1. Finance function in global business scenario
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 over-
emphasized 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 decisions of a finance.
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(Much greater in number or influence) 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 owner’s 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.

2. 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 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 today’s 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

3. 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