Importance of Business Finance
In the present competitive open market economy, every government,
non-government, and international business institution has to finance with
great importance in a preplanned way. Through the use of well-thought and
effective financial management, the risks of the institutions are reduced and
profits are increased. The following things make financial management more
meaningful:
a) Capital Crisis of Business
Finance-related ideas bear special importance in the situation of Bangladesh.
As Bangladesh is a poor country, the financial crisis is a regular incident
for business organizations. Due to this crisis, running the business smoothly
has become very challenging. It could be said as an example, a business
organization needs to purchase raw materials, but if it cannot purchase raw
materials timely due to the financial crisis then the production process of
the organization may be hampered. Finance-related ideas help a business
entrepreneur to collect the necessary amount of funds at the right time and
utilize it properly in a planned way.
b) Backward Banking System
Besides, as our financial organizations are not well-organized like that of
the advanced countries, (usually) loans cannot be arranged within the expected
time after application. Sometimes, the loan cannot be arranged as per the
required amount due to the insufficiency of property to be pledged as security
for sanctioning the loan. So, to overcome this problem, business people have
to collect funds at the right time in a very well-planned way and also need
profitable utilization of the fund with the right investment decision. A
proper financial plan and management help him to predict this type of problem
and give an idea about the process of overcoming such a situation.
c) Less Educated Entrepreneur
The majority of the entrepreneurs in Bangladesh are less educated and are not
able to conduct financial activities through a long-term plan. So, many
profitable business organizations cannot operate smoothly due to the financial
crisis arising from improper financial planning, and in the end, it faces loss
instead of profit. But, the only reason for this loss is financial
ill-management. If a businessman has sufficient knowledge about financial
management he can easily collect the necessary amount of funds at the right
time from a less expensive source and can earn enough profit by running his
business by investing it in a suitable project.
d) Production-Oriented Investment and National Income
A successful investment plays a direct role to increase national income. By
applying financial knowledge, a business person can choose the most profitable
project from among the alternatives by doing a cost-benefit analysis of the
projects under consideration. This type of profitable investment is as much
meaningful for the business so much it is important also for the economic
development of the whole country.
