Project Finance vs. Corporate Finance: A comparison of differences

Companies need money to make money. This isn’t exactly a trade secret. Whether to secure more inventory, execute expansion plans or invest in economically viable projects.

So, where do they get this financing from? Who is in charge of collating funds?

Every organisation has a finance department that monitors financial management. In most cases, it is the corporate financial team. In other instances, it is the project finance team.

If you are aiming for a finance career, it is essential to understand the difference between the two. While both types of finance help to organise capital for various business operations, there are some distinct differences to consider.

Corporate finance deals with the larger picture when it comes to managing the finances of a company. It is involved with financial planning, investment management and capital structure. Whereas project finance has a narrower vision, dealing exclusively with specific projects within a set time frame and budget.

It is important to educate yourself about project finance vs corporate finance. When you understand the unique characteristics of both, you will be more efficient and productive when handling a company’s financial management and business operations.

So let’s not waste any more time and dive straight into an in-depth comparison of project finance vs corporate finance. 

Project finance vs corporate finance: Definition 

While both are important for a company’s financial management, project and corporate finance are separate entities that handle different responsibilities.

What is corporate finance? 

As a corporate finance professional, your company will depend on you for a variety of financial activities that help optimise productivity and profitability. Corporate finance is a vital part of any company’s success. Finance professionals work on strategies to boost business operations, reduce costs and determine feasible investment strategies. They also work on taxation, capital structure, sourcing finance and planning budgets.

Without corporate finance, companies would struggle to keep track of their various expenses and revenue. They would also be unable to maintain cash flow and budget allocations.

What is project finance? 

Companies use a funding method called project finance to ensure a steady supply of capital for specific ventures. It is for long-term, laborious projects that tend to be risky, time-consuming and require excessive capital. A designated project finance team is established to ensure capital is secured for this very purpose. So what do they do? The finance team incorporates various techniques to assure the project is worthy of investment.

They then source capital that is independent of the parent company and doesn’t affect the corporate balance sheet. The professionals working in project finance collaborate with all the other teams and look after the financial, legal and technical aspects of the project.

Project finance vs corporate finance: Key features 

Project finance:

• The main objective of having a project finance team is to source funding for large-scale, long-term ventures that require special financial attention.
• Project finance experts ensure there are minimal risks around the new project. They calculate projections, examine the market trends and make informed decisions before green-lighting the new venture.
• Once the funding is secured, the professionals will use their expertise towards optimising operations, enhancing productivity and reducing unnecessary costs. This will boost interest among investors and shareholders.
• The new project’s assets and cash flow are considered collateral for loans.
• Most project finance professionals work on infrastructural projects that require long-term financial plans and goals.

Also Read – Master Project Finance with these Top Courses

Corporate finance: 

• Corporate finance looks after the general financial management of the company, making sure the books are balanced, budgets are maintained and the fiscal health is stable.
• The finance team helps secure funding for various purposes such as everyday operations, expansion plans, investment opportunities, and many more.
• Corporate finance is responsible for maintaining financial statements and balance sheets.
• The finance teamalso plays huge role during mergers and acquisitions, create strategic financial plans, minimise risk factors and calculate capital structure.
• Who keeps the shareholders happy? The corporate finance team. They enhance the value of the company and works towards maximising profitability.

Project finance vs corporate finance: Financing sources

Project finance: 

• Project finance uses various funding sources such as debt, equity and mezzanine financing.

Corporate finance 

• Corporate finance uses funding sources such as debt, equity and internal financing.

Project finance vs corporate finance: Job profiles 

Project finance:

• Project Finance Associate
• Project Finance Senior Associate
• Project Finance Manager
• Project Consultant
• Vice President

Corporate finance:

• Financial analyst
• Finance manager
• Corporate accountant
• Investment analyst
• Management accountant
• CFO

Also Read – Corporate Finance Jobs: Roles, Salaries, and Growth

Qualifications and skills

Project finance qualifications:

• CFA
• MBA Finance
• Certified Project Finance Analyst
• Financial modelling

Project finance skills:

• Technical financial knowledge about risk management, financial analysis, equity modelling and other relevant topics.
• Analytical skills
• Problem-solving skills
• Good communication
• Attention to detail

Corporate finance qualifications:

• CFA
• MBA Finance
• ACCA
• Financial modelling

Corporate finance skills:

• Proficiency in accounting and mathematics
• Sound technical financial knowledge in topics like, financial reporting, financial analysis and valuation.
• Research skills
• Analytical and critical thinking
• Quantitative methods
• Good communication

Project finance vs corporate finance: Salaries 

Project finance

• The average annual salary in project finance is Rs 6 lakhs to Rs 7 lakhs, but it varies depending on your designation, experience, company and location.

Corporate finance

• The average annual salary in corporate finance is Rs 9 lakhs to Rs 10 lakhs, but it varies depending on your designation, experience, company and location.

Project finance vs corporate finance: Main differences

All about Proschool’s financial courses 

Finance jobs come with a lot of expectations. Companies demand excellence and high levels of proficiency from finance professionals. A reputed coaching institute like Proschool can help you earn the qualifications, skills and business savvy you need to work in this challenging industry. So what courses can you enrol in at Proschool?

The CFA certification is one of the world’s best. It is a meticulously designed investment course that offers important subjects in finance and investments. Topics include economics, quantitative methods, equity investments, financial planning and corporate finance.

Proschool offers the ACCA program, a prominent accounting course that is coveted by professionals all over the globe. Management accountants can greatly benefit from studying the ACCA.

You can also opt for the Investment Banking Operations and financial modelling programs. Both are high-quality courses that will give you a leg up in your career. When it comes to project finance vs. corporate finance, you can get the training and education for both at Proschool.

Why Proschool is unique?

• The professors are industry experts with many years of experience.
• The teaching staff uses innovative learning methods and practical training techniques.
• The focus is on using real-world case studies, projects and examples to help students understand the concepts better.
• Additional resources such as mock tests, practice papers, prep books and customised study plans are also available to all students.
• Coaching centres are set up across major cities in India, but you can also enrol for online classes.
• Proschool’s placement program is accessible to all certified students.
• You will also receive training on interview etiquette and writing professional resumes.

FAQs

• Is corporate finance more important than project finance?

No, one type of finance is not better or worse than the other. Both are important in their own way, and many companies need both financial methods to operate successfully.

• What is the main difference between project and corporate finance?

Corporate finance manages the overall financial health of a company, while project finance ensures funding and budgeting for specific ventures.

• Does a CFA certification help me get into corporate finance? 

Yes, a CFA-certified candidate has a higher chance of getting hired in corporate finance. Recruiters recognise the CFA course as one of the top finance programs that offers quality training for all students.

Conclusion

The finance industry is a coveted place to work in. Many individuals enter this field in the hopes of earning lucrative salaries and gaining massive growth opportunities.

However, we all know just how competitive finance can be. You have to carefully select the right profile that suits your talent and abilities. It can be tricky as you need to educate yourself about the various designations and sub-divisions in finance. Hopefully, this post has given you a clearer idea about project finance vs. corporate finance. All you need is the proper qualifications, and you’ll be ready to make your mark in this industry.