Guide To Finance

Finance means that the acquirer of an asset, or the builder of an asset, does not have to dispense 100% of the cost of the asset upfront. Rather, another entity will provide the balance of the funds to acquire or build the asset, and will accept the repayment of those funds over time. The relationship between the parties is through a binding contractual agreement, which clearly indicates the rights and obligations of all the parties involved in the transaction. There is usually a cost to obtain the funds, which is referred to as the finance charge. The entity that obtains the funds, in order to complete a transaction which will benefit that entity, agrees to pay, over a period of time, the amount financed plus a finance charge. The entity that extends the funds is compensated for the risk of extending the funds plus the time the funds are outstanding and cannot be extended to another party.

Obtaining funds is either through obtaining a loan or issuing debt / bond / note / debenture.

Funding / Finance is provided by:
  • Banks
  • Credit Unions
  • Insurance Companies
  • Finance Companies
  • Corporate Finance Departments
  • Money Market Funds
  • Mutual Funds
  • Pension Funds
  • Hedge Funds
  • Sovereign Wealth Funds
  • Manufacturers
  • Crowd Funding Websites
  • Private Individuals
  • Government Agencies
  • Non-Government Organizations
  • Non-Profit Organizations
  • These groups combined are referred to as the capital markets.

    In addition to funding, Finance is also concerned with managing resources, valuing assets, determining whether investing in an asset, securities or company is an acceptable risk, business expansion, and projecting cash flow or value at some point in the future.