Concept of Business Finance
Business Finance is a new concept of corporate finance with the core goal of establishing financial processes and tools in such a way that finance supports the business activities of the company.
It is essential for financial specialists in a company to know some basic principles of business finance:
- corporate finance must support business activities
- finance is focused on effectiveness and profitability
- costs are actively controlled
- effective and economical procurement is secured
- corporate financing is correctly drawn from internal as well as external sources
- financial specialists actively cooperate with other departments and do not act separately
- commercial effectiveness (sales and marketing effectiveness) are significantly supported
- supporting tools for management decision-making – budgeting and reporting – are created
- company processes are supervised so they are transparent and ethical.
What are the results of business finance?
- well-functioning processes
- elimination of unproductive processes
- managers receive effective information and tools for better decision-making
- measurable strategic performance of business units, departments and product lines
- and, most importantly – higher profitability.
The differences between correctly established business finance and the traditional, outdated approach to finance is shown above (see the second picture).
In the next article on May 31, we will present a self-evaluation test to help you look at your company from the points of view of procurement, cost management and business finance.
By Marek Fajčík, Spiralis s.r.o., www.spiralis.sk
11. May 2010 at 0:00