Dynamic, fast-growing organizations must develop financial management solutions that can quickly adapt to their changing business needs while helping them reduce costs, make smarter decisions, and continuously innovate. Financial success for a business consists of maintaining a strong cash position, building a healthy balance sheet and sustaining profits. However, these things don't just happen. They come as a result of practicing financial discipline.
Making the best use of your finances should be a key element in business planning and assessing new opportunities. With limited resources, you may need to pass up promising opportunities if pursuing them would mean starving your core business of essential funding. In today's market, it's tough to turn a profit even when you do things right. Here are five keys to stay ahead of financial challenges:
Monitoring Key Financial Management Ratios
In and of themselves the raw numbers on your balance sheet, income statement and cash flow statement have limited value. Of far more value are ratios that can be extracted from these documents. The secret to effective financial management lies in knowing which ratios to track and what they tell you about the state of your business.
Other Key Indicators to Monitor
While it is critically important to monitor a core set of financial key indicators, there are a number of "non-financial" indicators that can have a significant impact on your company's financial performance: customers, market, and sales.
Managing Cash Flow
We've all heard the saying "cash is king" and for small and medium size businesses who are growing, this is definitely the case. Cash flow is of vital importance to the health of a business.
A small to medium size business must constantly adjust to a changing market. In order to do so, it needs to take a forward-looking approach when it comes to allocating financial resources. Relying on data that only shows past performance only gives you half the story.
While forecasting is not rocket science, it will take you some time to get your predictions right. What is important is to get your figure as accurate as possible. When you are working on your forecast you will need to have the right information at hand.
The Right Tools
ERP financial management software can replace slow and cumbersome manual processes and integrate with familiar applications such as Excel. This leads to faster access to critical information and drives efficient operations, intuitive business decisions, and potential for profitable growth.
While there are many challenges businesses must overcome as they grow, maximizing their financial assets is at the top of the list. Download our whitepaper,
by SBS Group