“How many millionaires do you know, who have become wealthy by investing in savings account? I rest my case”– Robert G. Allen.
“Finance” term which is used without exception by businesses, whether it’s small business or big, with a sole proprietor or partners. Finance is like elixir that assists the formation business, and aids business to grow, to employ workers and to maintain an impression among other businesses, local, state and national government and most important the income tax department.
In simpler words, Finance is all about managing money. Money can be used as an umbrella term as it includes investing, renting, saving, lending, budgeting etc.And the finance doesn’t stop at managing money but how you can control it to have maximum output.
“Money is a terrible master, but an excellent servant” – P.T Burmun.
TYPES OF FINANCE
Corporate Finance: As the name suggests, you can know it is related to business point of view. For the business financial activities are related to running a company with maximum growth possibility. As the growth is the main motive of a company. Corporate finance professionals in the business have a responsibility of managing the company’s finance. It includes an accountant, financial analysts, and the managers.For example: Infrastructure spending, Income tax, Property tax, employment.
Personal Finance: From personal point of view, personal finance is the management of someone’s income or expenses, their expenses made in the market and obligations. We can say personal finance is the type of finance which we use on our personal level to manage our personal expenses.
Public or Government Finance: The branch of economics concerned with the income and expenditure of public authorities and its effect upon the economy in general. The public finance have certain components which are as follow:
- Tax collection
- National Budget
- Deficit/ Surplus
- National Debt
Finance is a necessity for acquiring physical resources, which are very important and needed to accomplish productive economic activities and needed to accomplish productive economic activities and for carrying business functionalism.
Importance of Finance.
- For existence of Business: In today’s businesses there is race to be the best in their particular segments, for that need to have a person who can manage the flow of money and keep record of that. Good business revenue happens with selling good quality products and services. And then the generated money is used for paying bills , wages to employees and paying tax. All of this needs to be recorded somewhere by someone.
- Sufficient availability of funds: Proper amount of funds is needed in daily expenses in a business to buy long term assets for business; also funds should be there to deal with future foreseen over cost which may arise.
- Cash Flow management system: Excess of cash flow can be difficult to manage by organization. Having an excess amount of funds and not using them genuinely can cause a company to fall.
- Keeping long-term goals: There is no second thought that having long-term goals either in your life or business is profitable. In business entities financial planning is made to meet financial goals in certain decided time.
- Planning values the importance of business: Financial planning gives immense value to a company, without this any of the business entities cannot function properly. The bigger the company the bigger the size of team work is required to make a financial plan.In case a financial plan is not working for that you should either have a backup plan ready or make some tweaks in the plans to continue the flow of the company.
In today’s lifestyle finance has become an inseparable part of our daily life. It has become a natural function and highly impossible to dodge this and run a life. This blog will help you to understand what finance is and why it is important in our daily as well as professional life.