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9 tips on how to have a greater business financial control

9 tips on how to have a greater business financial control

The lack of control over finances 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.

Do you find all of this very confusing? You have no idea how you can start putting your company’s management in order? Don’t worry! In this post we have listed 9 tips for you to start adopting the business financial control in your company and understand what the best ways to put them into practice are. Keep reading!

1. Do the financial planning

First of all, it is necessary to define how your control and planning of resources will be carried out. To do so, you need to know each financial characteristic of the company, such as expenditures, earnings, expenses, if there are outstanding debts, among other issues.

After this process, you should set clear and achievable goals and objectives for each sector. These objectives can be planned monthly, bimonthly, quarterly, half-yearly or annually.

Business financial control should be done as soon as possible, as in a few months the country’s economic situation or your company’s budgetary framework may undergo major changes. In such cases, having 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. Management, for example, has several 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.

For your business financial control to work efficiently, create budgets and cost categories for each business center, setting a limit for all expenses. If purchases exceed this amount, talk to the person in charge so that, together, you can create an economy culture.

4. Keep track of outstanding amounts

With good planning, it is possible to monitor your company’s defaults, which is a fundamental practice to settle any type of outstanding debt and keep it under control, thus avoiding the famous “snowball” effect.

To do so, categorize the debts and know how much and to whom the company is indebted. That way, you can try to renegotiate, enter into agreements and, only as a last resort, consider taking out a loan to settle debts.

This should only be done after you do a lot of math and realize that there really is no alternative. Remember that financial planning and organization must be well structured so that you never need to apply for a loan.

5. Use technology as an ally

There are several software available on the market that can automate processes, such as payment of bills and invoices, cash flow control, accounts payable and receivable, among others. The use of technology brings many advantages, including cost reduction and process optimization.

Having an organized business financial control system is important not only to ensure the company’s health, as the transparency of information can also make the search for investors easier. After all, in order to remain present and grow in a dynamic and competitive market, you need to have the calculations on the tip of the pencil.

6. Negotiate with your creditors

If possible, have multiple suppliers, as this increases your bargaining power. Paying the bills on time will avoid expenses with protests, fines, interests, and a potential need for loans.

A company that has quick access to its data and a system in which the information is organized is able to efficiently negotiate payment terms with its creditors.

7. Don’t mix personal and company expenses

Nothing is more harmful to cash flow than mixing individual accounts with those of the company. In doing so, it becomes virtually impossible to analyze the financial results. This disorganization will also have a negative impact on personal life.

The wisest way to resolve the issue is to establish a monthly withdrawal for the partners – one that is compatible with the business’s financial reality. That way, it is possible to protect the company assets and the personal property in case of problems.

8. Have a financial reserve

Having money set aside to cushion an unexpected expense or a potential emergency may seem like an impossible task, but if you manage to apply the previous tips in your company, this will become much easier.

The growth of this emergency fund can be a good indication that the business is on the right track, and as it grows further, a part may be reinvested in the company. To obtain this type of resource, the ideal is to allocate a percentage of the net profit.

Try to invest this money in a low-risk investment that can be redeemed at any time. Prefer investments that yield more than a savings account, but are still safe. Some options are Tesouro Direto (a program of the Brazilian Department of the Treasury) and Bank Deposit Certificates (Certificados de Depósito Bancário – CDBs).

9. 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.

ROI – return on investment – is one of the indicators that will allow a broader view of the company’s financial health. 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.

It may seem like a lot of information, but when you apply these tips into your company’s routine, you will notice the results. Do you want to check out more content about management? Then be sure to follow our profiles on social media!