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We use the term finance to explain the act of borrowing for loans or capital for a project. As a branch of a broader subject 'economics', it can also be viewed as a method of managing assets. Private corporations in addition to the public sector use the term when they discuss their business assets. When these funds are administered by a representative of a company, this specialized area is called finance management.
This involves lending money to another company or individual, either from internal resources or externally. The term optimization is used to explain the procedure whereby finance is maximized by reducing costs and increasing the return. Bad debts are poor finance management where rules have not been followed; the result of this is depressed markets, low production and a cash crisis. This is why people who act as finance managers only have this type of work for a relatively short period because the potential risk to companies is high and so are the stress levels as a consequence.
It has been said by a number of people that finance managers can often be 'time' short sighted as they rarely look a the long term 'bigger picture'. 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. 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.
Hopefully by educating the small (and large) business owners of their fiscal responsibilities they may build the basis of an improved company in the future. 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. It is a well know fact that by the very virtue of the fact you require money, banks see you as a risk.
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