Everyone uses finance at some point in their lives when they need capital supplied by another. Often, this term is used for the study of economics and how money is controlled. Private corporations in addition to the public sector use the term when they discuss their business assets. Management of finance has also developed into a specialized branch within the financial sector and is carried out by finance managers.
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. 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. That is why, a fund managers job is stressful as they must be careful where they allocate their funds and the potential risk involved thereafter.
The well known management expert Lee Iacocca said of finance managers that they only see the cost of the investment and not the possible return. The big difference between finance managers and sales managers is the direction they are facing; a sales manager is looking forward, towards the future. 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.
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. 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. The simple trick is for finance managers to arrange loans using outside lenders thereby protecting their own assets whilst maximizing their own profit simultaneously. It is a well know fact that by the very virtue of the fact you require money, banks see you as a risk.