Question

Critically evaluate the role of the finance function of a company.

Answer 1

Finance plays a very important role in the management of a business. It is the backbone of any enterprise because any organisation whether it is small or large requires funds for operations.

Finance function is an integeral part of any organisation and managers perform the finance function in which the requirement of the funds to be used in the operations of the organisation is ascertained. In order to run the operation of the organisation raw material, machinery, human labour is required.

Organisation has to wages to the labour and to purchase raw material and machinery also funds have to be spent. So, finance function focuses on keeping a check on the funds used in various operations of the organisation and how to control the additional costs that are being incurred.

Money is required at all times in the organisation and to make the funds available, the finance department has to plan the requirement of the funds in such a way that the operations of the organisation go on smoothly.

Finance management is directly responsible for the availability of the funds to the various departments in the organisation as and when required. For example, Production department has figured out that there is a new machinery available in the market which can increase the production many folds and they plan to purchase the machinery. In this case the finance department has to evaluate the decision as to whether the machinery should be considered or not.

Likewise, finance helps to satisfy the real time objective of the organisation as if any proposal is beneficial and it is choosen to be brought up for which funds are used and it turns out to be profitable, the objectives and the goal for which an organisation is established is also fulfilled.

Finance is said to be the lifeline of an organisation, therefore it is huge responsibility to manage the finance function for which a finance manager is appointed who looks after all the responsibilities that need to be performed many of which are

• preparing daily reports of the funds used
• managing the adequate availability of funds
• monitoring the cash flows
• analysing the targets

In this way the finance manager is very crucial because he is the one responsible for managing the financial needs and requirements. So, overall we can say that finance plays a very important role in any organisations for successfull running of the organisation and for achieving the company goals.

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