The financial management area is one of the most important in business management, but it is still one of the areas that suffers the most from errors. it was found that 55% of them had not prepared a business plan, 50% had not determined the value of the intended profit and 39% did not know the necessary working capital.
We realize that mistakes in financial management can be serious and even cause the end of a company. Therefore, this post brings some important tips to improve this management and avoid complications, in addition to reducing unnecessary costs.
Knowing how to price your product or service
As simple as it sounds, this is still a very common mistake. It is important to take several factors into consideration when pricing, such as material costs, labor, marketing, hours worked, and profit percentage. Many companies sin in this regard and end up having a loss. It is also important to mention discounts, which are not always a good strategy if they are not well thought out. Despite facilitating the sale, it is necessary to sell more and invest more time to have the desired profit.
Map the financial processes
A good process mapping is essential, but not enough. It is necessary to define the indicators to measure the results and, of course, make changes based on what is perceived in periodic analyses. If the cost per customer acquisition is very high, for example, it is necessary to study the reasons and think of new strategies to reduce this cost. Another example is if some unnecessary expense is found that could be replaced by some other more viable resource. To carry out these processes and changes, the organization of teams makes all the difference!
Have a financial plan
Nothing should be done without thorough planning. In this way, it is possible to have better control of expenses, prepare for unforeseen events, have an exact definition of resources, well-defined objectives and even the amount of work necessary to achieve these objectives and the necessary profit.
Tax management is also a key factor in this planning, so that there is no inconsistency with public bodies and, of course, to avoid fines, which are wasted money that could have been invested in the company much more efficiently. For this, those responsible need to be aware of all taxes that fall on their products, services and on the tax regime adopted by it.
Have a well-defined working capital
Another essential factor for any company, but which continues to be neglected in many of them. Working capital is what allows the company to run in a healthy way, thinking about transactions made in time, such as purchases paid on credit card by customers, payment of operating expenses and suppliers, maintenance of inventories and other needs.
Therefore, a company cannot have a long life without planning this cost and ends up getting lost in debt and delays.
Separate personal and business expenses
This is another very common mistake among entrepreneurs. It is necessary to make this separation honestly, so that there are no problems in the future. Personal and business finance cannot be confused! The same goes for profits. By the way, on to the next tip…
Reinvest part of profits
It’s no use seeing all the company’s profits just as cash coming into cash. It is essential that part of this profit is reinvested in the company itself, whether in new equipment, professional training or other needs. In the age we live in, innovation and the search for knowledge must be constant, or the company will be left behind and may end up going bankrupt?
Use financial tools
To facilitate all these points mentioned, there are several technological tools that can help in financial management and that are great investments for the company. This tip can also be linked to the previous one, as employees need to be able to use these tools so that working time can be reduced and management can be more accurate.
We hope we have helped and we wish your company to have an excellent financial health and that, in this way, you can boost your results.
Posted by: John Labunski