Everyone uses finance at some point in their lives when they need capital supplied by another. It can also be an expression used by specialists in the field when they look at how money is managed. Depending on your viewpoint, it can also be used to define the subject of managing the funds that the private and business sector uses. A company that has funds to manage will, more than likely, employ the services of a finance manager who is likely an expert in the field of economics.
Simply put these managers arrange money to be lent to businesses or private individuals using either money already available from company accounts or from external lenders. The term optimization is used to explain the procedure whereby finance is maximized by reducing costs and increasing the return. Poor finance is the cause of depressed markets caused when managers have not followed the optimization rule which leads to lower production and lower sales globally. That is why, a fund managers job is stressful as they must be careful where they allocate their funds and the potential risk involved thereafter.
Finance managers can be very short sighted, only looking at the initial cost involved and not the future return capability of the project. The big difference between finance managers and sales managers is the direction they are facing; a sales manager is looking forward, towards the future. Often though, problems occur with small businesses who fail to see the distinction between a business loan and a personal one. Quite understandably, lenders are unhappy about this type of arrangement as they feel the money might be unsafe.
This may cause some concern amongst small business owners but they should train themselves to be more focused on their business which should in turn create a better frame of mind for the future. However, small businesses can finance their needs from other sources like friends or from banks and private lenders. However, finance managers are in the position of making money for their company so out sourcing their lending can help increase their profits. Banks have a strange attitude regarding lending money; they prefer to only arrange this facility to people that don’t actually need money.
Source by Troy Gorham