Nature of Finance

Money required for carrying out business activities is called business finance. Almost all business activities require some finance. Finance is needed to establish a business, to run it to modernize it to expand or diversify it. It is required for buying a variety of assets, which may be tangible like machinery, furniture, factories, buildings, offices or intangible such as trademarks, patents, technical expertise etc.

Also, finance is central to run a day to day operations of business like buying materials, paying bills, salaries, collecting cash from customers etc needed at every stage in the life of a business entity. Availability of adequate finance is very crucial for survival and growth of a business.

Business is related to production and distribution of goods and services for the fulfilment and requirements of society. For effectively carrying out various activities, business requires finance which is called business finance. Hence, business finance is called the lifeblood of any business a business would get stranded unless there are sufficient funds available for utilization. The capital invested by the entrepreneur to set up a business is not sufficient to meet the financial requirements of a business.