Finance is the field of dealing with money matters. It is an important aspect for any individual or for an organization. In a business, it is a critical function because any business needs to make money to continue functioning. That is why it is considered to be a specialised field which requires trained people. There are several professional courses in finance conducted by business schools and online educational portals.
A finance team in a company has qualified people performing various jobs like accountants and analysts, among others. Their main job is to ensure that the company is running profitably and that the profits and costs are balanced. A financial expert in a company is responsible for overseeing many aspects of financial planning such as cash flow, capital expenditure, income, investments, profitability, savings, assets etc. They connect the company’s goals and strategic vision to the financial numbers.
Lack of proper financial planning can harm a business and its stakeholders. It can lead to a shortage of cash which is required for daily operations like marketing or production. Lack of financial planning can lead to not being able to raise capital for expanding your business or funding a new project in your existing business. In fact, all daily operations in a company will come to a standstill if financial planning is not happening properly.
In an organization, finance includes planning of financial resources, developing a capital structure, ensuring proper utilization of resources, analysis of the cost of doing business and budgeting. It is needed to study how the external factors like economic policy, stock market fluctuation, market environment etc affect the company.
For an individual also, the knowledge of financial planning is important to plan their life. It can help a person earn extra money, save more or generate new sources of income. Every person has some goals in life. It could be buying a house or raising a family. It is impossible to achieve those goals without managing the financial aspects of your life.
In fact, financial knowledge is important for a country also. It is important for the overall development of its economy. Governments in all the countries spend a lot of energy in planning the budgeting and for rolling out the economic policies for banking and other financial institutions like stock markets, insurance etc.
Indeed, finance plays a very critical role in our lives. We need financial understanding and planning to run our own lives as well as play our part in our workplace. Finance is one of the core functions of an organization also as the organization’s existence is dependent on its smooth functioning. Even national governments need to answer its people on its handling of financial matters.