Learn how financial management influences your business

Just reading this far you've already seen how important financial management for small businesses is, haven't you? It can help the manager or entrepreneur to make the best decisions for the business and directly impact their results.
Financial management can positively or negatively influence the company in different ways:
- understanding of needs: this facilitates the distribution of resources between sectors and the development of actions aimed at products or services that bring better results;
- analysis of results: with the constant recording of data on transactions, the manager can effectively understand the situation of the company's finances;
- increase in profitability: with more knowledge about the budget, the manager will be able to adopt measures with the objective of increasing revenue and profit.
In addition to the basic activities that should be part of the financial management work for small businesses, there are some types of administration that are more common – not only among small businesses, but in organizations of all sizes.
Learn more about them!
Cash flow
Cash flow control is one of the main financial management tools, as it records all financial transactions in the company's accounts.
Although simple, this record is essential for good administration, as it serves as the basis for many other activities.
The daily and rigorous monitoring of the cash flow brings more knowledge about the company, facilitates accountability to the authorities and helps the manager to quickly identify errors and internal fraud.
Management of accounts payable and receivable
Accounts payable and receivable management is also a widely used type of financial management for small businesses. Accounts payable correspond to the expenses that the company has to keep running, which involves production costs and administrative expenses.
Accounts receivable, on the other hand, are all revenues that the company has – not only from the sale of products or services, but from income or gains from lawsuits, for example.
Tracking this movement, in addition to helping to control cash flow, avoids payment delays and reduces defaults, leaving the company's accounts up to date.
working capital control
Working capital is the amount that the company needs to have in cash to carry out its activities in a given period. Depending on the type of company , this value can correspond to three months of operation, six months or even a year – there is no rule!
Despite not being considered by everyone as a type of financial management, working capital is of significant importance and should not be overlooked by any manager, no matter how small the company's operation.
He is the one who will guarantee the maintenance of the business in times of low movement or crisis. remember how many companies needed to close their doors in the pandemic in the coronavirus? Many of them did not have enough working capital to maintain themselves in this period of lower demand!
Management of invoices
Yeah, a lot of people don't know, but the control of invoices is also a way of doing financial management for small businesses.
As you know, issuing banknotes is an obligation of any business other than MEI. Without this, the operation becomes illegal and the company can be accused of tax evasion, which is a tax crime and can lead to imprisonment.
Keeping track of all issued invoices, whether incoming or outgoing, is a way to keep an eye on all the company's financial transactions, in addition to facilitating accounting.
This gives the manager a more concrete basis for data analysis and decision making.
Discover the advantages of good financial management for small businesses
Having a financial management system for small businesses can bring many benefits to the company. See which are the main ones:
- optimizes financial control;
- increases productivity;
- decreases the incidence of errors;
- prevents fraud;
- reduces costs ;
- avoids or minimizes losses;
- it helps the manager to have more knowledge about the company;
- offers data that serve as a basis for decision making;
- allows management to have a broad view of the financial health of the business;
- facilitates crisis management;
- helps identify problems;
- facilitates the evaluation of results.
See these tips to facilitate the financial management of the company
Did you see how financial management for small businesses can be advantageous? And if you still don't know how to put into practice the actions that will lead your business to these benefits, don't worry.
We brought here some tips given by our experts and which are even applied here in the day to day of our company, which has been growing since 2013, when it started operating!
Don't Mix Personal and Business Finance
This first tip seems obvious, but many entrepreneurs still do it, especially in small companies. And that's one of the biggest mistakes you can make in running a business!
It is essential that the company has its own bank account and financial control .
The managing partner must receive a pro-labore, which is a fixed remuneration for services rendered, as well as a salary!
Never stop controlling cash flow
We've already talked here about cash flow and its importance for financial management for small businesses. Even so, it is often overlooked by smaller companies or those with little transaction volume.
Strict cash flow control, however, is a very important step towards financial organization and must be done daily, considering even the smallest expenses or income.
This is a way to understand the past and make projections for the future, in addition to keeping the present more organized!
Know how to price products and services
Pricing should not always be based on the amounts charged by the competition. Of course, this can be one of the factors to be considered, but for the company to be able to keep its accounts in balance, the main point here must be the cost of production and the profit margin.
There's no point in charging R$100 for a product that cost R$110 to make, even though your competitor charges R$90. If that happens, it's time to review your production costs, but lowering the price will certainly bring loss for the business!
have discipline
In addition to involving a lot of technique, financial management for small businesses also requires discipline . That's what will help you to always have a detailed and rigorous control – and you know that when it comes to money, the stricter the better, right?
Finance management activities should not be done only when there is time. They must be part of the work routine and can never be left aside!
Use performance indicators
Performance indicators are parameters that help to understand the variables that make up your company. They are essential for monitoring results, identifying strengths and weaknesses and for strategic business planning.
Some examples of indicators widely used in financial management for small businesses are:
- ROI (return on investment);
- average ticket;
- balance point ;
- gross margin;
- net margin;
- contribution margin.
Use technology to your advantage
Nowadays, there is a large amount of software that offers the possibility to do all the financial management of your business in an automated way. This makes all work more agile and safer, which significantly reduces the chances of errors.
And those who work with financial management know how even a small mistake can result in big losses!
Even small companies can enjoy the benefits of a financial management system for small companies, which, in addition to these advantages that we have already shown, facilitates the integration of sectors, improves communication between people, facilitates the sending of information to accounting and even allows to analyze data more quickly.
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