IV ROLE IN OUR ECONOMY Business Finance is the lifeblood and nerve center of a business, just as circulation of blood is essential

in the human body for maintaining life; finance is a very essential to smooth running of the business. It has been rightly termed as universal lubricant that keeps the enterprise dynamic. No business, whether big, medium or small can be started without an adequate amount of finance. Right from the very beginning, i.e. conceiving an idea to business, finance is needed to promote or establish the business, acquire fixed assets, make investigations such as market surveys, etc., develop product, keep men and machine at work, encourages management to make progress and create values. Even an existing concern may require further finance for making improvement or expanding the business. Thus the importance of finance cannot be overemphasized and the subject of business finance has become utmost important both to the academicians and practicing managers. The academicians find interested in the subject because the subject is still in its developing stage and the practicing managers are interested in the subject because among the most crucial cdecisions of a f Finance functions: The functions of finance that includes tax, treasury, risk management which will contribute to the achievement of the strategic objectives and goals of the company. Importance of finance functions: The importance of finance has arisen because of the fact that present day business activities are predominantly carried on company or corporate form of organization. The advent of corporate enterprises resulted into: The increase in size and influence of the business enterprises Wide distribution of corporate ownership and Separation of ownership and management. The above factors have further increased the importance of corporate finance. As the owners in a corporate enterprise are widely scattered and the management is separated from the ownership, the management has to ensure the maximization of owners economic welfare. The success and growth of a firm only by maximization of principles and procedures as lay down by corporation finance. The knowledge of the discipline of corporation finance is important not only to the practicing managers, but also to others who deal with a corporate enterprise, such as investors, lenders, bankers, creditors, etc., as there is always a scope for the management to manipulate and window dress the financial statements. In the present day capitalistic regime, the size of the business enterprises is increasing resulting into corporate empires empowered with a lot of social and political influence. This makes corporate finance all the more important. Further, if we refer to corporate finance as the financial management practices by business firms, the importance of financial management can well be described as the importance of corporate finance.

Role of Business finance: The role of finance has been emerging from a conventional viewpoint to an innovation viewpoint in current competitive business world. Conventional view It is operational and risk focused. Reactive Efficient Number crunching quantitative Risk averse Innovation view It is lateral and forward thinking skills Vision oriented Opportunity and growth focus Intuitive Risk-taker Impact of finance function: In ever changing competitive business environment, its vital to re-examine the role of finance function due to the following change drivers: Gaining importance of finance in strategic role Higher volatility Financial evaluation of Mergers & Acquisitions Information economy Mitigation of evolving business risks New organizational hierarchy roles and requirements Issues Finance role: In todays competitive world, the roles and responsibilities of finance and accounting functions are facing key knowledge and skills related issues such as: Lack of consistency in the current process which in turn will impact the transparency of financial reporting abilities Ever growing demand for knowledge workers in finance and accounting field in the market place Lack of focus on internal compliances and control issues like Sarbanes-Oxley and Basel II law framework Focus on aligning the finance and accounting role as a strategic advisors and also business partners in order to understand clearly operational realities to identify future growth and opportunity in the business. Modern finance function : There are 4 key roles in any organization in present day scenario: Steward Has control over assets of the organization with meeting all compliance standards to mitigate business risks involved in the process Operator Create a strategic framework to monitor the efficiency of finance process which in turn will drive cost effectiveness factor across the organization

Strategist Acting as a strategic advisor to align the organizational goals in tandem with achieving the operational realities by means of measuring and analyzing organization performance with interpretation of financial information in the organization. Catalyst Acting as change agent to execute and monitor necessary changes to achieve the overall strategic objectives of the organization be means of aligning all the above 3 key roles in tandem