Finance is a crucial area of ​​management for all types of companies, especially for those companies that seek to expand and improve their positioning.

However, although entrepreneurs and entrepreneurs are usually aware of their importance, they often fail to control them effectively.

If this is your case, calm down! In this article, we will prepare you so that you do not make mistakes in corporate finances that put the future of your business at risk.

Next, we will give you some valuable tips to optimize the financial management of your organization.

Let’s get started!

1. Stay aware of the environment

Optimal management work includes the analysis and monitoring of external variables that may impact your company, hence the importance of monitoring the financial environment.

In addition, in finance, it is essential to evaluate all the factors that, despite not depending on your work team, influence your company.

2. Create a contingency fund

Planning, projection and objectives are keywords in the business world.

If you want to manage your finances effectively, you must establish in advance how much money you will spend and forecast the income you expect to generate in a given period of time.

However, although projections are indispensable, the truth is that there are always unforeseen events that can alter them.

Because of this, it is important that you have an exclusive capital fund for situations that are beyond your control and planning.

Among other things, you need to have a reserve of money to face unexpected repairs of machinery or increases in the price of inputs.

If you do not, when these types of situations arise, you will have to decide whether to temporarily pause operations or use capital to which you had already assigned other purposes, which can cause a great financial disorder and instability.

Of course, in case you have a significant income surplus, you should not only propose to have a contingency fund. Also, it is important that you focus on optimizing profits.

If you pay all the bills, you acquire the capital that you had planned and, in addition, you have a surplus for contingencies, then you will have sufficient financial capacity to make investments that can expand your savings, such as shares of companies in stock markets.

Of course, you can also use surpluses for internal investments, such as the implementation of technological systems, the expansion of the machinery fleet and the opening of new branches.

3. Take care of labor liabilities

Generating labor liabilities is inevitable; However, that does not mean that you should avoid assuming more than you can.

Therefore, the first thing you should know is that they are generated by legal rights that workers assume, among other things, as a result of their seniority, and that means that by resigning or being fired you must grant them a settlement and pay them vacations or pending bonuses.

That said, it is important that you have a payroll according to the size of your business and its sales flow. Otherwise, accumulated labor liabilities could affect your finances in the future.

If you still do not have the ability to manage a broad payroll, you can choose to outsource some operations by hiring freelancers.

This will help you not to have such a wide payroll and, of course, avoid labor liabilities, which will guarantee you financial stability and more accurate projections.

4. Calculate your borrowing capacity

Contrary to what most people think, borrowing is not bad; however, you must do it with previous planning. Therefore, it is essential that you calculate your borrowing capacity, for which there are various formulas and indicators.

One of the traditional ways of doing so is to subtract the monthly fixed expenses from the total monthly income and multiply the result by 35%.

The amount of that operation is the maximum capacity to borrow that a company or individual has.

Another rule of thumb is not to access credits that are higher than the total assets.

Although these tips are valuable, the ideal is that you manage your financing requests with experts in the field.

Remember that a loan can significantly boost the growth of your business, but exceeding your borrowing capacity generates great financial and operational problems. Small internal changes can bring great differences, such as going for a prepaid Mastercard for your employees.

5. Evaluate seasonality from finance

One of the useful factors to measure the financial behavior of companies is seasonality.

And is that the cash flow of companies usually faces variations due to the different seasons of the year.

For example, if you have food products marketer, possibly the season in which you generate more sales since consumption tends to grow in that month.

Knowing this will allow you to make more effective projections since you can include the variations in your company’s cash flow throughout the year.

On the other hand, the main benefit of understanding the seasonal behavior of your business is that you will be able to design strategies that allow you to optimize performance in periods when liquidity is lower.

If in a specific month, you usually generate few sales, this is the one to offer sales, discounts or implement different marketing and promotional techniques, such as personal or corporate branding and influence marketing.

From a financial point of view, the fundamental thing is that you manage to have the best possible numbers.

6. Do not mix personal and corporate finances

This is a golden rule for small and medium entrepreneurs.

Although things in your business go wrong, from a financial point of view, you should avoid allocating part of your savings or income to solve them, just as it is a very bad idea to use company money for company expenses.

In case you take working capital of the business for family expenses, you could compromise such important operations as inventory turnover and payment to staff.

If you do the opposite, that is, if you make family money available to the business, you will affect your quality of life and that of your loved ones.

In order for you not to be forced to mix finances, you must intelligently manage both the corporate and personal budgets.

If you have experience in command of your company and it has gained a space in the market, you must rely on your capabilities and, above all, those of your company.

Corporate organizations, through financing and other strategies, can float despite adversities.

7. Exchange checking accounts for savings accounts

To manage finances intelligently, attention must be paid to saving mechanisms.

And there are companies that, for example, safeguard their surpluses in current bank accounts, which do not generate interest and, on the contrary, charge commissions frequently.

Whenever it is reserve money, that is, it will not be allocated for operability, you must keep it in savings accounts, which allow, at least, a slow, but steady increase in capital.

As mentioned earlier, you can also bet on options that give you the possibility of multiplying savings, such as investment in stock markets.

8. Match the payment lapses with the payment lapses

A healthy economy, among other things, has a large volume of credits. For that reason, it does not hurt to generate accounts receivable, especially if you have a marketer and, therefore, your main customers are points of sale.

Of course, you must equate the lapses in which you give credit with the times when you receive resources.

This means that if you have to pay the raw material suppliers on a weekly basis, it would be a serious mistake to have accounts receivable with higher expiration periods.

If that happens, the company’s cash flow will be compromised. Therefore, always keep in mind that good financial management must be balanced.

9. Implements an ERP system

So that your company operates in an organized way and can improve its profitability, the ideal is to implement technological solutions that support you. In this sense, one of the best alternatives is ERP systems in the cloud.

This type of business management tools, when working with cloud technology, allows you to host the relevant information of your business on remote servers and not on computers or computing devices that can be damaged.

This, among other things, better protects data and documents and allows previously authorized users to access from different devices and places.

Yes, by implementing this system, you will have the possibility to evaluate your company’s finances, like many other areas, from the comfort of your home.

In addition to cloud technology, there are certain features that characterize an ERP system that will really help you manage your sales and finances.

10. Visualization of income and expenses

A finance module of a good ERP system in the cloud must have the ability to show, in an automated and immediate way, the income and expenses of your business.

In doing so, it will give you the possibility of knowing in detail the cash flow, which is one of the fundamental indicators to evaluate the liquidity of a company.

In addition to this, another of the features that this module has to have is to allow, without major complications and updates, the entry of new payments from customers and suppliers. If you’re just starting, here are some money management tips to keep your small business afloat.

Conclusion

Do not forget that if you compromise your company’s finances, inevitably, your personal budget will also be affected, so handle this area with caution and, above all, with the support of specialists and quality technological tools.