Improving Financial Health Of Your Business

Improving Financial Health Of Your Business

As an entrepreneur one will come across various challenges in managing business, however financial aspects tops the list and rank most critical. One need to pay utmost care and attention in carefully planning and monitoring aspects which affects financial health of the business. There are steps to guide you in better management of your finances so you can see your dream to its end, without getting trapped in financial mess.

1. Understand the Key parameters of your business:

Financial health of business

Just as we keep check on the vital parameters of our personal health, it is equally important to understand the key financial parameters of your business. Keep close watch and check on the revenue inflows and outflows to understand what is coming in and for what purpose it is spent. Though it is basic, it is very critical. Have a structured dashboard with the help of your CFO for regular review and understanding.

2. Prudence in spending:

monthly budget of your business

Spending less than what you earn is the wisest action one can take. Margins and Profits can be increased not just by increasing the sales price and revenue, but also by prudent action on cost optimization. Best deals with suppliers, Careful planning of Fixed Expenses, Outsourcing mundane, non-critical activities will help the business in trimming down its expenses.

3. Diligent Invoicing and Collections:

financial accounting

Regular invoicing with clearly agreed terms will help a long way in improving relationship with customers & also faster realization of money. Profits are real only when money is realized. Slow rate of collection is strain on the working capital needs of the business. Designing a simple and transparent receivable realization process is of utmost importance to ensure receivable do not turn bad and uncollectable.

4. Long Term Plans:

long term planning

Having long terms plans for where you want to see the business financially, will help identifying oppurtunities for growth. Designing a growth plan, drawing Financial Projections and analysing the financial performance periodically will offer valuable insight on how well you are progressing towards your goal, what corrections are required and how goals need to be realigned.

5. Identify the right source of funding:

Identify the right source of funding

It is essential that you choose the right type of finance for your business – each type of finance is designed to meet different needs. Smaller businesses usually rely more on business overdrafts and personal funding but this might not be the best kind of funding for your business. Drawing a Fund Projections in line with Financial Projections will help you identify the long term and short term financial need and decide on the source of funding.

6. Risk Identification and Mitigation:

Risk Identification and Mitigation

Risks are inevitable part of life and business is no different. Identifying, foreseeing and designing plans for mitigation of risks is a prudent way of safeguarding financials losses. Risk Management plans should form part of the long term objective of the business.

The Chief Financial Officer (CFO) of your business, an expert in Business Finance matters, is a part of the Visionary Team envisioning achievement of Financial Goals of the business. The CFO supports the Management Team by providing appropriate and timely guidance in taking crucial decisions fully aligned with the Long Term Vision and Goals of the business. The CFO also plays a key role in designing appropriate Financial Controls to ensure the Financial Resources are effectively deployed to maximum returns leading to creation of wealth.

Small and Medium Companies in growth stage, who cannot afford to employ a full time CFO, will be immensely benefited by Outsourced CFO Services. SBS Global, a Bangalore based Outsourced Financial Accounting and Compliance Services firm, also provides Outsourced CFO Services through its team of expert Virtual CFO’s.

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