing business some entities, such as the US government.You should make sure you have a D&B business credit profile if:You are planning to obtain a business loan
You need to purchase or lease equipment
Your cash flow is tight
You want to ensure you are getting a fair deal from lenders compared to your competition
You want to pay net 30 days instead of COD (Cash On Delivery)
You are paying interest at prime plus 1, or even higher
You plan to do business with entities that require a D-U-N-S Number, e.g. the US GovernmentThese issues and dozens other like them can be addressed by having a strong business credit profile. A good rating provides you with the financial freedom to take the steps you need to grow, and is a straightforward, unbiased method for other companies to assess your level of risk when considering taking you on as a creditor. A poor credit rating is a certain barrier to growth and success, preventing you from getting adequate funding on fair terms.Communicating directly with D&B will help establish your business credit in less time. If you are a new company, D&B can help you build a complete business credit profile from the ground up; if you have been in operation for a while, you will want to improve and/or protect your business credit profile. Find out more about how to establish, monitor, improve, or protect your business credit.3. Credit Market Requirements – Businesses must meet all the requirements of the credit market in order to have a higher probability of credit approval, as not being in compliance with the credit market can “send up signal flares” with both credit bureaus and potential grantors of credit.Some of the “signal flares” include:not having a business license,
not being registered with the Secretary of State for a certificate of good standing,
operating under your social security number rather than a FIN or EIN,
not having a phone line (land line) that is listed in the phone directory in the exact business legal name,
no web site, or
not having a business email address (not AOL or gmail, but a specific URL for your company).4. Small Business Credit Lines – Investigate and locate a minimum of five businesses (vendors/suppliers) willing to grant a small business credit without personal guarantees and will report the payment experiences to the business credit bureaus. This will assist your business to establish a credit report and build a financial credit foundation for the company. Find companies willing to grant credit that report to the credit bureaus such as marketingoncredit.com, UPS, FEDEX5. Business Credit Cards – Obtain three business credit cards (Sam’s Club Discover Business card), that are not linked to you personally and that report the business credit to the reporting agencies. Then be sure to always pay your bills on time!6. Financial Statements, Business Plans and Loan Packages – These documents are often required by many credit grantors as part of their loan application process. CxO To GO is a national professional services firm that has assisted many business with their financial statement preparation and business plans. Additionally, CxO To Go has packages such as PowerPlan and PowerPlan2 for business plans, PowerPuncher for executive summaries, CFOCast for financial projections and BankSell for bank proposals so lenders and bankers will take action. It is important to note that 61% of all businesses are turned down for a loan due to a poor loan package, however with BankSell the lender loan package gets results and moves the applicant to the top of the list for review and credit committee approval.7. Debt management – Be a smart money manager and manage the debt levels to ensure they are not too burdensome and can be paid back with current cash flow. Do not incur debt that will over leverage the company and cause missed or late payments.