What is finance?
Finance is an expansive term that describes two activities which are how money is managed and the actual process of acquiring the funds. Individuals, governments and businesses need funds to operate, this is usually separated in three categories such as personal finance, corporate finance and public finance.
An organisation relies heavily on business finance to make sure that the company runs successfully, it is impossible to achieve any long term or short term goals without managing the finance. There needs to be funds for the business to grow, to beat market competition, keep the business afloat and maintain their customer base. You can risk everything if your finances are not under your control, you will need adequate insurance and internal controls if your business is to be successful. You can get insurance for business liabilities, accident claims and to protect your finances.
Importance of financial planning
Corporate finance is the area in which monetary decisions are made within the business, they use tools and analyse every decision that is made. The first goal of corporate finance is to make sure that shareholders get maximum value. Corporate finance can be divided into long term and short term decisions, capital investment decision are made to see which projects should receive the money. Corporate finance also deals with equity, debt and whether to pay shareholders or dividends. Short term decisions deal with balance of current assets and any liabilities, the focus is on managing cash flow, short term lending and borrowing and managing a business inventory.
You can learn more at one of our finance courses in London, we offer an Essentials of Business Finance course. This course helps individuals to understand the importance of finance in a thriving business.