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What is Finance - Part Two

By: Jerry

Finance is an umbrella term for the movement of money from one company to another (or individual) to pay for goods or services and repaid with interest. It is also a branch of economics that studies the management of money and other assets. This subject is also referred to as a system of administering money used by the private and business sectors. People that look after or manage the arranging of finance are called finance managers.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 function of the finance manager is to Optimize or enable the fund to be made available with as little cost to the company but provide for a profit to be made in this process. 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. 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.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. Finance managers are people who always like to see where they have been and do not look towards the future in the same way that a sales manager does. Often though, problems occur with small businesses who fail to see the distinction between a business loan and a personal one. Generally lenders who are investing in a business situation like to know exactly what their money is being used for.Although resisting the tendency to use funds this way may dampen someone's enthusiasm in the short term, it will focus the attention of the borrower and perhaps instill more discipline in the future. An important area for businesses to receive finance is their own bank or failing that good friends or even relatives. The simple trick is for finance managers to arrange loans using outside lenders thereby protecting their own assets while maximizing their own profit simultaneously. The famous comedian Bob Hope best summed up the subject when he once said; a bank is a place that will lend you money but only if you can prove that you don't need it.

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Author is an executive at Integra Global Solutions www.integraoutsourcing.co.uk, which provides virtual accounting bookkeeping outsourcing services for 100s of accountants in UK, Ireland & Europe. For more details log on to www.integraoutsourcing.co.uk/virtual-accountants.html. You are free to publish this article as long as you have a link back to www.integraoutsourcing.co.uk/virtual-accountants.html

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