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Maintaining proper business financial management

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A key aspect in business management is to know your business finances. Tracking your business finances can often times be a tedious chore. Many companies find themselves hiring accountants to keep track their finances. Some simple things you can to track your business finances are as follows:



  • Cash Flow. Is your company spending more than it is earning?

  •  Accounts Receivable. Is your Accounts Receivable department lacking in following up with invoicing?

  •  Sales. Check with your sales team on what they are telling customers about payment options and terms.

  •  Are your books adding up? Who is in control of your companies' books? Are they stealing money from the company?

If you don't have the money to hire an accountant to control your business finances, there are many software programs available now that can use to track your businesses expenses. Having proper procedures in place for financial management will pay off in the long run.

Take the time to investigate where all the money is going. How much do you pay on rent and utilities? Small numbers add up quickly and you need to properly monitor them as well as the larger numbers. Discuss the policies for purchasing products with your purchasing department, office manager or secretary who is in charge of this. Any business-related purchase needs careful consideration. When dealing with larger purchases, you should have a policy in place that defines how you are to go about purchasing larger products.

One of the best things you can do for your company is to learn a basic set of financial management skills. Having some basic financial management skills will help you when discussing critical areas pertaining to your company such as cash flow management and bookkeeping. Proper financial management is one of the most important practices in business management.

Contact a financial analyst to look at your cash flow projects, profit and loss statements, and budgets. A financial analyst can tell you how well your business is doing and how you can improve certain areas to be productive. You can even do an analysis of your business yourself, set aside a couple hours each month and focus on your businesses finances. You should have your cash flow situation at hand, profit and loss statements, balance sheets, and income statements. Once you see where your business has been and where it is going, you can make an educated decision about your business finances instead of leaving it all up to your financial controller or bookkeeper.

You should always put together a break-even analysis. You can use information from your cash flow statements to determine how much sales you need in order to pay for all of your fixed and variable expenses. The fixed expenses are those expenses you will always have such as rent, insurance, maintenance, and salary. Your variable expenses are those expenses you have incurred to keep the product level in line with the sales. This can be having products shipped to you, sales tax, freight to ship products, and sales commissions. The break-even analysis is important to your financial management since it helps you determine how to project profits. It also helps determine when you will make a profit, how much to sell your products for, and how you should set your sales goal.

Proper business management comes from a leader who is honest, responsible, and prepared. If you don't know much about financial management, take a class. You can find local colleges who will offer one-course business finance classes for a reasonable rate. Train yourself to understand business finance so you can help your company grow and achieve success.

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