“Finance is not merely about making money. It’s about achieving our deep goals and protecting the fruits of our labour.” Robert J. Shiller. This quote highlights the essence of business finance, focussing on resource management, risk mitigation, and long-term value creation. Technology plays a significant role in business finance. According to the financial management magazine, 78% of highly successful finance leaders identified keeping up with new technology knowledge as crucial to success over the next three years.
Suppose a CFO at a tech startup oversees capital budgeting, securing funding, and managing cash flow. They ensure financial health by analysing investment risks. The main role of the CFO is to optimise resources and meet regulatory requirements. Following such actions helps businesses grow and promote long-term stability. At times, you are short of funds to finance business. In such cases, business loans in Delhi/NCR are your true saviour!
7 Functions of Business Finance
Here are the functions of business finance.
1. Raising capital
Raising capital is a significant function of business finance. To take up decisions on raising capital is a main feature of business finance. The finance team is responsible for deciding how to raise funds.
2. Working capital management
Managing working capital is a significant hurdle faced by MSMEs. Business finance draws a strategy to ensure that the company’s day-to-day operations are carried out without any financial hiccups. Therefore, it is another vital feature of the finance department. Capital management involves monitoring and controlling the company’s cash flow, inventory, and liabilities like accounts payable. The finance department ensures smooth day-to-day operations. The objective is to maintain an optimal balance between these components. It is done to meet operational needs without tying up excess funds.
3. Investing capital
Another important objective of business finance management is investing capital. The finance team evaluates various investment opportunities. It also decides where to allocate funds to upscale business growth. The team makes sure to assess the possible risks and returns. These are highly associated with each investment option.
4. Safeguarding investment
In today’s world, market conditions evolve every day. Therefore, investing capital is not enough. You should monitor the investment to maximise profits and lower risks. Business finance management guides through such risks by safeguarding investments.
5. Risk mitigation
Risk mitigation is another vital function of a finance team. In today’s era, markets are volatile. Hence, risk mitigation plays an important role. Business finance management makes sure the strong financial health of the company. You should invest wisely, take calculated risks, and constantly monitor the market.
6. Financial planning
Financing planning involves deciding the vision and goals of the business. The main role is to draw up a financial plan to achieve its objectives. The business finance function sets budgets, identifies risks associated with created budgets, etc. In addition, financial planning ensures the company adapts to changing financial needs. These financial needs are securing and managing the current assets of the company.
7. Other functions
Making decisions about liquidity, mergers, and acquisitions are some other significant functions of business finance.
Conclusion
To conclude, you must have a business plan that will help you in forecasting your business growth. It helps to maintain a budget for all business activities and operations. You must make sure to manage resources properly to help the business meet its objectives. Business finance ensures sustainability and long-term success. The financial manager is an indispensable part of business finance. Its role is to help functions run efficiently. Capital budgeting and financial planning help avoid any unfortunate circumstances while operating a business. Proper management of the flow of capital prevents the loss of funds in unnecessary ways. Such functions ensure the maintenance of liquidity and profitability.
