Finance management teams have to cope with a lot of tasks that require manual work and too much time.
As the company starts getting busy putting business plans into action, it is also vital to not forget to stay mindful of all the factors that can potentially affect the financial health of the organization.
With rising inflation, the war in Ukraine, remote work and the threat of recession looming in 2023, any financial team puts safeguarding the business finances against possible risks as a top priority.
In addition, the modern world also requires teams to look up at the horizon for new opportunities.
Effective financial management and robust finances allow companies to stay resilient amidst all adversities in the environment while also ensuring they are developing as a business.
But how can you protect your business against unwanted spending and achieve financial goals throughout this year? Let’s explore below:
Explore Best-Case And Worst-Case Scenarios
Even companies having well-laid-out financial plans can find themselves in an unexpected position due to market changes.
That is why it is vital to always know potential outcomes and stay proactive in this challenging market.
Scenario planning is designed to identify the best and worst possible outcomes that can happen, such as the necessary pivots that you are available to make within the budget and overall financial model.
Some organizations prefer to use a vast range of tools and software programs to assess and estimate different possible scenarios that can negatively and positively affect their finances.
This helps to create a stable financial model that allows one to make ends meet regardless of the outcome.
Ensure Your Cash Balance Adjusts To Changes
Any business can quickly go under if it doesn’t have sufficient cash to sustain its operations.
You, as a business owner or a financial manager, should always stay informed about cash flow levels and be able to monitor them.
The amount of cash depends on the company, but it usually should meet short-term needs and obligations alike.
So let’s imagine your comfortable cash balance is between $1500,000 to $200,000. This, then, should be your zero if all sales fall away.
It is vital to note that you should also have a cash reserve that will grow alongside the business growth.
Stay Alert About Financial Triggers
Do you know what typical signs are that your finances are at risk? Do you know what to look for in case of financial risks?
Or do you know what changes in the world and in the market can damage your finances? If not, you should identify the most common triggers for your organization and stay alert.
As a business owner or a financial manager, your key responsibility is to stay informed about what is happening in your environment.
This way, you will know whether to expand your company or conserve more funds for the future.
Data-driven decisions are essential in the case of finances. Use software tools like plaid vs stripe and get a business card so it will be easier for you to check spellings in convenient digital formats.
This will bring you vital insights and reduce unexpected situations by the end of the month while also observing how the company is performing and identifying triggers before they can damage your financial health.
Re-Assess The Past 6 Months And Learn From Them
Reports about previous months and years can be used as a valuable tool in estimating how your finances and the company’s inner resources were spent over the past few months. It is also the first step in allocating funds for the next quarter.
Reviewing your past 6 months doesn’t mean looking for mistakes and making assumptions, not just learning where things went wrong.
It is more about identifying steps you can make or specific actions to take to make sure you won’t make the same mistakes next quarter.
Think Ahead And Put Plans Into Place
In most cases, only a business leader can think ahead and make financial goals and plans.
That is because the CEO and CTO know the company best and can properly estimate spending based on different factors.
Instead of being reactive and starting to take action, it is best to explore the market daily to learn from competitors, check market trends and be able to make continuous adjustments as trends and predictions change.
Start With The Financial Year In Mind
Do you check the financial results of the previous year? If yes, does the previous year’s performance satisfy you? Does it fit into the overall goals of your business? How can you help your company to reach the planned goals?
The easiest way to do that is by aligning your short-term trajectory with your longer-term one, so you will be able to create more relevant financial plans for the next year.
Another effective strategy is also looking for new incentives, grants and policies that can positively affect your tax planning, cash budget and other business aspects.
After all, the second quarter of 2023 can be a good start to finish next year financially stable.
Benefit From A Hybrid Team Model
Are you looking for more expertise in a certain field? Maybe you need better business reporting or improved business data accuracy?
Or do you not have enough time to recruit and train new finance management teams?
If you are still trying to find new teams or employees and invest time in them but don’t see any valuable results, consider a hybrid team model.
The market makes it easier for companies to hire new employees or delegate some processes through team augmentation or outsourcing. In fact, statistics show that about 41% of companies outsource services.
Staff augmentation means you hire employees from another organization who join your team on a contract basis for specific tasks.
The biggest benefit is cost-effectiveness since you don’t need to pay for recruitment and training while also reducing costs associated with full-time employees.
Ella Marcotte
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