Finance. Some find it quite complex to handle, while some seem to adore it. It is one of the most important things in our lives as well as in a business as that is what handles the money matters of the company. Whoever is assigned to handle the finance related matters of a business required to be ones who are most reliable and responsible. To give some basic knowledge, there are three main sources of funding for a business; owner’s capital, loans and venture/partner capital. However, handling all these is no easy task and finance undoubtedly plays a significant role in a business. Following are some of the reasons as to why it is considered so important for a business.

Significance

What happens if the finance of your business has not been handled accurately and fairly? You will be unable to reach those strategic and operational goals that were set at the initiation of the company. How discouraging and disappointing would it be when that happens? If the finances have not been managed properly, you might even have to face liquidity issues in the company as well, exposing you to more risks in the future.

Long term

If you expect to achieve a series of long term goals, then you must have readily available long term sources of finance for the company. Why? Because these finances can be utilized to purchase capital assets like plant and machinery which will generate long term benefits for your company. This cannot be done using short term finances; therefore, manage them both carefully.

Short term

Are short term expenses important? Indeed they are. In fact these expenses are what help you to keep it running. Even though they may have not seem of much significance to you at certain points as much as long term finance, these money is what handles all the operating expenses of the company. Never underestimate it! Also, having cash in liquid form is also important. Why? You never know when the event arises for you to pay in cash at an emergency situation and it is always better to be prepared.

Goals and objectives

Every company comprises a of vision, mission, goals and objectives that they wish to achieve in the long run. These can only be achieved if the money of the company is being managed properly. This includes preparing forecasts, comparing monthly expenses and determining ways of obtaining more profit. Therefore, if the company is to earn better profit and lead it to its ultimate goals, these finances need to be handled carefully.

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