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Articles » Business >> View Article
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By:
tunde Obalana |
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The act of providing money in the form of a loan or capital is known as finance and is something that everyone from governments to the private individual uses. This is part of the area of economics that focuses on the strategies and methods of looking after money and other financial assets. It can be also defined as the management of funds and capital required by a business and private activities. This of course requires the use of specialist trained in money matters often referred to as 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 simple process of optimization is used to receive the most from these funds by reducing the cost of arranging the finance while at the same time ensuring returns are high. 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. The finance manager's job is to maximize profits while keeping the risk to a minimum so you can understand why there is a high level of stress associated with this work.
The well known management expert Lee Iacocca said of finance managers that they only see the cost of the investment and not the possible return. Finance managers are people who always like to see where they have been and do not look towards the future in the same way that a sales manager does. Some problems arise for the number of businesses that arrange loans and then use them for personal reasons, forgetting that this clearly defined barrier exists. Quite understandably, lenders are unhappy about this type of arrangement as they feel the money might be unsafe.
By stopping business borrowing this way it is hoped they will start to see the importance of maintaining good practices which should help with investment later on. An important area for businesses to receive finance is their own bank or failing that good friends or even relatives. 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. |
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