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Articles » Finance >> View Article
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| Finance Management |
By:
Carol Bell |
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We use the term finance to explain the act of borrowing for loans or capital for a project. It can also be an expression used by specialists in the field when they look at how money is managed. A more general and accepted definition is the control of business plus public sector assets and money. When these funds are administered by a representative of a company, this specialized area is called finance management.
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 word Optimizing may sound strange but it refers to taking measures that minimize the cost of financing while simultaneously attempting to maximize the profits out of the employed finance. 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.
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. Unlike the sales managers who would like to invest in the future by product development, finance managers are rather skeptical of financing a project whose benefits lie in the future; even though their management governs future outcomes too. 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.
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. Fortunately, small businesses can always use the more approved methods of friends or relations to help provide finance. The simple trick is for finance managers to arrange loans using outside lenders thereby protecting their own assets while maximizing their own profit simultaneously. 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. |
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