The world economy relies on finance to exist; it provides funding where necessary which is usually repaid with a charge called interest. It can also be an expression used by specialists in the field when they look at how money is managed. Private corporations in addition to the public sector use the term when they discuss their business assets. Management of finance has also developed into a specialized branch within the financial sector and is carried out by finance managers.
These managers arrange funds to be lent to individuals or business using their company’s assets where possible and if not sourcing the money elsewhere. The whole basis of optimization is to enable the maximum return from your finance whilst ensuring the cost to arrange it stays at a minimum.
The lives of almost everyone on this planet revolve around finance and when poor management occurs, the effects are seen globally with reductions in production and sales which obviously feed world markets. For this reason, a finance manager is expected to be very judicious in either the use of available funds or allocation for expenses.
A well know marketing and management guru Lee Iacocca said that finance managers always looked at the cost involved in a finance deal and not the future return. The big difference between finance managers and sales managers is the direction they are facing; a sales manager is looking forward, towards the future. Many small business owners forget that the business loan they have arranged is not for personal use; a distinction which gets blurred regularly. When money is lent under these circumstances, lenders feel quite aggrieved as they have lost control of where the money is being invested.
Although resisting the tendency to use funds this way may dampen someone’s enthusiasm in the short term, it will focus the attention of the borrower and perhaps instill more discipline in the future. Small businesses can be very flexible, however, and call upon friends, other businesses, family members, even their own bank for finance.
However, finance managers are in the position of making money for their company so out sourcing their lending can help increase their profits. The famous comedian Bob Hope best summed up the subject when he once said; a bank is a place that will lend you money but only if you can prove that you don’t need it. You should make sure that you plan out your finances before making a serious money investing or investment decision. Most people fail to make to plan or draft of what do with there finances.
