The concept of "finance" is often equated with money. But these are by no means synonyms. Finance reflects any monetary relations that arise between two specific entities, meaning that money is the material basis for the functioning and existence of finance. In addition, these entities have unequal rights in the framework of these relations, since one of them, namely the state, has completely special powers.
Finances are usually allocated from the totality of monetary relations in general. So, those monetary relations that occur between citizens cannot be attributed to finance. After all, they are regulated by the state by civil law methods, a characteristic feature of which is the full equality of subjects within the framework of these relations.
Finances are an important part of monetary relationships. The essence and functions of finance are markedly different from money. Money is nothing more than a universal tool that measures labor costs. But finance is an economically necessary tool for the redistribution and distribution of national income and GDP. They are an instrument for controlling the use and generation of money in general.
The essence and functions of the finance of an enterprise are interdependent concepts. Indeed, in functions the essence of finance is manifested. Three functions of finance are distinguished: the first - distribution, the second - control, the third - regulatory.
The economic nature and functions of finance are concepts that play an important role in the distribution of national income. Here we will focus on the distribution function of finance. The sum of primary or basic income is equal to national income. When national income is distributed among all participants specifically in material production and fixed assets are formed. These participants can be divided into two large groups: the first is the wages of employees, workers, incomes of farmers or other persons who are engaged specifically in the sphere of material production; the second is the income of institutions, organizations, enterprises in this field. But primary incomes cannot ensure the fulfillment of the tasks and functions of the state in full, and therefore it is necessary to redistribute and distribute national income. As a result, production or secondary incomes are formed. The essence and functions of finance are interconnected and are subject to the same goal. The distribution function is needed in order to develop productive forces, create market structures of the economy, ensure a high standard of living for different segments of the population, and so on.
The essence and functions of finance must be understood in order to control the distribution of GDP. This task is performed by the control function of finance. It covers the non-production and production sectors. Such control is aimed at a significant increase in stimulation in the economy, the careful and rational use of labor, material, and financial resources. Financial control is necessary in order to check whether the legislation on various financial issues is being strictly adhered to and how fully obligations to the tax service, budget system and banks are being met.
The essence and functions of finance cannot be imagined without a regulatory function. It is associated with any state intervention precisely through finances (for example, taxes, government spending or credit) in the production process.
The essence and functions of finance are realized exclusively through the financial mechanism, which is part of the economic mechanism. A financial mechanism includes many components: starting from the procedure for using funds of funds, ending with financial legislation.