finance

6 Steps to proper Financial Management

No one can doubt it. Financial management in a business or a company is one of the most important issues because at the end of the day the future depends on it. And that is why we cannot ignore them.

When we talk about proper financial administration, we aim towards the same objective: optimizing all business processes one by one and this is achieved by automating some of the tasks, including administrative or accounting, seeking above all to streamline the daily management of the areas of the job. 

And this is achieved thanks to the implementation of an ERP system. Within the functionalities of this tool, there are different modules aimed at specific professional profiles, such as the finance department, production, projects, sales, Human Resources, sales, customer and supplier service, and marketing.

In this article, we will focus on 6 steps to carry out correct financial management and the keys that we must take into account when choosing the best ERP.

As we already mentioned, this administrative tool helps us to collect financial data in one place and to generate complete reports automatically, which later help us to better base our decisions on the course of the business, without neglecting that it is also capable of keeping up-to-date accounting books and balances with total precision.

Let’s see then what are those steps are recommended to follow when looking for a correct financial administration.

PLAN FOR GREATER CONTROL

As we know, financial management is one of the processes that should occupy us the most when outlining a business strategy since it will help us to have greater knowledge of everything that happens within the business, and consequently greater control, providing more stability.

In this process, we have to take into account some aspects such as the assessment of the current business scenario, the budgets for its daily operation, the indicators and objectives that must be met in a given time, and especially the projections. It is the latter that will give light to the entire planning process since we have to know where we want to take the business and what we have to do to achieve it.

Your company must have the following habits to be successful:

  • Have a trained financial manager
  • Periodically carry out the analysis of financial ratios
  • Analyze financial statements regularly
  • Be aware of financing options
  • Have a fund in case of emergencies

PREPARE BUDGETS

As we already mentioned, preparing budgets correctly is the basis of the success of a business, and an ERP System can help us with this preparatory task.  

Thanks to this tool, we can see in full the business costs in each of the different business units in an exhaustive way, that is, in great detail. 

How does it help us to prepare as detailed budgets as possible? Mainly to establish a savings plan in them, to detect unnecessary expenses in which the business systematically incurs – and that nobody had captured before – and to bet on better management of all the financial resources of the same. Thus, it will never be necessary to put the future of the business at risk. 

KEEP ACCOUNTING UP-TO-DATE

Even though it is a very important daily task, there are businesses or companies that by not giving it its value can incur serious failures that not only destabilize the organization but can generate future problems with fiscal institutions. 

Having total control over business accounting means being able to access a complete 360 view of each and every one of the asset movements and liability fluctuations without having to dedicate extra time and effort to balance the balance sheet.  

When all these operations are carried out automatically without the administrative team has to get involved in them and do them manually, that is when we begin to see one of the great advantages of this administrative tool.

And if this were not enough, it also gives you the opportunity to check in real-time the status of business liquidity and current debt.

The financial management business should be your guide to making any decision and work as a strategy to have more liquidity and staying active in the market

SIMPLIFY STATEMENTS

Among the accounting tasks that we mentioned above are the income statements, which become the main headache not only for the administrative or accountants of the organization when they do them manually but also for the owners when they contain Capture errors that can lead to an unwanted outcome. 

The declarations are made by matching the information that we find in the accounting books, in the expense reports, and in all the financial reports issued in a certain period of time. 

Matching all this information is a job that takes time and dedication, but with an ERP it is possible to simplify it significantly so that everyone within the organization has the general and complete vision of the financial situation of the company.

MONITOR THE CASH FLOW

We say it without removing any letter: cash flow is the heart of the healthy finances of a business since it frames the income and the exit of money.

So simple and easy.

Therefore, monitoring that this flow is always maintained in healthy numbers will depend on many factors of a financial administration that seeks balance between movements, that is, between inputs and outputs. The liquidity of the business will depend on this.

To achieve this, we have to be aware of different things such as accounts receivable, pending payments, and the item of expenses.

CONDUCT PERIODIC AUDITS

To maintain optimal financial management of our business and carry out proper administration, it is important as the last step in this process to carry out periodic audits, since only the exact and precise knowledge of the reality of the business will give you the direction you should take to face all the future difficulties. 

Carrying out regular internal reviews and audits will allow us to detect the impact of the decisions that have been made over time, to reinforce those that have produced good results, and not repeat those that did not lead to anything good. 

FINANCIAL MANAGEMENT: AN IMPORTANT PILLAR WITHIN YOUR COMPANY

As you have seen in this article, carrying out correct practices to achieve financial management is necessary if we want to take your business higher each time. Having a good NetSuite ERP Consultant tools and systems that allow you to streamline the processes in your company or business will give way to the business growth you are looking for. 

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