The lack of business financial control is among the main reasons for the bankruptcy of several companies, and not only micro and small businesses suffer from this problem. On the contrary, medium and large corporations also need to focus on and create strategies for the use of capital and other financial resources of the business.
A good and efficient financial plan is essential for every company to remain active and competitive in the market and survive in the midst of crises and setbacks that can affect its cash flow. Therefore, this practice is not just a matter of reducing costs, but of survival.
With that in mind, we’ve put together 5 tips for you to start adopting a business financial control in your business and how to put it into practice. Keep reading!
1. Do the financial planning
First of all, you need to define how your resource control and planning will be. To do so, you first need to know each financial characteristic of the company, such as spending, earnings, expenses, if there are outstanding debts, among others.
After this process, you should set clear and achievable goals and objectives for each department. These purposes can be planned monthly, bimonthly, quarterly, half-yearly and annually.
The business financial control should be done as soon as possible, because in a few months the economic situation of the country or the budget of your company can undergo major changes, and a good control can be decisive to keep the business running.
2. Record all expenses and revenues
The fastest and easiest way to bankruptcy is the lack of control and knowledge of what your company must pay monthly. Scheduling, organizing and recording all spending, revenues and any kind of expense is essential to keep accounts up to date, adopt strategies to reduce these amounts and optimize your business financial control.
Therefore, invest in good management software — since Excel spreadsheets are inefficient for financial management — and record all cash outflow and inflow and fixed and variable expenses. With this, it is possible to do a solid diagnosis to make decisions based on facts and data, not on assumptions.
3. Develop budgets for each department
Each department of your company has different characteristics and needs. For example, the management has expenses and needs resources that are different from the purchasing department. Therefore, over-generalizing or evenly dividing the budget may not be a good idea, as some areas may end up with less capital than they really need.
So, for your business financial control to work efficiently, create budgets and cost categories for each business center. Set a limit for spending on office supplies, for example. If purchases exceed this amount, talk to the person in charge and try to create an economy culture.
4. Monitor outstanding amounts
With a good planning, it will be possible to follow the defaults of your company, a practice that is essential to pay off and keep under control any type of outstanding debt, thus avoiding a snowball effect.
For this, categorize debts and know how much and for whom you owe. That way, you can try to renegotiate and enter into agreements to pay them off.
5. Analyze results often
Once you’ve set your goals, prepared your planning and divided your resources, make sure that your business financial control continues. It is very important to check, analyze and study the results and indicators at least once a month.
This will allow you to know if the objectives and strategies employed are behaving as expected, allowing you to better understand your business and have an effective and functional decision-making.
Business financial control should be your guide to make any kind of decision and work as a strategy to have more liquidity and remain active in the market. Therefore, know each characteristic of your business, record all cash activities, and follow up on the results often.
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