Finance By: Jitendra Padhiar
The definition of finance is the provision of funds or loan supplied to an individual or company. This is part of the area of economics that focuses on the strategies and methods of looking after money and other financial assets. Depending on your viewpoint, it can also be used to define the subject of managing the funds that the private and business sector uses. When these funds are administered by a representative of a company, this specialized area is called finance management.
This type of management uses funds either from internal resources or external and allocates them to areas to maximize profit. 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 is the cause of depressed markets caused when managers have not followed the optimization rule which leads to lower production and lower sales globally. 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.
One of the most famous management gurus Lee Iacocca referred to finance managers as Bean-Counters who almost look at the expense part with a rather pessimistic view. Finance managers are the pessimists whereas sales managers are the optimists who look to the future and not to the past! 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. Lenders are not very happy about this type of situation because they like to know exactly what they are funding.
Businesses are gradually getting the message that they must behave more responsibly if they are to stand a chance of expanding in years to come. Fortunately, small businesses can always use the more approved methods of friends or relations to help provide finance. Lenders prefer to use money from elsewhere because it lowers their risk but still allows for a healthy profit to be received by the finance company. Bob Hope once said that you can only get a loan from a bank if you can prove to them you have absolutely no need for it; advice which could not be more true.
Web page Financial Content
This type of management uses funds either from internal resources or external and allocates them to areas to maximize profit. 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 is the cause of depressed markets caused when managers have not followed the optimization rule which leads to lower production and lower sales globally. 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.
One of the most famous management gurus Lee Iacocca referred to finance managers as Bean-Counters who almost look at the expense part with a rather pessimistic view. Finance managers are the pessimists whereas sales managers are the optimists who look to the future and not to the past! 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. Lenders are not very happy about this type of situation because they like to know exactly what they are funding.
Businesses are gradually getting the message that they must behave more responsibly if they are to stand a chance of expanding in years to come. Fortunately, small businesses can always use the more approved methods of friends or relations to help provide finance. Lenders prefer to use money from elsewhere because it lowers their risk but still allows for a healthy profit to be received by the finance company. Bob Hope once said that you can only get a loan from a bank if you can prove to them you have absolutely no need for it; advice which could not be more true.
Web page Financial Content
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