Use The Below Code To Embed This Infographic On Your Website
Finance is a crucial area of management for all types of companies, especially for those companies that seek to expand and improve their positioning.However, although entrepreneurs and entrepreneurs are usually aware of their importance, they often fail to control them effectively.
If this is your case, calm down! In this article, we will prepare you so that you do not make mistakes in corporate finances that put the future of your business at risk.
Next, we will give you 5 valuable tips to optimize the financial management of your organization. Let’s get started!
1. Stay aware of the environment
Optimal management work includes the analysis and monitoring of external variables that may impact your company, hence the importance of monitoring the financial environment.
Also, in finance, it is essential to evaluate all the factors that, despite not depending on your work team, influence your company.
Here are some specific recommendations to achieve this:
a. Keep up to date with laws, rules, and regulations
It is important that you and all those who are responsible for accounting and administrative tasks, know the laws, regulations and financial regulations of the nation, as well as their latest updates.
That said, one issue you should pay attention to is the reform for financial inclusion. Since in the first week of January 2019, the State launched this adjustment as part of the Program to Promote the Financial Sector.
The release of payroll loans and the possibility of making securities loans to a greater number of institutions are some of the related measures that impact the business sector.
However, the most important thing to know is that now more companies will be listed.
This, because the Ministry of Finance and Public Credit (SHCP) and the Bank of Mexico (Banxico) were authorized to give incentives to companies that submit an initial public offer for the Mexican Stock Exchange (BMV).
b. Pay attention to the global picture
In addition to reforms and regulations such as the aforementioned, to manage the finances correctly, the economic environment must be carefully evaluated.
A good entrepreneur maintains an analytical attitude, not only of the local panorama, but also of the global panorama, and tries to take advantage of it strategically.
c. Know the productivity indicators of your sector
One of the aspects that you have to give more importance to is the productivity indicators of your sector. For example, if you have an aesthetic, you must know the reality of this industry and identify the keys to manage the finances of a beauty company.
Also, you can use tools such as this free business calculator to calculate the labor productivity of your company and compare your results with that of the rest of your sector.
d. Be part of a community
Finally, an additional way to inform you of the most relevant financial news is to be a member of a business community as an SME Expert.
Being part of a community, it will be easier to keep up to date with the financial environment and you can discuss issues related to your business with other professionals and experts, which will contribute greatly to the relationship between you and your company.
2. Create a contingency fund
Planning, projection, and objectives are keywords in the business world.
If you want to manage your finances effectively, you must establish in advance how much money you will spend and forecast the income you expect to generate in a given period.
However, although projections are indispensable, the truth is that there are always unforeseen events that can alter them.
Because of this, you must have an exclusive capital fund for situations that are beyond your control and planning.
Among other things, you need to have a reserve of money to face unexpected repairs of machinery or increases in the price of inputs.
If you do not, when these types of situations arise, you will have to decide whether to pause operations temporarily or use capital to which you had already assigned other purposes, which can cause a great financial disorder and instability.
Of course, in case you have a significant income surplus, you should not only propose to have a contingency fund. Also, you must focus on optimizing profits.
If you pay all the bills, you acquire the capital that you had planned and, also, you have a surplus for contingencies, then you will have sufficient financial capacity to make investments that can expand your savings, such as shares of companies in stock markets.
Of course, you can also use surpluses for internal investments, such as the implementation of technological systems, the expansion of the fleet of machinery and the opening of new branches.
3. Take care of labor liabilities
Generating labor liabilities is inevitable; However, that does not mean that you should avoid assuming more than you can.
Therefore, the first thing you should know is that they are generated by legal rights that workers assume, among other things, as a result of their seniority and that means that when you resign or be fired you must grant them a settlement and pay them vacations or pending bonuses.
That said, you must have a payroll according to the size of your business and its sales flow. Otherwise, accumulated labor liabilities could affect your finances in the future.
If you still cannot manage a broad payroll, you can choose to outsource some operations by hiring freelancers.
This will help you not to have such a wide payroll and, of course, avoid labor liabilities, which will guarantee you financial stability and more accurate projections.
4. Calculate your borrowing capacity
Contrary to what most people think, borrowing is not bad; however, you must do it with previous planning. Therefore, you must calculate your borrowing capacity, for which there are various formulas and indicators.
One of the traditional ways of doing so is to subtract the monthly fixed expenses from the total monthly income and multiply the result by 35%.
The amount of that operation is the maximum capacity to borrow that a company or individual has.
Eye: this parameter is a simple reference, so you must also evaluate other factors before requesting financing.
For example, the assets of your company, that is, the sum of the value of your brand and different assets.
Another rule of thumb is not to access credits that are higher than the total assets.
Although these tips are valuable, you should manage your financing requests with experts in the field.
Remember that a loan can significantly boost the growth of your business, but exceeding your borrowing capacity generates great financial and operational problems.
5. Evaluate seasonality from finance
One of a useful factors to measure the financial behavior of companies is seasonality.
And is that the cash flow of companies usually faces variations due to the different seasons of the year.
For example, if you have food products marketer, possibly the season in which you generate more sales and income is the Decambrine since consumption tends to grow in that month.
Knowing this will allow you to make more effective projections since you can include the variations in your company’s cash flow throughout the year.
On the other hand, the main benefit of understanding the seasonal behavior of your business is that you will be able to design strategies that allow you to optimize performance in periods when liquidity is lower.
If in a specific month you usually generate few sales, this is the one to offer sales, discounts or implement different marketing and promotional techniques, such as personal or corporate branding and influence marketing.
From a financial point of view, the fundamental thing is that you manage to have the best possible numbers.
