recorded many different times like B u s i n e s s F i n a n c e
Each response has to be between 200 to 400 words. It has to be well written with your proper words most of the time. It has to be like you are talking to someone, agree or disagree with him, and support your ideas with saying why you agree or disagree, and use citations and references.
Finance is a significant part of an organization. The purpose of finance is to ensure that a business has adequate funds to operate and to spend its money effectively (Nordqvist, 2020). Finance is responsible for managing and monitoring funds, daily cash flows, and continuous transactions daily (Bansal, 2019). Finance ensures that the company has enough funds to operate that the funds are secure and invested for long- term gains (Nordqvist, 2020). Ultimately, business is about money, so managing it is essential for a company’s success and for pleasing the stakeholders. Finance is also a significant part of an organization’s decision making (Bansal, 2019). Finance gives a view on an organization’s status, and financial management helps an organization determine where and when to spend (Bansal, 2019).
As a Human Resources professional, I touch a part of the company’s basic financial operations. I regularly create financial models for any bonuses or merits we plan to payout. Other than high-level knowledge, I did not know much about how any financial decisions can greatly impact businesses. I also did not realize that finance was more of an art than a science. There are many ways to interpret the different facets of finance, like revenue. Revenue can be recorded many different times like, when a contract is signed, when the product or service is delivered, when the invoice is sent, when the bill is paid (Burman, Knight, & Case, 2008). This class certainly helped me to understand that finance is open to interpretation and is not so cut and dry like I previously thought.
Finance is among the most critical sectors of an organization that can determine its operations’ failure or success (Ekpo, Etukafia & Udofot 2017). Realistically, all organizations must have the finance department plan their daily operations, making it an important area to be covered (Ekpo, Etukafia & Udofot 2017). Finance management to an organization needs optimal attention because money is used to make more money (Levin, 2003). The initial capital invested must be properly harnessed to create profits balancing between debt and equity financing (Levin, 2003).
Finance to an organization is of the essence in meeting the operations that keep it going (Levin, 2003). Some of the operational costs that are to be catered by finance include the raw materials, employee salaries, inventory, among others (Levin, 2003). An appropriate financial plan is associated with stability in managing the organization’s operations that need frequent maintenance (Levin, 2003). The finance sector allows organizations to have a solid plan that is independent to meet asset creation in the short term and the long term (Levin, 2003). Through a proper financial structure, finance provides a muscle for organizations to venture into new activities and develop solutions through research (Ekpo, Etukafia & Udofot 2017).
Initially, I thought of finance to only involve the collection, allocation, and spending of money on limited operations within the organizations. However, my opinion has changed in the long run because an organization’s management should exercise a transparent view of all the undertakings in the finance sector (Gatchev, Spindt, & Tarhan, 2009). I should be together to take part in the planning by identifying the critical departments for efficient and effective utilization of the available financial resources (Gatchev, Spindt, & Tarhan, 2009). That way, critical components of finance are catered for, for the success of the organization.
Finance is one of the most important aspects of a business (Bansal, 2019). With significant funds, daily cash flows, and continuous transactions, managing and monitoring all of the above is necessary for an organization’s success (Bansal, 2019). Moreover, finance assists in the formation of new businesses and allows businesses to take advantage of opportunities to grow, employ local workers, and support other businesses and local, state, and federal government through the remittance of income taxes (Duff, 2019). Additionally, the strategic use of financial instruments, such as loans and investments, is key to every business’s success (Duff, 2019). Financial trends also define the economy’s state globally so that central banks can play appropriate monetary policies (Duff, 2019).
Additionally, managing finance is influential when it comes to making decisions (Bansal, 2019). For instance, if the organization has more outstanding funds, a part of those funds can be used for investment purposes (Bansal, 2019). Similarly, suppose the organization has funds lesser than the threshold value, a list of securities whose transactions failed to clear during the previous trading days (Fernando, 2020). In that case, it is vital to put unnecessary spending to a stop (Bansal, 2019).
The flow of finance starts with the creation of capital used to fund businesses through the issuance of common stock to provide capital, bonds to lend capital, and derivatives (packaged groups of securities that help to hedge against financial risk and replace the money banks lend out to borrowers) (Duff, 2019). Moreover, public companies and municipalities use this capital to help fund their operations (Duff, 2019). Banks use it to lend to companies, municipalities, and individuals to finance the purchase of goods and services (Duff, 2019).
When some finance process elements break down, companies go out of business, and the company movies into recession (Duff, 2019). For instance, if a central bank loses a significant amount of money and faces the risk of insolvency, other banks and corporate customers will stop lending or depositing money to the problem bank (Duff, 2019). The central bank will then stop lending to its customers, and the customers will not be able to purchase the goods or pay the bills for which they were seeking funds (Duff, 2019). As a result, the flow of money throughout the financial system slows down or stops (Duff, 2019).
Finance and financial operations are argued to be one of the most important factors within an organization, as it describes the situation around funds, cash flows, and continuous transactions (Bansal, 2019). Finance is the managing of available cash that an organization or business possesses (Bansal, 2019). Therefore, finance is the core of every business organization (Bansal, 2019). Also, finance is believed to be one of the processes that can make or break entrepreneurs, as all business organizations need finance for daily operations (Merashi, 2019). Finance processes are important for the following aspect within a business organization.
Financial operations are important to keep creating profit, as financial operations, keep businesses running (Merashi, 2020). For example, by managing the initial capital investment, which means financing debt and equity, the amounts of profits can keep increasing (Merashi, 2020; Bansal, 2019). What also keeps a company going are the operational expenses. Expenses for raw materials, inventory, interest payments, and so on are part of a proper financial plan that provides stability for the company to manage profits (Merashi, 2020).
Next to previously mentioned short-term processes, finance is also important for the long-term period. One of the goals for company owners is to increase production by increasing the assets of the organization (Merashi, 2020). Financial operations allow companies to have a solidified saving plan that is not necessarily dependent on all short-term finances, such as transactions and cash flow (Merashi, 2020). Another long-term goal is to find new markets and to expand as a company. Without proper financial processes within a business organization, you may not have the financial resources to explore and penetrate these new markets (Merashi, 2020).
Finally, it is important to understand that financial processes are important for the whole market to exist (Duff, 2019). For example, the global economy depends upon an orderly process of finance (Duff, 2019). The capital market provides money to support businesses, and businesses provide the money to support individuals and consumers (Duff, 2019). Also, taxes such as earned from income support different governments (Duff, 2019). Finally, even sports and arts benefit from financial processes because they receive money from corporate and individual sponsors (Duff, 2019). In short, this means that without financial processes the whole market and global economy would collapse, as capital markets create money, businesses distribute it, and individuals spend it (Duff, 2019). Therefore, finance is of vital importance to the economy and organizations.
My opinion about the importance of finance in an organization has not changed much, as I have always seen the importance of it. However, the importance of finance in an organization is more specific to me and more dissected into different aspects to me.
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