Corporate/ business finance is an important and inevitable function in any business and efficient financial management is crucial for success and sustenance since it involves the management of financial resources and financial activities of the organization.
A team of finance and accounting professionals or the finance department generally handles it. Financial analytics course by XLRI is available online to help gain a deep understanding of advanced concepts in the areas of accounts and finance, and to keep themselves abreast of changing trends, mechanisms and legislation.
Even though a strong vision and a great product are the central needs of a business, one cannot ignore the importance of finance and its efficient management. Here is how finance is important to business:
Initial Capital: It is popularly said that money is essential for making money. To start the activities of a business, capital investment is required. For ideas to materialize and become products/ services, the groundwork for sales, product testing, marketing, etc. seed capital is essential. Businesses have a tough but defining choice between debt and equity financing.
Meeting operational expenses: In the short-term, businesses require finance in the form of working capital to meet operational expenses such as remunerative payments, raw materials, inventory, interest payments, etc. Proper short-term financial planning and maintenance of good working capital flow is crucial to keep the operations going. Though maintain adequate cash flow is always important, it is especially important in the starting stages since revenues will take some time to match the cash outflows.
Scaling up and asset creation: In the long-term, capital is crucial for purchasing assets like machinery, land, equipment, etc. to expand the production scale. Scaling up production will create assets, help the business grow and penetrate existing markets. The business must have sufficient capital budget to do so and cannot depend on short-term finances for this. They must have savings and should be able to raise and infuse capital investment through debt or equity financing.
New products and markets: Without finance and proper financial management, even an established organization will not be able to explore newer markets or develop and test newer solutions/ products. Finance is required for testing and research purposes as well as for marketing and advertising purposes.
Business cycles: Business cycles of growth, boom, recession, depression and renewal caused by changes in the economy and other external factors are a reality. And no matter how well it is doing, the business is bound to bear the consequences and has to be prepared to tackle these cycles. The financial plans must be foolproof and should include plans for when the business takes a hit due economic downturn.
Advanced courses for finance professionals and courses for business managers and non-finance professionals help them understand and acquire skills in financing planning, management and forecasting. Enrol yourself into an online course in finance analytics and boost your career progression.