Since businesses are driven by money and are almost always focused on profit, many people can understand why they need to know about financial management. However, this term alone doesn’t say much.
Every entrepreneur should delve deeper into the subject . Of course, there are details that they don’t need to think about every day, since many hire employees for this. However, how are you going to monitor the work of the employee if you can’t evaluate it?
The three pillars for efficient financial management are basic concepts to start your studies. They are fundamental points that you need to know so that your company can grow with a solid and strong structure.
However, it is important not to rely solely on this content and to maintain constant training. Then, to apply this knowledge, it is necessary to make a financial plan .
3 pillars for efficient financial management
All decision-making needs to be based on the stability of rigorous financial control . Growing a business is not possible without managing cash flow in an intelligent and strategic way.
Learn below 3 pillars for healthy financial management. Take note, advance in your studies and look for equally efficient tools to help in this operation.
1. Know your company like no one else
No matter how many experts an entrepreneur hires, no one knows the company’s particularities as well as he or she does . This person may not have the techniques or in-depth analysis, but he or she has mastery of the business.
The business owner knows how the customer likes to be served, the best payment methods for the segment, the ideal price, what the market practices and countless other information.
However, you would be surprised at how many people are unaware of very important figures about their own company. But the solution to this doesn’t have to be memorizing every penny of the transactions, something that is almost impossible.
There are numerous digital tools that monitor and make this data available. The most efficient of these is the integrated management platform, also known as ERP . In addition to keeping the business owner well informed, it simplifies administrative processes.
2. Control your numbers and processes
Information control is key to business success . Therefore, small and medium-sized companies need processes and financial control that are as rigorous as large companies, thus ensuring proper management, avoiding fraud, embezzlement and, most importantly, lack of cash flow .
Day-to-day operations must be monitored non-stop. Cash flow, which many people do not even control, is just one of the financial management operations that a manager must worry about. Bank reconciliation, inventory control , and monitoring of purchases and sales must all be recorded and evaluated.
Integrated management platforms are a great option for solving problems in this area. Many of these operations are aimed at simplifying and automating processes. You and your employees may forget a step in the tax reconciliation process, but the platform will show you the error or simply correct it on its own, for example.
3. Make decisions based on numbers
It is no longer possible to be in the 21st century and want to make decisions based on guesswork. When you have, through controls, numbers that reflect the company’s reality, decision-making is more effective and intelligent . This way, it is easier to identify the financial result of these actions, directly or indirectly.
By understanding the financial numbers, the entrepreneur can clearly see what is impacting the business’s profitability and creating money bottlenecks.
It is not uncommon for companies to see increasing revenues but not see any profits or even notice cash shortages, for example. Without accurate numbers and adequate analysis, responses are given based on impulse and feelings, rather than strategically.
Analyses such as break-even point, ABC curve of customers and products, financial indicators, pricing, expense trends, target monitoring, are just some that every company must monitor monthly.
Where do you want to be: making a decision based on an analysis with wrong numbers or being certain that that choice is the most correct for the period and that it will generate greater profitability?
Therefore, these three pillars, when put into practice, simply transform management based on guesswork into strategic management, where you take control of the business, control processes and use these numbers to your advantage.