Microfinance - lending to the poor Essay Example | Topics and Well Written Essays - 1750 words

Microfinance - lending to the poor - Essay Example Due to these stringent measures, small scale businesses and private entrepreneurs are locked from assessing bank finances to support their businesses. The service of lending finances to small scale businesses and private entrepreneurs who cannot access such services from banking and other financial institutions is referred to as microfinance. Banking institutions consider such borrowers as lacking ability to repay loans and the interest (Collins et al. 135). However, microfinance institutions have successfully advanced finances to such borrowers for a long time and have managed to get them out of poverty. Conventionally, banks have ignored small scale clients by failing to grant them loans or accept deposits from them. Providing financial services to small scale customers is an expensive activity because it takes a lot of time to processes numerous but small value loans involving many clients (Collins et al. 155). This is because the same processes undertaken when processing small amount transaction is similar to that which is taken to process a large amount belonging to one large client. Since the same interest rate is charged for both large and small scale clients, banks prefer dealing with large clients in order to save costs involved when dealing with many small scale clients (Yunus 135). The operation cost of processing transactions in the bank remains unchanged regardless of the amount of funds the bank is handling. This is the reason why banks prefer large scale clients who are making large transactions so that they can maximize their revenues. According to Collins et al. (165 ), handling many accounts is costly in terms of data base management. This has discouraged banks from inviting membership from small scale clients so that they can maintain the cost of data base management as small as possible. According to Yunus (137), banks consider lending their finances to small scale

Management accounting Essay Example | Topics and Well Written Essays - 1500 words - 6

Management accounting - Essay Example The decisions also help in reducing cost that a company incurs in day to day activities. The second one is by assisting the management in controlling and directing the operations of the company. A company that has well organised activities achieves efficient use of resources, (Chandler, 1977). The third one is that the information motivates employees and managers to achieve the targets set. The targets are set in a participatory manner and, therefore, every worker has their views taken into consideration. The fourth one is by measuring the performance of every aspect in the business, for example, employees, managers and departments. The last one is that the competitive position of the company is gauged. This ensures measures can be taken to increase the company’s long-run competitiveness over others in that particular industry. The business thus controls a large portion of the customer share which ensures high profits. Management via accounting is so crucial today because mana gerial accountants are important members of any management team. Managerial accountants play an important role of providing strategic decisions as well as day to day decisions. The decision making process is complex and requires specialists from management accounting as well as other financial disciplines. The day to day operations would be very expensive and tiring if management accountants do not plan them in advance. This is what makes management via accounting very important in modern business enterprise. These enterprises use the accounting and statistical information to ensure the smooth running of business activities. Business activities that are well managed lower the internal cost of running a business. It also ensures intensive use of resources in the business thus avoiding wastage. The business is also sure that customers pay for their goods and services in time and that suppliers deliver stock and are paid when due, (Capa Centre For Aviation, 2013). Management by using a ccounting is a field concerned with the efficient use of data from accounts. The managers of a company or business organisations use this information to help them make decisions that assist them to better manage and control resources, with the end goal of increasing the profitability of a company, (Kieso, 2005). The use of accounting data to manage a business is often confused to be financial accounting. This is not true because of several aspects that are related to management accounting information. The first aspect is that management accounting information is forward looking. This means that managers use data to plan for the future and determine how they can control situations that seem will be bad for the company. Managers can also use this data to improve situations that appear will be favourable to the company. For example, if managers predict a certain good sales will increase by 50%, they can employ more sales staff to increase the sales to 60%. This is an example how manage ment via accounting can serve as a good tool to increase the profitability of a company and ensure that it becomes a multi-national business. Other managers use historic information to make decisions that will affect the company. This approach might be accurate but not as effective as that from management via accounting, (Dameri, 2013). The second aspect that mangers use from management accounting is the assurance with which a plan made using management accoun