Role of Finance in a Business

Money is the nerve center of a business.

The goal of any finance function is to achieve three benefits: business support service, lowest costs and effective control of the environment. Money is the lifeblood of a business and finance is the nerve center. Finance is required to promote or create a business, gain assets, develop products, run market surveys, advertise. The conventional view of finances focuses on being reactive, efficient, quantitative and risk averse. New innovative views focus on being vision-oriented, opportunity and growth focused, intuitive and risk-taking.

Budget And Forecasting

Budgeting and forecasting relate your business to the outside community. Driven by earnings and growth estimates, stock prices rely on timely data forecasting to achieve optimal price and market capitalization. Small businesses benefit from this knowledge even though not publicly traded. Knowledge of raw material requirements, personnel and staffing demands, and expansion requirements force entrepreneurs to thoughtfully consider their needs.


Also referred to as the close, Finance, Money Business and Stock Market website defines bookkeeping as the “process by which all subsidiary ledges and journals of the organization are summed up for a given time.” A close can be small and simple or incredibly long and complicated depending on the size and complexity of the company. Your company should be able to close within a few hours, so the process can happen daily.


Any company with shareholders or outside financing should have standard external reporting requirements. External reports focus on how banks, shareholders and the general public all relate to the organization. Stockholders rely on reports of data forecasting and budgeting when determining when to buy and sell, so accurate data defines the entire process.

Payables And Receivables

The finance department manages all cash flow into and out of a business. Vendors and creditors need payment correctly and on time to keep things running smoothly. You need to stay liquid–the right amount of cash on hand–at all times and finance must maintain payment plans that keep everything on track.


Due to public trading, large company owners tend to be widely scattered with management sometimes located in another place entirely. The management must ensure the owners’ economic welfare to stay employed. A company’s success and growth occurs when the principles and procedures of corporate finance are followed. Corporate finance forms the backbone of a corporation. Without accurate and timely information, the system would fall to pieces.

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