Five Ways to Better Business Financial Management

By | April 11, 2014

Managing finances always remains a priority for those in management roles. Efforts are always made to leverage the optimized usage of the finances available at hand. There remain many serious concerns associated with finances like cash flow, market research, and breakeven costs of revenues, investment appraisals, working capital, ratio gearing, and ratio analysis.

Availability of many options, combinations and alternatives on finances makes the job of an financial manager very challenging/difficult/troublesome. On the web space many such financial managers keep on sharing their expertise. Based on the refined views available, this extract will put forward five better ways of financial management which are:

Charting Out the Realistic Budgeting:

  • Firstly establish the start-up cost. This cost will involve onetime costing for the purchase of equipment, down payments & utility deposits.
  • Working capital needs that are of short durations should help in supporting the inventory & account receivables.
  • Investing more money in fixed assets is not a judicious act.

Charting Out of Realistic Expenses:

Put on paper the expenses that should be realistic like:

  • Fixed expenses of loan payments, mortgage & bills of phone & cable.
  • Variable expenses of maximum three months should come on the paper in prior.
  • Establish the realistic expenses of even one week.
  • Finalize the areas where your spending is remains in excess.

Realistic View of Market Changes

Market changes remain to be a cyclical pattern.

  • Keep a clear understanding of your business cycle.
  • Attain the cyclical data about the sector of the industry to which your business belongs. It helps in outlining of the macro & micro factors for the better financial management of your business.
  • Trends of your industry may help in achieving realistic data.

Hands on Experience of Ratio Analysis

Such analysis can help in making the financial management more robust & outcome based.

  • Probability Ratio gives indication whether your business is making profits or not. It involves Gross Profit Margin, Operating Profit Margin, and Return on Capital Employed.
  • Other ratios that too may add in financial management are Efficiency Ratio, Liquidity Ratio, and Stability Ratio Investor Ratio.

Cutting of expenses

  • Day to day, weekly, monthly & yearly expenses should find a realistic spreadsheet pivot portrayal to help attaining a better understanding.
  • Estimations & projection techniques should find optimum use as they may help a lot.

For better financial management solution one may opt for above stated suggestions. It will help in better migration of your business to a profitable stage. It will also help in devising more other profitable avenues.

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