Aims of financial functions

The primary aim of finance function is to arrange as much funds for the business as are required from time to time and manage funds in such a way so as to ensure their optimum utilization and their procurement in a manner that the risk, cost and control considerations are properly balanced in a given situation.

Acquiring sufficient funds

The main aim of finance function is to assess the financial needs of an enterprise and the finding out suitable sources for raising them. The sources should be commensurate with the needs of the business.

Proper utilization of Funds

The funds should be used in such a way that maximum benefit is derived from them. The returns from their use should be more than their cost. It should be ensured that funds do not remain idle at any point of time. Those projects should be preferred which are beneficial to the business.

Increasing Profitability

It is true that the money generates money. To increase profitability, sufficient funds will have to be invested. Finance function should be so planned that the concern neither suffers from inadequacy of funds nor wastes more funds than required. The proper control should also be exercised so that the scarce resources are not frittered away on uneconomical operations.

Maximizing Firm’s value

Finance function also aims at maximizing the value of the firm. It is generally said that a concern’s value is linked with its profitability. Even though profitability influences a firm’s value but it is not all. There are some other considerations which also influence a firm’s value like the condition of money market, the cost of funds etc.

An effective finance function, which includes all aspects of finance, tax, and treasury and, typically, risk management, makes a positive contribution to the achievement of the organization’s strategic objectives and to its value creation goals.