Some of the business knowledge is gained in daily work, in the form of experience gained by managers. However, seeking to learn about techniques and tools to improve decision making is critical. If you want to know more information about management you can read all below.
Stay Up to Date on Business Management
Instinct-based financial decisions no longer work as they once did, because today’s market is much more competitive. Financial management tools are essential to avoid waste and help companies achieve better results.
The internet is a great facilitator for finding this knowledge. You can search on business pages and free courses on the subject.
Develop Strategic Financial Planning
In order for a business to get where it wants, you need to know where that place is. That is, it is necessary to identify and make clear the company’s mission and strategic business objectives.
The tool used for this is strategic planning that also encompasses financial management. The plan should design overall investment, spending and revenue objectives at the strategic level; cost optimization and revenue generation targets by sectors and areas in the tactical spectrum; as well as reducing waste and increasing efficiency in specific tasks in the operational context.
It is highly recommended that you turn a word plan into numbers and deadlines to create actionable goals.
Employ a Company Financial Management System
A company’s financial information can comprise a large amount of data. This makes it very difficult to perform manual labor, especially in relation to personnel costs.
Thus, adopting computer systems to manage corporate finance is a smarter solution. Today’s systems offer integrated tools for financial management in a variety of ways, such as managing payables and receivables, budgeting, organizing inventory and purchasing, sales invoicing, and so on.
In addition, cloud computing allows you to access the system from anywhere and from any authorized device, even outside the company’s physical environment. Other features of this technology for financial management are lower storage costs, information security and loss protection through backups distributed across multiple servers.
Now that you know the most important tips check out some preventative practices that will help you control your business finances!
- Finance Control Practices
- Avoid excessive payroll expenses
- Companies with good spending control tend to make certain rules so as not to compromise the budget. One is to keep personnel expenses within a limit of up to 40% of revenue.
- Therefore, in order to optimize the expenses and the results obtained, an evaluation of the staff must be performed. Evaluate the expenses with the professionals of each sector, as well as their productivity and relevance to the company’s activities.
- In many cases, there are overworked employees and others who could pay more. It is up to managers to identify these issues and thus reorganize activities to increase yield. Outsourcing some industries can be a great way to improve a company’s financial management and should be considered.
We also remember that payroll expenses are not limited to salary payments. Maintaining financial control must include reserves for 13th salary expenses, vacations, layoffs and other contingencies.
Separate Personal Finance from Company Finance
In small businesses and family businesses, it is common for managers to borrow money from the company’s cash. However, this is a serious mistake that makes it difficult to keep track of cash flow and sometimes drives less prepared companies into bankruptcy.
To avoid this kind of problem, the company should always set a fixed salary for managers and directors and never use the company’s cash as a bank for loans.
Keep in mind that cash control is critical to the management organization. Therefore, the less interference from factors beyond the control and business issues themselves, the better for the business. Some simple practices, such as sorting and recording inflows and outflows, help control and evaluate spending and organize cash flow.
Perform Periodic Evaluations
Following the logic of strategic planning, conducting periodic reviews is essential to rectify any errors in financial management before causing harm to the company. In addition, assessments help control costs and monitor results.
For this, you need to constantly study the market, learning about trends and patterns and assessing how your company assimilates them. Tracking the practices and activities of competitors in the same industry can also help your company benchmark these assessments and help you innovate and predict market movements.
The assessment itself should be based on the analysis of the situation, performance and results of the company and its sectors, aiming at identifying possible problems in the processes and points that could be improved. The regularity of these assessments is critical to avoid bad surprises and so that corrections can be made in a timely manner, they can be performed monthly and semi-annually.
One of the ways to circumvent the crisis is to seek partnerships that can favor your business. For example, taking advantage of your suppliers to lower inventory costs can be a great way to improve a company’s financial management.
Another efficient way to improve financial management through partnerships is to find companies that provide complementary services to your business. Imagine a gym that finds a sporting goods company that is willing to pay rent or pass a commission to sell their products inside the gym space, would it be a good deal or not?
Whether it’s cost savings or commission, some partnerships and a good network of relationships are good financial management practices and a guarantee of stability even in difficult economic times.
Each of these tips and practices can progressively organize the company’s financial sector and make the necessary contribution to increasing profitability.
Finally, keep in mind that financial management is a sleep-depriving concern for many managers today, and getting informed is essential to finding solutions to these problems.