Understanding Financing Institutions Smarter – To become a smarter economic actor, understand the types of financial institutions and their functions in life. Please note that there are types of financial institutions that are fraudulent. Therefore, one must be careful in choosing a financing institution.
A financing institution is a business entity that carries out financing activities in the form of providing funds or capital goods. Utilized by a company within a certain time based on periodic payments. The leasing or leasing user pays a predetermined amount regularly to the owner. The use of equipment is separate from ownership. Financing Institutions include:
Is a business entity specifically established to conduct business leasing, factoring, consumer financing, and credit card business.
Venture Capital Company
Is a business entity that carries out a financing business or equity participation in a company that receives financing assistance or an investee company. This is for a certain period in the form of equity participation, through the purchase of convertible bonds and financing based on the distribution of operating results.
Functions And Roles Of Financing Institutions
The function of the Financing Institution is to finance activities such as production and consumption. Meanwhile, its role is to move the economy and help the community in production and consumption activities.
The business principle of a Financing Institution is to provide financing and is accompanied by interest. In an increasingly modern era like today, various financial institutions have been present to facilitate financial planning.
How Financing Companies Work
One of the institutions that need to be known is the provider of financing services for those who want to buy goods non-cash. This type of payment is often referred to as installments or credit. Human desires are never-ending. Not to mention the needs that must be met. Companies or financial institutions are business entities outside banks or other non-bank financial institutions.
Provide loan facilities to customers for a purpose. Just like banks and other official institutions, the mechanism regarding finance companies is known to the state and has also been regulated in the Minister of Finance Regulation concerning finance companies.
In general, financial institutions such as banks will provide search funds to prospective debtors. It is different with finance companies. When applying for credit to this institution, you will not get liquid funds, but the company’s approval to finance the credit. So, cash funds are paid by the financing company to a third party, where the purchase transaction is made. In Indonesia itself, financing companies are something that you can easily find.
Machinery And Heavy Equipment Financing Company
The number of industries and small and medium enterprises in Indonesia makes this country dependent on the presence of heavy machinery and equipment. These machines are certainly a tool to produce products that are needed and desired by the community, such as clothing, food, houses, and others. Not all companies have sufficient funds to purchase machines and heavy equipment by cash.
Especially if the business is still small and medium scale. Of course, it is difficult to buy machines and heavy equipment directly for the production process. The option to make purchases on credit was finally taken to continue to run their business. The number of industries in Indonesia has also triggered the number of finance companies that concentrate on heavy machinery and equipment.