corporate finance management
Corporate finance is an area of finance which deals with the financial decisions corporations make and the tools and analysis used to make these decisions. It primarily aims at enhancing the corporate value while reducing the firm's financial risks and maximizing the corporations' return on capital.
Corporate Finance can be divided into long-term and short-term decisions and techniques.
The long-term decisions are the Capital investment decisions which involve decisions related to whether to finance an investment with equity or debt, and when or whether to pay dividends to shareholders. Capital investment decisions thus comprises of an investment decision, a financing decision, and a dividend decision. The short term decisions can be put together under the heading Working capital management. It focuses on managing the relationship between a firm's short-term assets and its short-term liabilities, cash management, inventories, and short-term borrowing and lending.
Financial Services offered by Corporate Finance Companies
Asset Based Lending
It is the method of procuring loans by keeping assets as security which could either be liquid, current assets or fixed asset. The asset-based lending could be used at the time of merger, acquisition or buy out, for debt restructuring and commercial refinancing and to meet the working capital needs.
Cash Flow Lending
It could crop up in response to the seasonal requirements, business expansion or cyclical business swings. Cash flow lending is vital at the time of acquisition, merger or buy out and to meet recapitalization and offshoots.
Second Lien Loans
These loans also known as Secondary Collateralized Institutional Loans (SCIL) are primarily used for recapitalization. Recapitalization is the process of tapering out dividends and replacing the more expensive funding with the less expensive SCIL financing and buying out financing.
Corporate Debt Restructuring
This is meant to clear the past debt burden. Business restructuring can be done by way of cash flow supplied by commercial refinancing.
Appropriate corporate debt restructuring could be offered by the following corporate financial solutions:
- Asset based loans are given for Corporate Debt Restructuring.
- Debtor-in -possession financing is offered for Corporate Debt Restructuring.
- Plan of Reorganization Financing is provided for Corporate Debt Restructuring
- Revolving Credit Facilities are given for Corporate Debt Restructuring.
- Senior Secured Debt is offered for Corporate Debt Restructuring.
Business Debt Consolidation Financing
This service facilitates to restructure business by refinancing past term and equipment loans to match the cash flow.
Global Corporate FinanceGlobal corporate finance deals with cross border funding of diverse corporations. It follows a global lending program by taking into consideration the tax and foreign exchange regulations.
The services granted by the global corporate finance are as follows:
Payables Financing
Companies availing the global corporate finance have the benefit of early payment discounts from customers. The financial institutions that grant the global corporate finance open an account with each of the suppliers giving them the option of receiving payments as soon as possible.
Inventory Financing
In order to maintain a standard flow of cash 100% inventory financing is provided to the companies availing this service. The consumers who go for inventory financing enjoy the following benefits:
- Augmented credit capacity
- Free financing for the sponsored suppliers
- Simple and common repayment dates each month
- 100% advance rates
- Online account management
- Accelerated cash flow
Receivables financing
The asset based finance solutions presented under the global corporate finance offer working capital for the growth of the company. Under this finances are provided by following 3 steps:
- Checking the eligibility of clients who receive it
- Purchasing the receivables at a discount or for cash
- Collecting the full invoice amount from the customers over time.
The benefits of receivables financing are:
- Stepping up of cash flow
- Alleviation of collection risk
- Increase in productivity
- Optimization of asset potential.
Term loans
Term loan financing is normally attached with other commercial financing offerings. This type of financing helps in the purchase of equipments and other important assets. The benefits associated with it include:
- Added source of business finance
- The spread of the cost of assets and infrastructure investments over time.
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