In managing a business, some factors play crucial roles in ensuring the business thrives and becomes prosperous.
Financial Management in a business involves organizing, planning, controlling, and directing the financial activities such as obtaining and utilization of funds of the business. It means applying general management principles to financial resources to ensure the business is profitable. The events of every aspect of the business have an impact on the organization’s overall financial performance and must be controlled by the business owner or whoever is in charge of running the business.
Part of a business that emphasis should be laid on to ensure profitability:
Accounting
As a business owner having a good knowledge of the financial status of the business is key to success. Without proper accounting, one might not be aware of profits or losses made, and this would in-turn wreck the organization.
Data on the financial standing of the business can help in determining the right course of action to move the business forward. Good financial records can be the difference between a right decision or a wrong decision as regards the business.
Profit Points of The Business
Every business needs profit to run smoothly or at least a constant source of finance. After getting a good knowledge of the financial status of a business, knowing how your organization makes a profit is the next focal point as regards the business. Which product or service does your organization provides that consistently yields good profit, and how can you improve on their quality to increase your business profit margin.
Managing Cash
The liquidity of a business could either be in-hand or at-bank; either way, operating the cash in every business is paramount. Cash flow management can either make or break the business; businesses with a narrow profit margin might be forced into borrowing to keep the organization afloat. Business expenses either on short term base or long-term basis should incorporate into the business financial plans.
Leveraging Assets
The typical assets in a business could be machinery for production, organization cars, even business building as the case may be. The financial standing of a business can be improved if the assets of the business are strategically coordinated to provide more revenue. For example, loans can be acquired to boost the business by using the business asset as collateral.
other valuable tips:
5 Tips to Getting a Better Grasp of Your Company’s Finances
Business Finance: Six Essentials You Need To Keep Better Track Of All Finances
Tax Management
Non-payment of taxes as at when due crumble a business, especially if the government finds out. Tax laws vary according to federal and state regulations. Appropriate tax planning can lead to reductions in loses, which might result from defaulting on tax payment.
Financial management is an important skill of every business, either small or big. Every decision made as regards the business has a financial implication on your organization, hence the need to pay heed when it comes to managing finances in every business.
Knowledge is essential to making the right choices; do not benefit alone, share this article with friends and family to ensure they benefit as well.
For further studies on how to manage a business read – Business management techniques.
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