Finance

From The desk of a Financial Ninja!! ??

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In today’s era if you want to get going with your business effectively without having a proper know how about how actually the finance for your business works and having a go to plan towards your business will foe sure help you in addressing your random business concerns and make you abler in spending your hard-earned money. Thus, here comes money management which is basically managing your money in the wiser and most efficient way. With the help of proper money management tools, a business owner whether running a small business unit or a big business unit would be able to coordinate various financial activities of its business entity which will further shuns away chances of bankruptcy, limiting all the risky factors, and would be able to fetch you with the most efficient and viable returns on different investments decisions made by the business unit.?

The term finance is a wide subject to ponder upon, and it might get overwhelming along the way. With the below pointers you can easily get hands on the basics of Finance and help you run your business unit smoothly.

Want to know more….Lets have a deep Insight!

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What Is Finance?

Finance refers to how a person or a business unit manages its financial resources. Inclusions here are borrowing, investing, lending, budgeting, saving, spending, and forecasting the monetary resources.

Well, most of us think finance is only about money but in reality, finance is much more than money. It carries a wider perspective. Though money is a legitimate unit used for most of the financial deals and negotiations which also include various financial transactions on daily basis, the term finance remits to channelizing and allocating the assets and managing monetary resources in the most profound way.

Finance involves a pool of multiple pursuits and units, which further enhances the chances of developing a steady cash flow?forecast for your business entity keeping the highest goal in saving the “Money”?and allocation of resources by creating wise budgets and apt financial models.

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Types of Finances There are basically 3 types of finances:

Namely 1. Personal finance 2. Public finance 3. Business finance

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1. Personal Finance?

Personal finance means managing an individual's cash resources across 5 essential areas of a particular individual or household: Income, savings, investments, spending habits, and safeguarding the assets. The final attempt here is to make the most productive investment decisions and build a safe and cushioned financial future so that the individual has the most least debt obligations.

An individual’s financial system also appertains to generational transfer of fortune, well planned tax opportunities, filing tax returns and availing tax benefits and even usage of credit cards for purchasing and selling purpose. One’s personal finance is customized as per one’s specific needs in the short, medium, or long term.?

Another very interesting fact about Finance is that every individual every business entity has a different financial goal, thus allowing to make different financial decisions as per their goals, their source of income, their priorities. But while managing your finances you should try to set in both short term and long -term goals. For example, if one wishes to chuck off their home loans, education loans or any other loan that would be considered as your short-term goal and if one wishes to gain returns on their investments, they will consider stock markets or real estate. For this people consider modern financial tools for a better financial management.

Personal Finance Can also have great Impact on their Business so they should have strategic planning towards their finances so that individuals can overcome any unforeseen circumstance in the near future. Now, here comes in picture your personal savings, if done mindfully will exactly save you from such unanticipated circumstance wherein you need to sell your business as well. So be prudent with financial decisions. These days a lot of young and dynamic minds are creating their own startups and doing potentially well for themselves. It is a very good example where personal finance is invested in a right direction.

2. Public Finance

Likewise, individuals have to cater to proper allocation of resources, public offices, governments need?to allocate their resources to variant departments of the economy. Public finance basically refers to how federal, state, and local public bodies pursue profits and gains and are able to manage all the expenses in a smarter way for the provisioned services to the public.?

Some of a government’s most essential functions include collection of money from the public sector domain through taxes, elevation of capital through bonds, and then channelizing the collected money into extensive gamut of services that is further beneficial for the public. This tax works capacitates diverse functions which includes managing infrastructural development, debt ministration and patterned expenditures. A stable economy is ensured by overseeing income?generation and government expenditures through various government agencies enlisted for the same.

Few facets of public finance also include proper tax management, debt issuance, budgeting, international trade, and regulation of inflation. These are the few aspects of public finance that have a direct and enduring effect on the business entity and personal finance.?

?3. Business Finance (Corporate Finance)

Business Finance also known as Corporate Finance takes into consideration all the financial activities related to running a business entity. ?The inclusions here are majorly all the acquisitions and investments, business funding, capital budgeting, tax management and several other small and big risk involved in a business in order to create their stake in the competitive market.

?An evolving business unit needs to balance all the cash flow, risks involved and investment possibilities to add value and intensify the capital structure of the business unit.

Corporate finance can raise its capital by either Equity Financing?or Debt Financing. ?Through Equity financing a business unit secures funds through stock markets, while debt finance is as the name suggests it is a loan taken by the business unit agreed upon a certain rate of interest.

Difference between Finance & Accounting

In a layman’s language both Finance & Accounting plays a crucial role for a successful endeavor of any business unit. Though both these terms are not same at all. The key difference between finance and accounting comes down to how they consider a company’s financial catalogues.?

Accounting puts weightage on cash inflow and outflow, thereby helping in reconciling the financial statements and record of the business unit, and accordingly deliver the relevant information related to finance to the lenders, investors and the public.

Whereas Finance focusses on the accounting reports?and documents to develop strategies that improve growth and profitability for businesses. Asset management, selection of right investment financial instruments, financial modeling, and portfolio improvisation.

Importance of Finance in Small Business?

If you are an owner of a small business unit in any part of the nation then there is no mandate that you have to be a financial Manager or you need to hire a certified financial manager to procure benefits from your business finance, rather all you need your up to date ?balance sheet and your financial statements so that you can venture out profitability from ?your business. ?Through business finance a business entity is able to implement strategic financial decision making and plan and allocate resources by properly managing the cashflow. It also further leads you to implement long term and short goals so that you maximize your profitability.

Thus, it can be said that the Finance in small business is a term that circumscribes the available resources and helps in money management for business units, individuals, small and big public institutions. One cannot run any business without a thorough going expertise about the most important factor “M” called Money. You need to do a proper analysis so that your business doesn’t suffer the risk of bankruptcy. So just brush up your skills keep a watch over incoming and outgoing cashflows and Voillla there you go!!!!!

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