Business Finance and Operational Management Essentials

Leasing vs. Renting Comparison

• Leasing: Can be performed on movable and immovable property. Maintenance of the goods falls on the tenant. Minimum duration: 2 years for movable property and 10 years for immovable property. There are certain time limits on the amount deducted.
• Renting: It can only be performed on movable property. The maintenance of the property falls on the lessor. There is no minimum duration. The fee is deducted in full.

Loan vs. Credit Comparison

• Loan: You receive the entire loan from day one. Interest is paid on the first day and the total amount over the year. If you return the money in advance, you suffer a penalty. It is used to pay for purchases or investments, never to address a lack of liquidity.
• Credit: It makes money available to the client, who can make use of it or not. Interest is paid when money is available and only on the amount taken during the set time. You can return the money at any time without suffering any penalty. It is used to address a lack of liquidity, never to invest.

Key Business and Operational Definitions

Production Process

The organizational logic of the steps to be followed in workshops to obtain the desired product.

Employment Contract

An agreement between a worker and an employer whereby the employee is committed to working for the employer under their direction and organization in exchange for a wage.

Collective Bargaining Agreement

A contract negotiated and finalized by the representatives of workers and employers to regulate working conditions during a specific period of time.

Stock Security

Keeping a reserve amount in the store in case any mishap occurs.

Investment Spending

Refers to the spending performed by an entrepreneur in the purchase of goods that will help produce other goods, and whose duration is more than one year, such as local premises, machines, tools, vehicles, equipment, furniture, and costs of formation and implementation of the company.

Temporary Shortfall of Cash

The situation a company faces when it is temporarily out of cash.

Discounting Bills

The recovery of a bill of exchange in advance by paying a commission to the bank.

Small and Medium Enterprises (SMEs)

Small and medium enterprises are considered those that meet the following requirements: fewer than 250 employees, annual turnover not exceeding EUR 40 million or an annual balance sheet not exceeding EUR 27 million, and not being owned by a large company or group of large companies in a percentage equal to or greater than 25% of capital.

Investment Plan

Details of the investment required to manufacture the product or service.

Spending Plan

Details of the expenditure necessary to obtain the product or service (e.g., raw materials, wages, and Social Security).

Financial Plan

The plan that determines whether a project is economically feasible.