5 steps towards improving your business finance management
Getting your businesses finances in order is a key step for a successful business.
Money management is especially important through the current cost-of-living crisis, so we’ve provided some useful advice for business leaders below.
Why is financial management important?
The difference between a profitable and non-profitable business can often come down to financial management. There’s a fine line to draw when it comes to getting it right: Excessive or insufficient spending in certain areas could sink your business, so healthy, balanced finances are imperative.
We’ve outlined five crucial steps towards corporate finance management below.
1. Work with a finance team
You’ll need to create a solid finance team for your company.
This looks different from business to business, but usually includes hiring skilled employees to work on finances. Informed business leaders often seek professional accountancy services to find new ways to expand their reach.
If you choose to consult financial experts, this investment will help you to look after your finances on a day-to-day basis – without using too much invaluable company time.
2. Keep on top of client payments
You’ll need to make sure that your clients are paying you on time and in full.
Consistently late payments can present an obstacle for your businesses, especially when it comes to financial planning. If you don’t know when your customer or client will pay you, it’s difficult to assess your current financial position and plan ahead.
To avoid this dilemma, try to make sure that your clients and customers pay on time. You might choose to approach this by implementing a pre-payment, asking for a deposit, or by halting services after a period of no payment.
3. Maintain accurate records
By analysing your businesses expenses, you’ll be able to keep track of your spending.
You’ll see exactly where your money is going, and from there, you’ll be able to make optimised financial decisions. You can identify areas to both reduce your spending and grow your margins, whether immediately or over a longer period of time.
Make sure to conduct an accurate and thorough analysis for your income and expenses.
4. Know your financial health
You should have a good knowledge of your business’ financial position.
At the very least, you should be aware of your available resources, your current sales and forecasts, and your stock values. This will help when making financial decisions and finding areas in which to invest and from which to reduce spending.
5. Meet your deadlines
Lastly, every business should commit to certain financial responsibilities – including paying relevant business tax and supplier invoices.
If you keep on top of your payments and deliver on time, every time, you’ll be in a much stronger position. Furthermore, being a reliable payee is much more likely to strengthen external relationships for your business, helping to build your industry reputation.
