Managing and organising a company’s finances is essential to long-term business survival. It involves more than properly keeping numbers: it implies good analytical capacity and skills to make the right strategic decisions. The success of any business is based on the proper management of resources, innovation and in being competitive with other companies. Since good financial management is the central pivot of any company, below we present five habits of highly successful businesses in managing their finances.
Having a skilled finance manager
The role of a finance manager is of vital importance to the company. Bad financial decisions or wrongly invested capital can lead to serious complications and even bankruptcy. This is why it is advisable to hire a certified accountant or experienced finance manager. Strict accounting and economic management offer more benefits to the company than the costs implied.
Periodic analysis of financial ratios
As a way of enhancing the key economic aspects of the business. The most important ratios are economic and financial profitability, generation of cash flow, debt ratio and financial autonomy of the business.
Regular analysis of financial statements
Analyzing financial statements with your finance manager will help monitor your company’s health and compare it with previous periods or with the competition. Your company’s balanced financial structure will enable you to improve your negotiating power, the costs associated with your debt and it will help you make the right decisions.
Know your financing options
Educating yourself and obtaining financing tools will enable you to invest and make the business grow. This is why it is important to have good financial information since it is a business owner’s best presentation letter to financial entities, prospective investors or public entities when requesting a loan.
Have an emergency fund
The amount depends on the company’s size and activity. A reserve equal to 3 months of operating expenses is typically recommended. This money must not be kept in a safe or at the company but as a financial instrument that generates profit.
