Economics as a broad discipline is sometimes treated as a hard and quantitative physical science and sometimes as a human and social qualitative science.

The ongoing debate revolves around whether economics follows certain mathematical laws which can be discovered, or whether it revolves more around generalities and tendencies which can be explored but never proved for certain.

Corporate finance, as a subset of economics, tends to be framed very much as a hard, mathematical science.

Whereas accountancy is a mathematical record of what has already occurred in relation to the trade and ownership of a company, corporate finance is the process of matching necessary funding to trade and the allocation of ownership through investment.

Continue reading →

What are the facts of your current financial situation? Do you have access to information about your income and expenditure, your asset and liabilities? You surely have an idea of how much you earn on a monthly or weekly basis but can you trace where it all goes? Can you calculate your net worth? Ignorance of your financial situation is no joke it is sleepless nights, it is working harder for every penny instead of letting your money work for you, it is anxiety and stress and the list goes on. You must gain control of your money!

I recall that, gaining control of my cash flow was harder than learning how to how to speak in public! At a time, I was making a five figures salary as a software engineer of a medium size IT Company and yet my personal finance was a mess! I had about three credit cards that I was seriously struggling to repay. I also had two personal accounts with two clothing shops and a bond. With every raise and bonus, my spending almost doubled! I was using more than 40% of my income to buy things I did not need. It took me a while to realize that, my financial situation depended on how much I saved and definitely not on how much I earned!

As long as you consume every cent you earn, you are caught up in a self-created trap. You must take action to reduce your expenditure and start saving. Financial freedom requires you to define your purpose.

Continue reading →

Accounting can help to accelerate business growth when the process is done correctly. But if you are not used to managing business finances you can put your company at risk. Let’s take a look at three common accounting blunders and how to handle them the right way.

1. Mis-classifying transactions. Running a business solo may cause you to work in areas outside of your professional expertise. With the availability of accounting software on the market today, do-it-yourself bookkeeping is on the rise. But managing this task when you lack the proper training can do more harm than good. Lack of accounting experience increases the chance of improper transaction reporting and errors.
2. Inconsistent reporting. Too often bookkeeping is made to be the last priority on the list of things to do. When you are busy attending to other tasks in your business it is easy to push this task to the end of year. You need consistent feedback to know what changes to make throughout the year.
3. Using unreliable data. When it comes to generating financial reports, remember that garbage in is garbage out. In other words, your financials are only as good the data in your accounting system. In order to make the best assumptions, forecasts, and decisions you must have a system with complete information and data that is free of errors.

Now to correct the process here are some things that you can do:

Continue reading →