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The Importance of Finance

24/11/2015, by admin, category Business

Finance is actually a broad business term that describes how an enterprise generates their cash needs and how these cash are managed. For any new business starting up and itching to make a name for themselves in the market, a thorough knowledge in finance is highly required. In fact the backbone of any business plan is how to get money and how this money will be effectively managed in running the day to day operations of the enterprise.

finance
Most experts believe that finance is a science that solely deals with money management. Before managing money however, it first has to be generated or outsourced. Generating finance is not a light decision to make because there are several risk factors that need to be considered, like what the current interest rates on loan prevailing are, are the expected cash inflows able to service the loan repayments or are the investment bankers willing to back you up by underwriting your risks. Fund management on the other hand deals with activities like making sound and low risk investment, seeking out and negotiating for low credit funds and matching future cash inflows and future liabilities so that funds are always available to settle debts when they become due.
Finance is like a spring that trickles down our very economy keeping everything afloat.

 

There are three key categories of finance: personal finance, corporate finance and public finance. Unwise financial decisions made in any of these three sectors could result in catastrophic effects in the economy. This therefore makes a knowledge in finance very important. The flow of finances mainly starts from venture capitalist who lay out the funds needed to start an enterprises. The next step involves using those funds to generate sales and finally paying up the money initially borrowed. This in essence shows that our economy is driven by finance.
Any enterprise starting up or hoping to achieve a constant growth rate, needs to keep their finances in check. All operations within the business require some sort financial outlay, so if the bank accounts run low and the fund managers are quacks operations within the business crumble and the whole business goes under.

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