Significance of Business Finance

               Business Finance is required for the establishment and existence of every business organization. Finance is required not only to start the business but also to operate it, to expand or modernize it's operations and to secure stable growth. The importance of business finance arises basically to bridge the time gap. Manufacturers require business finance to bridge the time gap between the purchase of raw material and other supplies for production and recovery of sales. Traders require finance to bridge the time gap between the purchase of goods and recovery of sales.

       The need for business finance arises for the following purposes:

1. To acquire Fixed Assets-- Every business organization whether manufacturing or trading needs finance to acquire some fixed assets. Manufacturers need finance to acquire land& building,plant& machinery, furniture etc. Traders need finance to acquire shops for sale of goods, godown for storage of goods and vehicles for distribution of goods.

1. To purchase raw-materials/ goods-- Manufacturers need finance to acquire raw materials and consumable stores for production. Traders need finance to acquire goods for distribution.
2. To acquire services of human being-- Manufacturers need finance to pay their workers, supervisors, managers and other staff employed by them. Traders need finance to pay their staff employed by them.
3. To meet other operating expenses--  Every organization need finance to meet day to day other operating expenses like payment for electricity bills, water bills,telephone bills , travelling and conveyance of staff, postage & telegram expenses & so on.

1. To adopt Modern technology-- With fast changing technology, business organizations need finance to modernize their plans & machineries, production methods and distribution methods. An Enterprise may decide to replace outdated and obsolete assets with new assets to operate more economically.