“The facility to get and avail money whenever it is needed in our business”.
The term business finance NZ refers to the amount of money which is invested in a business. Finance is important for every business and it is needed to purchase raw materials, assets,keep the business and to handle every financial activity which is related to the business.
Financial Needs of Business
To start a business some primary requirements is to have some capital (money for investment).capital is very important for starting a business but to run it must be in a flow.When the company grows and expands more finance is required for each and every step.
- Fixed capital
- Working capital
Every business requires a large amount of money i.e. the capital to get started. Fixed capital is the reserve way to require the purchase of assets that are to be used again and again for a long time in our business.
Requirements of fixed capital
The requirement increases with increasing the size of industry in a fixed capital such as; oil refineries, railways , hydro power projects and thermal power projects etc require more fixed capitals.
Working capital is the difference between the accounts receivable (current assets) and the current liabilities(account payable) of company.All the current assets and current liabilities are checked by the balance sheet.working capital financing is that when the business to cover the small expenses such as day to day such as day to day operations and payroll, rather than the purchase of real estate or equipment.working capital is a simple cash flow solution that permit businesses to keep working while they get paid for an ongoing project or other kinds of goods sold on the credit.
Business Finance Role
Business finance, also called corporate finance in the business world , is responsible for allocating resources,reviewing opportunities for equity and debt financing and also creating economic forecasts and some other functions within our organization. The importance of business finance is in the ability to ensure that the business operates with or without any financial hiccups like running a short of our cash, and at the same time making sure that our funds are secure and well invested for the long term gains.
Moreover finance is totally dependent upon accounting, Finance is much more active while accounting is more descriptive; therefore you must use accounting data to manifest perceptible results .
Sources for business finance are debt,letter for credit, debentures,venture funding, euro issues, working capital loan and retained earnings etc.
Benefits of business financing
Building a business financial plan is never too easy.It requires a lot of effort,best data, and a good amount of imagination.And if you have never done this, you will likely hit some road block along the way.
A best financial plan keeps you focused and on track as our company grows, when new and different challenges arise, and when unexpected crises will arise and hit.It helps us to communicate clearly with our staff and investors, and build a very modern transparent business.