Learning Materials For Accounting, Management , Finance And Economics.

Monday, December 24, 2012

Functions Of Finance Or Finance Functions

Generally, finance functions are carried on to achieve the goals of the firm. Finance functions are mainly viewed from two approaches; 'raising of funds' and 'raising and allocation of funds'. The first approach confines the finance functions to the procurement of funds only and ignores the use of funds. It was the major finance function at the early stage of the development of finance. The second approach is comprehensive and universally accepted. Nowadays, we follow the second approach. Alternatively, finance functions may be viewed on the basis of level of managerial attention required to get them performed. On this basis, finance functions may be classified as managerial finance functions and routine finance functions as below.

1. Managerial finance functions

* Investment decisions
* Financing decisions
* Dividend decisions
* Working capital decisions

2. Routine finance functions

* Supervision of cash receipts and disbursement
* Safeguarding of cash balances
* Custody and safeguarding of valuable documents like securities and insurance policies
* Taking care of mechanical details of financing
* Record keeping of the financial performance of the firm
* Reporting to the top management
* Supervision of fixed assets and current assets.