7 tips to optimize the financial management of your company

Optimizing your company’s financial management is the right move to make in order to compete in your sector. After all, the company’s financial health depends on how its assets and liabilities are managed both in the short and long term. Make no mistake: the entrepreneur who ignores the organization of their finances will soon face a problem.

And to remind you to invest time and resources in your financial department, we have 7 tips that will help make your future ambitions more favorable.

Why optimize your company’s financial management?

Before we start, it is crucial that you, as a manager, understand the importance of keeping the company’s financial controls in order and under control, so that we can proceed to the practical part of optimization.

Financial management is the company’s strength, being decisive for the maintenance of its production. With this control, it is possible to pay employees’ salaries on time, acquire inputs from suppliers, honor commitments made and carry out marketing strategies.

In addition to financing short-term actions, it is through the correct management of financial resources that the organization is able to plan its future projects, such as expanding production or opening new units. The viability of the business is also monitored by these controls, where we can easily observe the quality of the results obtained in a given period.

How to optimize the financial management?

Thus, the relevance of financial controls for maintaining the operations of a business in the short term, as well as for long-term planning and investment actions, is evident. Next, check out the 7 main tips on how to improve the financial management process in order to optimize the company’s results. Check it out!

1. Assess the team’s qualification

The first thing that should guide the financial management optimization is to check the skill level of the professionals who work in the financial department. How many of them have an undergraduate degree? Do they know how to use management software, or how to handle computer programs? Are they interested in training courses? You should look for answers to these questions, as many obstacles in the work process are related to the team’s lack of training.

Evaluate the people involved and set aside a part of your budget to promote training. By investing in training, you provide the ideal environment for good management practices to be disseminated among all employees, increasing the quality of the workflow in this area. If you do not have the resources available, be flexible and encourage your employees to look for new skills.

2. Create timetables for balances

Having up-to-date information on your company’s financial numbers is an analytical tool that will help you make quick decisions. Therefore, having a timetable for financial statements is a way to look at the company’s future and be prepared for any changes in the market.

Asking the accounting department for monthly or quarterly financial reports is always the right decision to make your financial management more dynamic. The detailed evaluation of these financial statements will indicate the real financial status of the business and its history of development, serving as excellent references for the decisions and actions of managers and other investors.

3. Check the market projections

Market fluctuations directly influence the financial results of your company, either by changes in the stock exchange or in the habits of your customers. This is why you should never stop projecting the future of your industry. In addition to optimizing your financial management, you will be able to evaluate your brand and how your products or services can improve.

If you have an after-sales sector in your company, it will be of great value and a great source to get information about the market moods. Being able to identify seasonality and other variations of demand over time helps to better understand the consumer’s buying behavior and which items most affect their purchase decision, allowing the design and application of action plans for the benefit of your company.

4. Understand your cash flow

It is an old lesson, but one that can never be ignored. Nothing can escape the control of your company’s financial activity. For example, accounts payable and accounts receivable need to be fully aligned in order to avoid forgetting to charge or pay suppliers. It is incredible that there are still midsize companies making gross mistakes in cash flow management.

Can you imagine offices with stacks of invoices on an employee’s desk awaiting authorization from the owner to make the payment? It seems impossible, but that is the scenario in many companies in the country. So don’t follow that path. Adopt methods to make your company’s financial management more fluid. Create positions of trust that can carry out the cash outflow. That way, the company will not develop with a philosophy of mistrust.

5. Make selling to bad payers more difficult

Selling is always important, but receiving is even better. There is no point in forcing sales to defaulting customers. At the end of the month the deficit in your cash may be considerable and you will need to ask for bank loans, which means you will lose money. Developing a procedure that makes it difficult to sell to customers who don’t pay on time considerably helps the financial health of your company.

Software such as CRMs are excellent allies in this process, as they provide greater control over the customer’s history with the company and help to outline their profile by assisting other sectors (such as sales, customer service, production, marketing) with information relevant to their work.

6. Have financial control software

There will be no optimized financial management by using papers and endless spreadsheets that are not shared by the team. In addition to slowing down the workflow, the use of outdated resources also increases the risk of loss of documents and leaks of sensitive information on the company, its customers, partners and suppliers.

In such cases, the company may be subject to sanctions related to the General Data Protection Regulation (GDPR), which stipulates heavy fines on this type of data loss and other penalties. Therefore, your company needs to adopt a financial control program that can relate to other administrative activities of the group.

Software will make it possible to do bank reconciliations and issue electronic invoices and bank payment slips, as well as control the input and output of resources. It will also allow the interconnection with the commercial department, and the data registration of suppliers and customers. This information is displayed on screen and can be followed online by managers and business owners.

7. Develop a strategic planning

The tips we have presented so far only make sense if they are grouped together within a broader planning, called strategic planning. The company’s managers are responsible for developing this plan, and they need to create it based on information collected within the organization itself and its field of operation, trying to direct all the company’s productive resources towards a given future objective or target.

Without this direction, the activities carried out lose their analysis parameter and the organization as a whole is adrift. Therefore, gather your entire team and set, in financial terms, which goals, strategies and operations need to be observed in order to optimize the financial management and make the business more efficient and profitable.

As per our tips, understand that your dedication to the financial department is critical to the smooth running of your company. This is not to say that you should be extremely zealous and centralize all your decisions. On the contrary, you should be open to employee input and technological developments.

Take care of your financial management and you will certainly achieve good results, as the lack of organization can compromise the health, maintenance, competitiveness and the permanence in the market of your business.

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