It is certain that in order to maintain a healthy business, financial control is more than necessary, becoming crucial for your enterprise. So, here is Swaraj Sahu, founder of accustra, to teach us how to have effective financial control with the following 4 tips to maintain the financial health of your business.
Tip #1: A Well-structured Cash Flow Is The Foundation Of Your Success!
Putting your debts and credits on paper is the first step to understand how your company’s financial health is going, it is advisable that you already have a balance sheet for your business, but as we are referring to the movement of your capital, a cash flow it is an indispensable tool to maintain the financial health of your enterprise.
Cash flow is a document that demonstrates the movement of money from your enterprise in a certain period of time, where inflows and outflows are analyzed, whether in cash or in instalments.
Swaraj Sahu says “Typically, newly opened ventures and small businesses usually do this control through a spreadsheet or even a record book due to the low amount of transactions. However, this is not a recommended attitude, because as your company tends to grow, your demand for processes begins to become increasingly greater, and in those hours, having financial control being managed by you, through a tool that can easily be damaged and without any security, it is a fatal mistake for your business!”
Other than that, you still need to pay attention to the data that is inserted in your cash flow and know how to analyze your projections of future investments, not least because it is very risky to invest in raw materials without knowing if your business has money to pay fixed expenses.
Tip #2: Set Goals, But Understand Your Limits!
Another advantage of obtaining a well-structured cash flow, apart from the transparency of your financial control, is that you have a basis for stipulating goals for your business, according to projections that can be stipulated by your average monthly earnings and expenses.
For example, a shoe store identifies that in the last seven months it has maintained an average monthly expense of $50 for the lighting of the establishment, since this, the financial manager stipulates a goal to decrease this average value by 20% for three months from now.
In order for this objective to be achieved, there are several ways out, from changing the lighting of the establishment to hiring a company that implements energy efficiency services in the store.
However, for decisions like this to be made, it is necessary to know the feasibility of this action and the current situation of your company’s cash, so it is important to have control over your periodic earnings and expenses to maintain the financial health of your business.
You need to keep in mind the return on your investments so that you can keep your capital running without compromising the permanence of your business in the market.
Tip #3: Negotiate Consciously, Both You And Your Suppliers Can Benefit From This!
Having control over your finances and goals based on your needs, you need to know how to negotiate with your suppliers.
Swaraj Sahu says this because when you are in control of your business money, it is much easier to set payment terms, knowing when you will have money or not!
You can appeal for discounts on cash payments, or ask for larger amounts of instalments, depending on your cashier’s situation.
Having a good relationship with your suppliers helps you a lot! Companies know how to recognize good buyers and give up some deadlines or prices to keep loyal customers but remember: you cannot abuse this relationship and you don’t need to be stuck with just one supplier option, it is advisable to have options for possible unforeseen events.
Tip #4: These Tips For Maintaining The Financial Health Of Your Business Are Just The Beginning, But You Don’t Have To Do This Alone!
If you are thinking about setting up your business, or if you already have one, it is important that having total control over your finances, after all, accumulating pending items is the second biggest cause of closing companies worldwide!
But don’t worry, you can count on an office to manage your finances, which gives you much more security and relief to manage your business!