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Written by Webmaster
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Friday, 25 July 2008 |
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The definition of finance is the provision of funds or loan supplied to an individual or company. The subject it is actually a part of is economics which is also used to manage assets both monetary and fixed. This subject is also referred to as a system of administering money used by the private and business sectors. A company that has funds to manage will, more than likely, employ the services of a finance manager who is likely an expert in the field of economics.
Simply put these managers arrange money to be lent to businesses or private individuals using either money already available from company accounts or from external lenders. 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. 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. It is for this very reason that finance managers are very careful with finance they agree too and where it is funded from.
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. These managers are the opposite of sales managers who are forward, investment thinking individuals; whereas a finance manager will not recognize the fact that investment requires an approach that lies in seeing into the future to look for returns. For most small business owners there is not a clear distinction between personal and business which often leads to the funds being used in areas that are not part of the arrangement. Quite understandably, lenders are unhappy about this type of arrangement as they feel the money might be unsafe.
This may cause some concern amongst small business owners but they should train themselves to be more focused on their business which should in turn create a better frame of mind for the future. The problem is that many small businesses do not always source the best finance deal like trying their bank or alternatives like family or relations. Of course lenders are out to make a profit and business loans can be expensive, a situation which is partly designed to increase the finance company's return and to offset any potential problems later on. 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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Category Three 
