financial resources

Financial resources should be understood as the fuel of a vehicle, they will define how far the company can go. For this reason, the financial management of a company is essential. In this article you will learn what financial resources are, what their types are and some examples.

Having accounting and finance software can be decisive in order to manage these vital resources.

These professional tools such as Bind, Contagram or Glasof will allow you to manage the accounting management automatically, of all your resources, creating backup copies, and organizing finances by sectors. You can also manage electronic invoicing, taxes, assets, payroll and expenses.

What are the financial resources of a company?

The financial resources of a company are those assets available to the company, but which have a degree of liquidity. That is to say, they are the assets that the company owns, and that can be converted into cash with relative immediacy, without losing their value.

If we have a company that sells manufactured products, and we have two commercial premises, those physical places are assets of the company. It is about material resources.

Now, if we want to turn those stores into cash, we won’t be able to do it right away, and if we want to do it quickly, we’ll probably have to sell them for less than their market value.

Here is an example of why a property or another type of material asset is not part of the financial resources, since they do not meet its two conditions:

∙         Immediateness to convert it into money.

∙         No loss of value in the conversion.

Financial resources are understood as both cash and bank deposits, as well as those assets that the company owns, and that can be transferred to obtain capital. That is, everything that can be easily converted into money.

The financial resources of a company must be managed with professional tools.

Financial resources also include assets that are not yet available, such as a debt receivable. Stocks in other companies are also resources.

Examples of financial resources of a company

As a general rule, companies have more than one type of financial resource. Some examples can be:

∙         The money that the company has in cash and in its bank accounts.

∙         The money invested in: foreign currency, savings account, fixed term, shares, etc.

∙         The money that you currently have, or will have, thanks to the fact that the company completed the sale of products and services. If, for example, we have agreed a sale in installments, that money that will arrive in the future can be considered part of these assets.

∙         The capital obtained by the issuance of shares, bonds and securities.

∙         The money issued by financial entities, private or state and bank loans, with some type of interest. State grant programs are also included among the examples of financial resources of a company.

Types of financial resources

The most usual classification is according to its property. The two types can be:

∙         Own financial resources

∙         External financial resources.

Own financial resources

Own financial resources are the assets that are part of the company’s assets. It is the own capital that it possesses, due to its own administration of resources and its productive activity.

These assets include:

∙         Cash and bank accounts.

∙         Profits from sales and reservations.

∙         Investment capital of partners and shareholders.

∙         Shares of other companies, which our company owns.

The importance of own resources is that they give the company some freedom when it comes to expanding and investing, without taking risks or paying interest.

External financial resources

These are the assets that are not part of the company’s assets, but which, however, are available as capital to invest and put into circulation for the benefit of the company.

These are assets that the company acquires as debt, and that have a financing cost. In the case of loans, that cost is the interest to be paid, with the installments.

Some examples of these types of resources are:

∙         Loans from suppliers or creditors.

∙         Bank or private loans.

∙         Issuance of titles.

∙         Securities such as bonds, government securities and shares.

That is, it is the one that is available through a financing line from an entity outside the company.

By Anurag Rathod

Anurag Rathod, as a blogger he used to spread all about app-based business, startup solution, on-demand business tips and ideas and so on.