Financing and Finance Management

Financial planning is a broad term for things regarding the development, management, accumulation, utilization, allocation, and distribution of financial assets and liabilities. Financial planning is the art of realizing a balanced budget and keeping it within the limits of the income and expenditure that one is entitled to. Proper financial planning also involves ensuring that the financial resources allocated for different purposes are utilized and thus, lead to effective economic performance and growth. In today’s highly dynamic economy, the term financial planning often becomes a bit vague. It is, therefore, important to lay down certain rules or guidelines as a reference in order to make financial planning more precise and efficient.

The three main types of financial planning are financial planning that takes the form of business planning, investment banking and financial consulting. Business planning, as the name suggests, is concerned with obtaining a clear picture of ones’ future market position, both long-term and short-term. By creating a strategy that will enable him or her to achieve this future, a business professional can come up with realistic expectations of revenue and expenses. This plan can be implemented by hiring the services of a business coach, who will guide the owner through the various steps necessary for achieving a desired level of success. The financial analyst, on the other hand, will use the financial information available to assess a company’s position in the market.

Investment banking refers to those financial activities undertaken with the aim of turning a profit. These activities include asset management, debt consolidation, investment research, merchant banking, and corporate financing. These activities are carried out through banks or other financial institutions with the aim of making a profit by earning interest or dividends on their invested assets. The objective of investment banking, therefore, is to turn a profit by ensuring that the owners of the concerned company receive adequate returns on their invested money.

Financial services refer to all the activities involving money and the financial institutions that provide them. The scope of these financial services includes such activities as creating financial strategies, providing credit facilities, investing in securities, etc. Financial services are an important part of the overall management of a company’s affairs. Therefore, the promotion of good financial management is of crucial importance in helping businesses to achieve the goals set out by their owners.

Equity Finance refers to the provision of loans at a low interest rate, to meet short-term needs. It is one of the most important elements of good business management. Equity finance thus helps to minimize financial risks by ensuring that only a part of the capital structure is made available to meet operating requirements. The availability of equity finance depends largely on the capital structure of the concerned organization, its financial health, and the relative ability of the owners to raise funds.

Corporate finance refers to the management of resources by means of corporate finance. A corporate manager decides how to invest his company’s capital, including deciding how to channel it to meet the different financial needs of the organization. Capital investments in certain ventures help to build long-term organizational strength. Capitalizing for growth also helps to mitigate the risk of operating losses. Good corporate finance planning can therefore contribute substantially to the sustainable success of a company.