Home Business Business finance is a general term for all matters

Business finance is a general term for all matters

Business finance is a general term for all matters concerning the procurement, development, and management of financial resources and investments in a business. In layman’s terms, business finance means managing resources to achieve a company objective. There are two broad types of business finance: capital financing and operating financing. Capital financing is used for short-term (in the range of one to five years) debt and investment, while operating financing is required for long-term (on the order of decades) primarily for expansion or acquisition of real estate.

Reza Satchu

Capital Financing – A process of managing and planning financial resources that will raise a company’s worth above the debts it already has – thereby enabling the raising of new debt (and thus stimulating growth), the repayment of old debt, and the growth of the firm as a whole. To achieve this end, business managers usually make use of a variety of tools such as market analysis, capital budgeting, balance sheet appraisals, etc. They also engage in financial planning, which is the process of determining future cash needs and expectations, usually with an eye to ensuring that whatever funds are raised will be repaid with a positive effect on the firm’s bottom line.

Operating Finance – The provision of cash or other working capital to maintain the smooth operation of business operations. Most of the time, this finance is needed to sustain the normal operations of day to day business operations. Many businesses use operating finance to acquire needed inventory, pay salaries and benefits, and purchase needed supplies and equipment for production and/or services.


emily watson