Financial management is one of the most significant responsibilities of owners and business managers. They should think about the prospective consequences of their management decisions on profits, cash flow, and the financial condition of the company. The activities of each aspect of a business have an influence on the company’s financial performance and must be assessed and controlled by the business owner.
Billy Crafton says that most companies experience losses and negative cash flows during their startup period. Financial management is very important during this time. Managers should make sure that they have adequate cash on hand to pay employees and suppliers even though they have more money going out than coming in during the initial months of the business. This means the owner should make financial projections of these negative cash flows so he has some idea of how much capital will be required to fund the business until it becomes money-making.
As a business grows and matures, it will require more cash to finance its development. Planning and budgeting for these financial needs are crucial. Deciding whether to fund expansion internally or borrow from outside lenders is a decision made by financial managers. Financial management is finding the proper source of funds at the lowest cost, controlling the company’s cost of capital, and not allowing the balance sheet becomes too highly leveraged with debt with an unpleasant effect on its credit rating.
• A non-existent, deficient, financial plan is one of the most common reasons businesses fail they are caught off-guard by overestimating revenue or with a lack of cash flow. The planning procedure will highlight opportunities and risks, reveal essential choices to be made, help you understand your market better, and bring into focus changing weaknesses and strengths.
• If you want to invest in developing your business or want to be protected in the event of a downturn, you will need to be able to access new sources of finance. Without a financial plan in place, lenders are unlikely to view your business as feasible for financial assistance or a loan. A good plan will emphasize current requirements and forecast opportunities or future stresses.
• To get your books and get the best taxes arranged in the most advantageous manner then it is a lot easier getting an accountant that will be an expert in the field as the capital draws some of the world’s best brains to it. If you are looking for a business advisor, look for the most innovative advisors that will soon turn your financial plans into a booming business reality.
• Control your finances so you can stay on top of overall expenditure against sales targets, avoid bank charges, and invest in surpluses intelligently. The best tax tactics are only noticeable with a clear understanding of your finances. Getting yourself a good accountant and a business advisor, London is the place and fastest way to bring your accounts up to speed and find out areas where savings can be made.
It is clear that financial management is vital all through the life of your business and should be at the heart of any decisions you make. You will be able to get the most out of a financial plan with the help of an accountant and business advisor.
Billy Crafton 