Do you need to give your company a financial boost? Do you want to optimize the company's finances? In this post we tell you the keys to achieving the best economic and financial management of the company .
The economic-financial management is based on the correct administration of the organization's resources. That is to say, in a very simple way, it is about managing expenses and income so that everything works correctly.
Having a good economic and financial strategy will help you:
- Make your company more competitive in a market that is increasingly saturated with competitors.
- Make better decisions because they will be based on real and correct information.
- Give a good image to investors, customers and suppliers, so mutual trust will be created.
- Know the resources you have to internationalize the company, buy an asset or launch a new product or service, for example.
Read also: Initial investment plan in a company: definition and content
What are the bases of good economic and financial management?
The person responsible for the economic and financial management of the company must know the bases of good management, which may be the following:
- Control payment and collection terms . It is common in small companies that an invoice is issued and the collection is not controlled or the payment policy of the company that has been invoiced is unknown. This means that, for example, if it is time to pay taxes and that invoice has not been collected, the liquidity of the company may be affected. The same happens with the payment terms, you must control them so that the invoices do not remain pending payment and can generate interest.
- Check where your benefits come from . It is essential for a good economic and financial management of the company that you know where your benefits come from because it may happen that they come from the liquidation of an asset and not from the activity of the company.
- Distinguish profit from cash . You may have a good billing level, but if you are paid in 60 days, for example, you will not have cash to deal with other payments. That is why it is important that you differentiate what is profit from what is cash.
- Analyze profitability. The profitability of a company supposes the ability to be able to generate sufficient profits, in relation to its sales, assets or own resources, to be profitable. In other words, there is a balance between income and expenses that can be maintained over time and that can allow the company to grow.
- Itemize all expenses. In addition to knowing where your income comes from, it is essential to know how you spend each euro of the company. The first thing you will have to do is divide the expenses into fixed and variable so that you can control or eliminate those unnecessary expenses that negatively affect the business.
- Hire a business consultancy. A business consultancy will analyze the economic-financial situation of your company, market trends, what competitors do and new products or services, among other aspects, to give you a true picture of the situation of your business and the options. that exist to develop it and make it grow.
- Prepare an economic-financial strategy . In order to carry it out, a series of steps can be followed, which are the following:
- Surrounding analysis. It is important that you know both the market in which the company works and the company internally.
- Goal setting . Ask yourself what do you want to achieve with the economic-financial strategy? It must be an objective that means a challenge but is also achievable. It is also important that you set a deadline to get it.
- Fixation of control mechanisms . If you do not control the results you obtain, you will not know what you are doing correctly and what needs adjustments, so in the strategy you must define what elements you are going to use to control progress.
- Study if the prices of your products or services include costs . It may happen that you sell a product at a certain price but when calculating the costs (transport, raw materials, marketing, etc.) you do not make a profit.
- Take advantage of the tax advantages. Good tax advice can be the key to saving money on taxes and benefiting from tax aid and incentives.
- Compare your data with that of competitors. Your business may obtain a profitability of 20% but if you do not compare it with the data of competing companies, you will not know if it is high, low or the same. It could be the case that your competitors generally obtain a 30% profitability, so your profitability will be low for the sector.
Ultimately, it is about the economic and financial management of the company giving you the peace of mind of knowing where you are directing your business, in what way and within what time frame you are going to achieve the objectives you have set for yourself.
Posted by: Abdul Rimaaz
