Finance can be defined as a branch of economics that studies the management of money and other assets. If you prefer, it can also be a general term which encompasses the entire subject of managing and supplying money in the business and private sector. A company that has funds to manage will, more than likely, employ the services of a finance manager who is likely an expert in the field of economics.



This type of management uses funds either from internal resources or external and allocates them to areas to maximize profit. The whole basis of optimization is to enable the maximum return from your finance whilst ensuring the cost to arrange it stays at a minimum. Poor finance management is caused when managers neglect the rules and a deterioration occurs affecting markets around the world. For this reason, a finance manager is expected to be very judicious in either the use of available funds or allocation for expenses.

It is not uncommon to hear finance managers referred to as bean counters as they are looking at immediate returns and initial costs against the potential at a later stage. Finance managers are the pessimists whereas sales managers are the optimists who look to the future and not to the past! Often though, problems occur with small businesses who fail to see the distinction between a business loan and a personal one. Most lenders will cancel the loan if they feel they have been deceived this way because they are unsure what the money is to be invested in.

This may cause some concern amongst small business owners but they should train themselves to be more focused on their business which should in turn create a better frame of mind for the future. Small businesses are not however, restricted to using external finance companies because other sources do exist including their bank, friends and other types of private lender.

Finance managers can help improve their company's profits by using external sources which also lessens the risk on them at the same time. 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.