The 5 Items That Cannot Be Missing In Financial Management

May 25, 2023May 25, 2023 Our Team 0 Comments

Financial management can be considered as the sum of all procedures and all actions related to planning, control of activities and analysis of the company’s economic situation , and managing the finances of an enterprise requires great responsibility. According to surveys by the Institute of Geography and Statistics (IBGE), for every 100 companies that start their activities in the country, 48 close their doors within 3 years.

Therefore, having quality financial management is essential for the success of your business. And this is one of the great challenges of entrepreneurs. Having efficient control of the economy should be one of the priorities of an organization, as any mistake can be fatal.

Understand financial management

Closing the month with cash on hand does not mean the company is making a profit. Therefore, the most effective way to prevent unpleasant unforeseen events from affecting your company’s finances is to have trained financial managers .

All processes of a company, from human resources, sales, material control to stock, go through financial control. Therefore, knowing how to manage capital with quality should be one of the main concerns of business managers. And one of the biggest mistakes made is putting theory into practice before analyzing the organization’s economic situation.

Quality financial management must always have all the necessary data and information about the economic situation of all sectors of the company , so that, as a result, it can balance the debit balance with accounts receivable. With efficient control, it will be possible to evaluate possible unnecessary expenses and failures that may occur.

With good financial control, it is also possible to evaluate the company’s economy in the long term through its performance in the labor market and the profits obtained from sales. All the goals of the organization go through financial management , therefore, it is necessary to use this tool correctly, so that it serves as a basis for decision-making and gives security to managers.

Navigating aimlessly is an extremely risky attitude! Without planning you will not have a goal to achieve and this can lead to the failure of the venture. Quality financial management means giving priority to good results, with the aim of achieving profit.

The 5 items that cannot be missing in financial management

discipline

Lacking discipline is perhaps one of the biggest mistakes managers make —and the one that happens most often. In most companies, financial management starts with excellent quality. However, the concern of managers with other activities of the organization and the scarcity of time make them stop worrying about controlling finances on a regular basis. As a result, spreadsheets begin to become outdated, bills accumulate and budgets are ignored. When managers realize it, the company’s financial situation is already in chaos.

A tip for managers to remain disciplined is to set aside time daily to take care of the company’s financial management. Thus, this will become a habit and finances will always be up to date.

Cash flow control

Having control of cash flow goes beyond the daily monitoring of bank statements and updating spreadsheets. In addition to serving to know the current economic situation of the company, the cash flow also works to make future plans. Financial management needs to know which expenses still need to be settled, especially those that have increased interest if they are not paid on the day.

With this, managers will be able to have a better view of which bills must be paid and which amounts will be received, being able to anticipate actions without extrapolating in the budget. It will also be possible for the financial management to make a comparison between the projected profit and the one obtained, indicating the reasons that will lead to the same and where improvements need to be made in the company.

Knowledge of small expenses

Many managers fail to include small expenses in financial planning and are surprised to see how these small debts can become a burden on the company’s finances . Generally, these expenses compromise the financial health of the organization only after a long period, but they should not be ignored. In addition, extra expenses such as the 13th salary should be included in financial planning from the beginning of the year. With that, you can make a reservation so you don’t have a big loss at the end of the year.

Know how to calculate the selling price of your products

Business managers need to know how to calculate the price of products sold . They should not make this calculation using only the comparison with the competitors’ values. All costs must be considered! It is necessary that the financial management study in depth the entire production process of the services performed by the company . The way to calculate costs varies according to the organization’s type of business, but the manager will know that he is going in the right direction when he obtains positive balances.

Team work

It is important for financial management to have well-organized teams — and that these teams relate well to each other and to other areas of the company. It is necessary that the members of the organization are aligned with its objectives. Each team has a certain function and, if it is not carried out correctly, it will influence the performance of other teams and may even lead to poor economic performance of the company. Therefore, financial management must carry out frequent training of its teams so that members are committed to the company and perform their functions correctly!

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