Simply Finance

[financeeeasyz]

The meaning of the term finance is where money is provided for a commercial activity either public or personal. The term can also refer to another branch of the subject dealing with its management. A more general and accepted definition is the control of business plus public sector assets and money. Large companies with even larger portfolios will employ a finance manager to help control their assets.

Managing this involves dealing with the optimization and allocation of funds to various areas either by borrowing or by using those available from internal resources. The term optimization is used to explain the procedure whereby finance is maximized by reducing costs and increasing the return. The fact is that it governs most of the worlds activities and poor finance management will immediately show up as conditions deteriorate in procurement, production and sales as it affects every sphere of business activities. 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.

Finance managers can be very short sighted, only looking at the initial cost involved and not the future return capability of the project. Finance managers are the pessimists whereas sales managers are the optimists who look to the future and not to the past! 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.

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. However, small businesses can finance their needs from other sources like friends or from banks and private lenders. Finance managers can help improve their company's profits by using external sources which also lessens the risk on them at the same time. 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.