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What is finance? | Finance Features | Types of finance| Benefits of Finance

Finance is something we know very well. It is not necessary to be autonomous, to have an SME or a large company to understand that this concept is present in the daily life of any person and/or family. And managing what you earn and spend today is crucial, especially for making a living.

But what is Finance? Is it the same as accounting? And what types of financing are there? All these doubts and a few more are what we will discuss in this article today.

What is finance

According to the RAE, finance is conceptualized as: “One’s obligation to undertake to respond to another person’s obligation.” However, among other meanings it offers, we usually know it as “Flows, goods”. In reality, finance can be defined as the part of the economy that is responsible for studying the money and capital markets and the institutions that work in them. It not only focuses on ways of making money (income, salary, etc.), but also deals with savings and investment, suggesting plans to make everything profitable.

The difference between finance and economics

It is clear, however, that Finance is one thing and economics is another. We can say that finance is a minimal part of everything involved in the economy.

While economics has a broad approach to different disciplines, it focuses on seeing how people’s needs will be met through economic production; finance simply has a more money-centered approach.

Finance vs accounting

Now there are many who confuse two concepts that a priori might be considered the same, but in reality, they are not. We’re talking about finance and accounting.

The truth is, it isn’t. They are two similar concepts, but also very different

accounting: Accounting is a discipline that encompasses the rules and procedures for ordering, analyzing, and cataloging financial transactions. Or to put it another way, we’re talking about the way financial and economic transactions are collected, analyzed, and ordered.

Finance: Finance itself is more important than accounting because making money-related decisions. such as investing, saving, spending, or looking for plans to obtain more finance, depends on this discipline.

In other words, accounting is a part of finance because without it finance cannot be realized.

Finance Features

Once you are clear on the concept and specifically the difference between finance, economics, and accounting. So the next step is to know what characterizes finance to strengthen your knowledge.

Your goal is to manage money. But also capital goods. So, it’s not just about managing the money you have, but also savings, investments, loans… Both what you have and what you need to watch out for finances.

It deals with certain concepts. We are talking about financial and economic terminology: benefits, interest rate, risk, investment costs …

Help improve money management. Decisions are made by the treasury, knowing perfectly what you have, what you owe, and where you want to go. So seek to achieve this goal and with it improve the economic situation. Therefore, they are very important for businesses as well as families and individuals.

Other disciplines are helping them. In fact, you may have seen that accounting is closely related to finance, but also closely related to economics, statistics, probability…

What is the funding for?

It is clear that finance is available today. That is a way of showing individuals and companies what they own, what they owe, and what they can do with their interests. It debts in a way that will try to get the best result and the most appropriate resources. so that the economy (whether it is a person, a family or a company) gets in the way.

So, waste, bad investment, or poor financial decisions can have negative repercussions. so you can’t leave it to your free will, but you can’t have a head to spend more than you have, you can’t immobilize savings because it can bring great benefits.

Types of finance

Corporate finance

They focus on companies. So what they are looking for is to learn how to acquire, manage and use a company’s economic resources. For example, they can decide which projects or products to invest in. So how to divide profits, or how to get funding sources to move the company forward.

Personal Finance

These are the best known for practicing these daily individually and as a family. We refer to those who study how to obtain and manage resources. And it will encompass not only the economic issue, but also the workforce and education because depending on the career or occupation and the job he has.

Public Finance

Public finance, analysis, and management of all financial and economic resources owned by government agencies.

In other words, how to obtain resources with taxes, how to invest money in projects; how to redistribute resources and profits etc.

International

These relate to international transactions, mainly focused on companies that export or import or buy and sell abroad.

They should be very aware of the fluctuations in the exchange rate, its profitability, the indebtedness of a country and the risks that may arise from these transactions.

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Benefits of Finance

Here are the 5 most important reasons!

1-Convenience: Fintech mobile app development companies simplify customer processes for large and small businesses by adding banking capabilities with the help of BaaS service providers,

2-Seamless payments: Seamless experience creation through integrated financial services such as QR code on non-financial apps, BNPL (CHASÖ: buy now, pay later) or digital wallets

3-User experience: Fintech software developers have expertise in developing a user-friendly interface that focuses a user on their fintech product,

4-Conversions: Better understanding to serve customers due to greater visibility and convenience,

5-Revenue: The expectation of a 5x increase in revenue per user by integrating financial services into the company’s existing applications or customer campaigns.

Integrated Finance Applications

This integrated finance trend has become disruptive in payments. banking today as it showcases enormous potential in reshaping financial services for businesses. They are finding their positions in the following applications:

1-PoS, e-commerce, and vertical software vendors: Companies such as integrated finance, Shopify, Toast, Lightspeed, provide integrated payment and lending services to their sub-merchants. Sub-vendors are vendors that process payment transactions under a master aggregator.

2-Ride Sharing: Ridesharing companies such as Uber offer various financial services such as digital wallets, insurance, instant payments, debit cards to both the passenger and the driver.

3-Consumer-oriented fintech applications: Fintech applications and software solutions that focus on the specific needs of consumers and expand the functionality of their applications to meet these demands through debit cards, loan installments, instant lending, instant loan payment, etc. Some popular examples of consumer-oriented fintech applications include Revolut, Klarna, Square.

4-Consumer technology companies: Big technology giants such as Apple, Google, Facebook, Amazon, Telcos offer digital wallets, P2P payment services, credit and lending services, debit cards to their end-users.

What is Finance?| Finance Features | Types of finance| Benefits of Finance