Finance Management
Finance is an umbrella term for the movement of money from one company to another (or individual) to pay for goods or services and repaid with interest. The subject it is actually a part of is economics which is also used to manage assets both monetary and fixed. If you prefer, it can also be a general term which encompasses the entire subject of managing and supplying money in the business and private sector. 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 way this works is that managers work to keep the cost of their borrowing low whilst passing this cost on with a an additional percentage to the client enabling a profit to be made. Poor finance management is caused when managers neglect the rules and a deterioration occurs affecting markets around the world. The finance manager’s job is to maximize profits whilst keeping the risk to a minimum so you can understand why there is a high level of stress associated with this work.
It is not uncommon to hear finance managers referred to as bean counters as they are looking at immediate returns and initial costs against the potential at a later stage. 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. Unfortunately when you are running a small business, the boundary lines between a personal loan and a business loan can be a little blurred and often the planned arrangement is not used as was not used for its original purpose. Managers are rarely impressed with this situation as they believe they have aright to know what their money is being used for.
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. 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. Obviously the more finance that is provided by outside sources the more it ignites the profitability of the lender. 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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Add comment June 22nd, 2008