Do you need money? Most everyone can use extra bucks in business or personal finances. The term finance is used to describe money management. Finance is also used to describe the process of acquiring funds. For example to finance a movie means to find or raise the money to make the movie. To finance a business expansion is a discussion on how will companies pay for the additional costs to take on more business. The need to pay for more employees or to pay for a larger building will increase capital needs.
Often this area of finance is divided into three areas which follow most business models of sectors. Personal finance deals with individuals or families homes and living costs. Public finance deals with public city, state and federal offices and covers a wide range of topics. Corporate finance deals with businesses small, medium or large. Sole-proprietorships or a conglomerate finances are also included in a discussion on corporate finance.
All three areas have divisions in common; the scale will be the differential. Finance, as it relates to acquiring funds, are concerned with making good investments. Looking at what an investment is going to return requires study and research. Projections are determined by experts based on historical data with similar elements. This can get detailed as not only does a business consider the hard costs of cash outlaid but the “cost” of the money. What the cash could be earning elsewhere.
Banking is almost always involved in finance when acquiring funds. If a loan is secured to buy a business there are elements of the loan including interest on cash out and the cost of time? Penalty fees accrue if a loan repayment schedule is not met on time. Setting up where the money goes as it is returned is the finance departments’ role. Accounting practices will need to be decided upon with the bank as how to report the process.
Securing low interest credit is an element of finance and acquiring funds. If a company needs to secure a loan there are common requirements attached to the loan. These can include interest rates, which fluctuate daily. Many variables come into play and can be different per each loan schedule. Interest credit is also involved in acquiring a company’s assets. If a company is buying a physical asset, interest rates will be set up on those payments.
Finance departments deal daily with the transfer of goods, services and cash cause everyone wants more money.
Sources cited: https://www.businessinsider.com