When you start a business, the most convenient thing is for you to learn and manage your resources optimally, as you will find obstacles to overcome, and new opportunities to take advantage of. One of the things an entrepreneur has to know is when he is making or losing money. Before you decide to pull the plug, it’s important that you take a few things into account. Consulting with an industry specialist is a wise idea that can help you manage your finances better. Ivan Illan is a renowned financial advisor and a bestselling author of two books. You can always hire him to make the most of his financial expertise.
Managing the finances of a company is an ongoing task that requires constant attention to the cash flows, but above all, to financial objectives.
How to improve financial management
You must monitor the allocated resources in all areas, from sales and billing to cost management and financial risks, etc.
Here are some tips that will come in handy:
- Improve the cash cycle by reducing the time that money remains unproductive. That is, the lapse between the payment to suppliers, and the payment to customers.
- Take your money management beyond the accounting aspect, and give it a spin by creating a treasury area in charge of tracking collection and payments.
- Consolidate your bank accounts to avoid duplication of commissions, and have more control of balances.
- Frequently analyze your cash flow so that you detect in time the situations in which you must cover deficits to keep your operations going.
- Take advantage of technology to simplify processes, eliminate errors, reduce costs, and increase the productivity of your treasury.
- Identify how much the costs of financing is, and make sure that relevant employees know about them.
- Review your collection process to ensure that the billing is done in a way that avoids delays due to errors, and reminds customers in due time to clear the payments.
- Evaluate the systems and means of payment to eliminate those that generate higher costs and lengthen the time for cash collection.
- Analyze the quality of your customers so that you modify the sales conditions according to their importance and payment compliance.
- Establish a process of collection of past due loans to speed up and charge the customer the additional costs incurred due to late payments.
- Investigate and compare the financing options and their conditions between different banking institutions before committing yourself.
- Use currency hedges to protect yourself against variations in the exchange rate and avoid losses in your business operations that may occur due to the increasing costs of financial transactions.