|
Articles » Finance » Personal-Finance >> View Article
|
 |
|
 |
| Finance Explained |
By:
Scott Morgan |
|
|
The service of providing funds or capital for commercial or private reasons comes under the umbrella term - Finance. The subject it is actually a part of is economics which is also used to manage assets both monetary and fixed. Depending on your viewpoint, it can also be used to define the subject of managing the funds that the private and business sector uses. People that look after or manage the arranging of finance are called finance managers.
The responsibility these managers have is to improve company profits by using their own resources by providing funds to another which then must be paid back. The simple process of optimization is used to receive the most from these funds by reducing the cost of arranging the finance whilst at the same time ensuring returns are high. 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. These managers are the opposite of sales managers who are forward, investment thinking individuals. Where as a finance manager will not recognise the fact that investment requires an approach that lies in seeing into the future to look for returns. When arranging a business loan, many applicants forget that they are not to be used for personal matters, something that is ignored 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 are not however, restricted to using external finance companies because other sources do exist including their bank, friends and other types of private lender.
Finance managers can help improve their company's profits by using external sources which also lessens the risk on them at the same time. A famous quote about banks goes something like - banks are only interested and willing to lend money to those individuals that least need or want it. |
|
|
|
|
 |
 |
 |
 |
|
 |
|
