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Get Your Company Finances Under Control With These 4 Simple Techniques

Get Your Company Finances Under Control With These 4 Simple Techniques

The shocking truth is that most companies have the capacity to be profitable quickly – sometimes from day one. But often, they fail to capitalize on the market opportunity in front of them by failing to manage their finances adequately. Brands can attract dozens of new paying customers per day and still get into financial difficulties. Why? 

The main reason has to do with the difference between financial and economic success. A company can be a viable entity selling a product that people want but still fail. Just because there’s a need out there, doesn’t mean that you’ll necessarily manage to fulfill it in the right way. Even firms as successful as Apple can spend frivolously, undermining otherwise viable business models. 

Are you worried you’re wasting a once-in-a-lifetime opportunity by failing to manage your finances properly? Check out these simple techniques to get money matter at your business under control. 

Pay Close Attention To Your Cash Flow

Photo by Kuncheek from Pexels

Profitability and cash flow are two entirely separate things. A lot of firms are profitable over the long-haul, but in the interim, they run out of cash to pay their expenses. Eventually, they wind up failing, unable to pay suppliers or staff. All that work and effort down the drain for nothing. 

Accounting services from XMI Growth highlight the importance of cash flow planning. A company might be profitable on average, but that doesn’t mean it will consistently have cash in the bank. Invoices might not get paid on time. There might be a delay in receiving payment. Or there may be significant expenses in certain months that rip into the firm’s overall cash position. You never really know. 

Ideally, you want a week-by-week analysis of your likely future cash positions. Once you have a plan, you can see when your cash is expected to run out, allowing you to organize funds from creditors in advance. 

Create A Financial Dashboard

Planning is great, but the unexpected happens in business all the time. Often, you can find yourself having to shell out for expenses you never anticipated without warning. Having a financial dashboard helps in situations like these. You can instantly get a handle on your current cash position, and work out how many resources you can dedicate to a particular project. 

Members of your finance team can use these boards to get a better sense of the likely state of the company’s finances in, say, a week or a month’s time. Many of these services, for instance, show you things like the average number of days until the collection of payment, or how far along various prospects are in your sales pipeline. You can then use all these data to update your projections, adding real observations to your likely cash flow timeline. 

Cashflow planner dashboards shared across your enterprise are helpful. The more eyeballs you have on your financial situation, the more likely you’ll unearth upcoming problems. 

Prepare For Rapid Growth With Creditors

Creditors, for the most part, want to lend as much cash to businesses as possible. But they’ll only provide it if they think you’re good for the money eventually. And proving that can be difficult. 

Most companies go through a rapid, double, or triple-digit growth phase at some point. The amount of money going into the accounts rises rapidly, but not as fast as their expenses. And therein lies the problem. Business success is about remaining consistently profitable, not just making more money. 

If you anticipate rapid growth ahead, speak with your creditors immediately. Thrash out some likely cash flow scenarios and reach a consensus on how much money you’ll need to see you through this expensive phase. Usually, lenders have experts on their team who can roughly calculate your likely needs over time, depending on your growth projections.

Get A Finance Coach

Even experienced entrepreneurs can find it challenging to stay on top of their finances and make the right decisions. It’s not always clear what you need to do when you’re in the thick of it. Having a coach you can ask for help makes a big difference. 

Coaches are ideally people who’ve done it all before. If you find yourself in a financial bind, they can point you in the direction of a way out. They can also step in and prevent you from making mistakes with your money that could undermine your enterprise’s viability. So many entrepreneurs throw away their companies investing in projects that never deliver the return that they expect. Expert opinion from somebody you respect can prevent you from going down the wrong path. 

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