Finance Definition – The True Meaning

When many people think of finances they automatically think about money. While this is true there are various aspects of finance that many people are unaware of or even have little understanding. It is generally about the way that you manage your money, assets and make investment decisions. The manner in which you handle your money can make the difference between you being financially stable or unstable. If you learn how to discipline yourself and come up with a realistic budget you can manage to survive through financial difficulties.

However, it is easier said than done to execute what few are able to accomplish. It is important that you master your finances no matter how little your income is. You have to gather and research as much as possible so that you are in a position to increase your income while reducing your expenses. There are many sources of information to guide you on what can help you improve your financial situation.

When you are in a position to manage your debt, income and expenses, then you are in a comfortable place. When you want to come up with a proper budget, you have to add up your total income and then your total expenses. This should be a start to track each monthly expense. Look into your credit cards, your loans and find ways to improve your finances. This will help you have a clear picture of what you can cut back on and where you can source some extra income.

Many hardworking people make mistakes because they do not have a clear understanding of how they are spending their money on a monthly basis. When you are dealing with your finances, you have to have a long term target so that you can have security when you are retired.

Corporate Finance Definition

Corporate Finance is the process of matching capital needs to the operations of a business.

It differs from accounting, which is the process of the historical recording of the activities of a business from a monetized point of view.

Captial is money invested in a company to bring it into existence and to grow and sustain it. This differs from working capital which is money to underpin and sustain trade – the purchase of raw materials; the funding of stock; the funding of the credit required between production and the realization of profits from sales.

Corporate Finance can begin with the tiniest round of Family and Friends money put into a nascent company to fund its very first steps into the commercial world. At the other end of the spectrum it is multi-layers of corporate debt within vast international corporations.

Corporate Finance essentially revolves around two types of capital: equity and debt. Equity is shareholders’ investment in a business which carries rights of ownership. Equity tends to sit within a company long-term, in the hope of creating a return on investment. This can come either through dividends, which are payments, usually on an annual basis, related to one’s percentage of share ownership.

Dividends only tend to accrue within very large, long-established corporations which are already carrying sufficient capital to more than adequately fund their plans.

Younger, growing and less-profitable operations tend to be voracious consumers of all the capital they can access and thus do not tend to create surpluses from which dividends may be paid.

In the case of younger and growing businesses, equity is often continually sought.

In very young companies, the main sources of investment are often private individuals. After the already mentioned family and friends, high net worth individuals and experienced sector figures often invest in promising younger companies. These are the pre-start up and seed phases.

At the next stage, when there is at least some sense of a cohesive business, the main investors tend to be venture capital funds, which specialize in taking promising earlier stage companies through quick growth to a hopefully highly profitable sale, or a public offering of shares.

The other main category of corporate finance related investment comes via debt. Many companies seek to avoid diluting their ownership through ongoing equity offerings and decide that they can create a higher rate of return from loans to their companies than these loans cost to service by way of interest payments. This process of gearing-up the equity and trade aspects of a business via debt is generally referred to as leverage.

Whilst the risk of raising equity is that the original creators may become so diluted that they ultimately obtain precious little return for their efforts and success, the main risk of debt is a corporate one – the company must be careful that it does not become swamped and thus incapable of making its debt repayments.

Corporate Finance is ultimately a juggling act. It must successfully balance ownership aspirations, potential, risk and returns, optimally considering an accommodation of the interests of both internal and external shareholders.

IT Financing Offers Purchasing and Upgrade Solutions

Numerous businesses will be reliant on the installation of an advanced Information Technology (IT) system in order to remain competitive in their market. Without access to the technology offered by a cutting edge IT system, a business might not be very limited in how it conducts operations. That would definitely present a roadblock when trying to succeed in a competitive market. Also troubling would be the fact an old, outdated IT system can present all manner of security risks.

So, why do so many businesses rely on older, less productive IT systems? The answer is the businesses simply cannot afford to upgrade. Based on current cash flow projections, the business must remain reliant on using the IT infrastructure it currently has in place. Or does it? For those businesses wishing to upgrade but are short on available funds, it is possible to explore options for IT financing.

Financing IT Equipment Is No Different Than Procuring Other Types of Loans

The way the financing agreement works is a business would apply to borrow funds from a service that specializes in long or short term funding for IT needs. The borrower may seek full or partial financing for a purchase and then make the monthly payments as specified in the financing agreement. Access to such lending capital ensures that IT needs never have to be ignored due to cash flow concerns and liquidity never has to placed at risk in order to purchase new equipment.

That said, this type of IT financing is only one method. There is another way it can be done.

IT Financing as a Line of Credit

A service that offers financing for Information Technology may also present an agreement that comes in the form of a line of credit. Basically, when the time comes when your business needs to purchase new IT equipment or technology, funds can be accessed through a pre-approved line of credit. In addition to employing the line of credit to cover equipment costs and purchases, the line of credit can be used to cover repair work, software upgrades and other IT needs. Best of all, a line of credit can be accessed at any time. So, when a business requires immediate financing, it can simply take advantage of its available credit line.

The Benefits of Working with an IT Financing Service

In addition to gaining access to funds and protecting cash flow, there are other benefits that can be gained from working with a reputable financing service. The service could offer flexible payment plans. This can allow a business to better budget itself when it is seeking to upgrade or replace its current IT technology. Down payments may not be required which further lessens the costs of procuring financing. For those businesses in need of it, it might be possible to be afforded off balance sheet financing.

IT financing definitely offers a solution to concerns over the costs associated with maintaining an IT infrastructure. All business reliant on a reliable IT system should definitely take note of what financing options are available.