Running a business is not only about winning new customers, signing contracts, hiring employees and marketing activities. Every business activity is, to a large extent, related to proper management. For this reason, an entrepreneur should know how to handle company finances so that he or she can plan expenses and properly handle the funds that are part of the company's assets. The following is a brief financial glossary.
Company assets and their sources of financing
No company could exist without having the right assets. But what exactly is behind this term? It is mainly about assets (the main components of said assets), as well as liabilities, i.e. sources of financing (equity and debt).
Corporate assets are divided into:
- Fixed assets (also known as non-current assets) - these are items of property used in the business for more than one year. They include: fixed assets, all long-term investments, legal and intangible assets and long-term receivables;
- current assets, i.e. the parts of the company's assets that are used in the company for less than one year: cash, inventories, receivables from suppliers, short-term investments, prepayments and accruals.
Liabilities, in turn, are the source of financing for the company's assets (its capital) and are broken down as follows:
- equity - funds earned during the course of business and funds owned by the company. We also include in equity capital the contributions of value made by the owners of the companies. However, shareholders should take into account that the return of the contribution is actually only possible when the business is wound up. It is also worth remembering that the equity capital of a company may increase or decrease, but these changes are always made while ensuring that the interests of creditors are safeguarded;
- External capital - these are all sources of asset financing that the company holds. These mainly include: trade payables, loans and short- and long-term borrowings. External capital is money that is at the disposal of the company, as well as its creditors, but only for a strictly defined period of time. After its expiry, it is repayable.
Corporate finance
Now that we have learnt the most important information about a company's assets and sources of financing, it is time to move on to some important concepts regarding financial management in a company. Let us therefore take a closer look at the most important definitions:
- Corporate finance - is the set of processes occurring in the course of business and activities that affect the smooth functioning of the company. It is mainly about the appropriate turnover of accumulated cash belonging to the company's resources, i.e. the disposal and accumulation. It is worth mentioning that each enterprise should develop its own internal financial system.
- Financial system - is a set of norms, regulations, as well as rules for the operation of economic activities created on the basis of the law, which concerns the circulation of money. The developed financial system will include activities mainly related to the preparation of monetary operations and their planning, analysis and implementation. It will also include various methods of settlements with suppliers, customers, financial institutions and state authorities.
- Financial management - involves proper planning of activities that will bring us closer to achieving the company's objectives. Without proper business financial management and ongoing supervision, it is difficult to ensure that the company functions properly. Of course, in addition to planning activities, one must also take into account the possible raising of funds that will be used to develop the company. Efficient management will be key in financial management.
- Investment in a company - using available finances to increase its fixed assets. Every company will sooner or later have to make investment decisions in order to grow. We distinguish between the following types of investment:
- tangible - acquisition of new fixed assets;
- financial - the acquisition of long-term third-party securities, as well as an increase in long-term financial assets.
In order to prepare the process of investment implementation you need to:
- establish the desirability of the investment;
- develop the project and the necessary investment documentation;
- carry out all investment work;
- hand over the investment to the user;
- evaluate the investment by analysing two indicators: the payback period and the efficiency (profitability) of the investment.
Choose InPost Subscriptions for businesses and send parcels at a fixed price.
Take one minute to leave your contact details and start sending parcels from as low as 11.89 PLN*.
- One contract for courier and Paczkomat shipments
- Free courier pickups
- Express delivery
- Price guarantee for the duration of the contract
- Fuel surcharge included
- Dedicated post-sale support
* Net price per Paczkomat shipment in the Subscription 600 plan.
Czytaj również
