FUNCTION AND IMPORTANT OF COMMERCE

The exchange of goods is a complex process best with several types of hindrance. Commerce removes these hindrance. According to James Stephenson, "commerce embrace all those activities with help to break the barriers between producer and consumers. it is the sum total of those processes which are engaged in the removal of Hindrances of person (trade), place (transport, packing and insurance), and time (warehousing) in the exchange (banking and finance) of commodities".


  Thus the main function of commerce is to remove the following hindrances: 

 1.Hindrance of person:This hindrance refer to the lack of contract between producer and consumer. the producer is faced with the problem of financing the buyers who need the goods he has produced and who are able and willing to buy such goods. the consumer does not know the source of supply of goods which would satisfy his needs at prices he can afford. Commerce removes this hindrance by means of trade. Trade provides an organised market where the buyers and sellers can contact each other. It saves both producers and consumers from the time consuming  and expensive exercise of locating each other.


2.Hindrance of places:A major problem faced by producers is to send their goods to distant places without loss through theft, pilferage, damage,etc. Commerce solves this problem by means of transport, packing and insurance . Modern means of transport carry goods to far of places quickly andf safely. Packing of goods helps to preserve their quality in transit and storage.with the help of packing, businessman can preserve the quality of goods. Thus, transportation and packing are useful commercial activities.


3. Hindrance of time:In modern industry goods are produced on a large scale in acticipation  of demand. There is usually a time gap between the production and consumption of goods. Therefore, it become necessary to solve the goods until they are sold.

4.Hindrance of exchange:Buying and selling of goods between persons living in different places requires a common medium  of payment. Money serves as common medium of payment. However, convenient, and safe means of payment are required to settle the transaction. Banks helps to removes this obstacles in the process of exchange by making and collecting payments on behalf of their clients.

5.Hindrance of risk:During transportation and storage, there are several possibilities of loss or damage of goods.There also exist risk  of theft, burglary deterioration,fire,etc. There risks cause anxiety among businessmen and discourage them from investing money in business. Insurance helps to remove the hindrance of risks by compersating businessmen for financial loss. It plays a vital role in the development of trade and commerce.