Importance Of Finance

We start from the basis that the reason for business is not finance. Surely a good product, an effective sales and distribution network, or perfectly qualified personnel with the right motivation, may be more relevant elements for a business to be successful.

For this reason, not all entrepreneurs recognize the importance of finances in the company. In fact those who run it might assume that finances are just the accounting records.

And, within the entire structure, effective money management is key; And that is where the importance of finances in the company lies , since it allows a panorama quite close to the reality of the business as well as being a fundamental tool in decision-making.

That is why carrying out good financial management, a correct management of debts and investment in the business suppose 3 perspectives on which to forge growth and the achievement of company objectives since otherwise it can be presented as a process of stagnation in business development.

Finances in the company

The company is a dynamic body that moves and advances depending on how it is managed. And, within the entire structure, effective money management is vital; And that is where the importance of finances in the company lies. Since without this resource it can become uphill to  make  assertive decisions .

Due to the fact that it allows him to have, to whom he directs, a complete overview of the reality of the business and how to approach the different aspects of relevance.

In this sense, finances in the company play a dual role:

Record information

Decision-making tool.These two functions can be tangibly seen in two basic elements:

These two elements are what make finance fulfill its function of facilitating management within the business structure, since from them both the information that groups what happened and the way in which this information becomes a point of reference are derived to run the business.

Importance of finance in the company

  • Financial management
  • Debt Management
  • Investment Management

Three perspectives on which the growth of the company depends. Since without good  financial management , proper management of debts and investment in the business, a process of stagnation in business development can occur.

Therefore, finances must be assumed as an integral part within the business structure, since they directly affect all relevant aspects of it, but even more it must be used as a  tool  that enables the achievement of the business objectives.

Have Updated Information

The first of the guidelines to follow so that finances in the company are a tool is that the information is permanently updated. Financial ratios

If we are able to record all the information, it will be easier for us to control it by generating reports that help us summarize the key data and therefore have a greater capacity to improve it as well as its anchoring utility for decision-making.

Scenario creation

The second of the guidelines has to do with one of the most relevant aspects within the financial scheme of a company; creating scenarios. Financial feasibility

These are representations that help us to visualize what could happen in the short, medium and long term, as well as the strategies to carry out for its optimization.

Through finance, the company can see the financial behavior of a certain action and its impact within business management and more specifically, in the financial structure of the business. So that you can see what measures to implement to optimize available resources.

Measurement factor

Finally, finances in the company become a tool depending on how they can be used as an element of comparison with respect to what has been planned. In other words, they serve as a parameter to identify whether the actions or decisions taken were according to plan. And in case of not having complied, then take corrective actions to establish improvements in management.

In short, finances in the company represent a value of great importance for business management, helping managers to have more than relevant information in decision-making since it transforms the reality that the company faces in the day already day in totally objective numerical data.