FINANCIAL RESOURCES AND DECISIONS

Financial resources and decisions

Financial resources and decisions

Introduction

Among business strategies borrowing money of financing is an important and a positive approach for business decisions. By doing this company can speed up its growth, support seasonal financial slowdowns, and invest in the business opportunities which strengthens the business in the future. In addition to this, a strong financial strategy supports the business towards success and a weak financial strategy hinders the corporate strategies and may result in failure of business strategies (Fields, 2011, pp. 223).

Now a day business and economic environment around the globe is dynamic. The business and global economic environment is constantly changing. Therefore, the strategies for business's financial decision should be dynamic. We cannot say that the strategy company using may not be considerable after a year or six months. Therefore, the most appropriate side of the business to constantly monitoring and redefining company's financial strategies (Fields, 2011, pp. 223).

Financing the business

Among business strategies borrowing money of financing is an important and a positive approach for business decisions. By doing this company can speed up its growth, support seasonal financial slowdowns, and invest in the business opportunities which strengthens the business in the future. In addition to this, a strong financial strategy supports the business towards success and a weak financial strategy hinders the corporate strategies and may result in failure of business strategies (Fields, 2011, pp. 223).

In any business, the management teams responsible who are responsible for a different company activities such as marketing, technology, human resources, and operations is not directly related to financial communities of business. However in small business when there is a major project, they might participate. In public companies, to answer the questions of the financial community and shareholders of business, company calls top executive to answer those questions.

Whenever there is a major project in the company, it eventually affects the existing of the company, form of the company and financial savings of the company. With new financing to company new peoples are hired and budget of the company is expanded. When company unable to obtain financing due to onerous terms; business reduces its budgets and headcounts.

In financing options, the major factors that may affect the financing can be its cost, maturity, restrictions and conditions, collateral and payment schedules. There are two major categories of financing; debt financing and equity financing.

Debt financing

Debt financing is adopted by a company for it short term or long term borrowings. Short term borrowing refers to the loans or financing options with a period of one year or less. Short term debt is used to maintain the current needs of cash for the business. Whereas the long term debt financing refers to loans having maturity of more than one year. Company mostly uses long term debts to finance its research and development projects, real estate and for major capital expansion (Megginson & Smart, 2008, pp. 528).

Short term debt financing

There are various types of short term debts as follows:

Account receivable financing

Compensating balances

Factoring

Credit cards

Inventory financing

Line of credit

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