Facing CompetitionĪdvertisement and publicity production and distribution of new commodities and services, incentives to the consumers, sale promotion, providing services and commodities at a fair price are required, to face present-day competitors.įor all these activities, finances are required. Related: Top 10 Functions for Establishing A New Business Unit (Step by Step). Not only that, but other responsibilities may also be performed easily. Sound Business Positionįinance is the only base point by which sound or weak position of business is known, reason being that payments may be made easier to the suppliers, remuneration and facilities may be provided to the Employees and payment of original amount and interest may be paid to the debtors in time, only when sufficient funds are available. With finances, various commodities may be purchased or sold or produced.īesides, finance (capital) is also required for the purchasing of techniques, machinery, and equipment, the establishment of Laboratories, etc. Development and Extension of Businessįinances are also required for the development and extension of all business activities of the modern age. Efficient Operation of Businessįinance is the source of business, which cannot be efficiently operated without finance, the reason being that with the help of Finance, purchase of commodities and raw materials, sending of products to the consumers, conversion of raw materials into finished product and sale thereof become possible. Related: 18 Major Factors Affecting Capital Structure (Complete List). Thus, finance is required to complete the initial activities of the business enterprise.
Finance in business registration#
Establishment of Business Enterprisesįinance is required for the promotion of the establishment of any type of enterprise.įinance is required for registration of the company, for incorporation, for obtaining the certificate for starting the business and also for obtaining permission letter.īesides, expenditure on these requirements, finance is required for arranging the working place, machinery, and equipment, working material, furnishing and salaries of the employees. The need and importance of business finance may be explained as follows: 1. Question is, What is the main purpose of business finance? or Why is finance so important? The importance of Finance may be compared with blood circulation in the human body.Įxplaining the importance of Finance, Finance is important for industries and businesses, as lubricant oil is for the wheels, fresh for the bones and blood for the veins.
In other words, Business finance means raising capital for business units and their rational use.
Hence, Finance means obtaining capital or loans, so that the objectives of business entrepreneurship may be achieved. In Business, Finance broadly means capital. In the modern age, for every entrepreneurial or business activity, finance (capital and funds) are required, as without it the entrepreneur cannot function finance is the lifeblood of all economic activities.
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