An important part of planning and managing finances as a business should be in understanding how the financial situation that the business is in can be improved.
The challenges faced by many in the COVID-19 economic climate is something that should be addressed in future financial planning during this particular period by recovering businesses.
Understanding and undertaking regular reviews of the future financial positions of the business can assist you in clarifying whether or not the business can meet its strategic direction.
A business can improve their financial performance by planning how to use their finances appropriately. This is a vital aspect of financial management practice for businesses.
Financial management is utilised by many businesses to ensure that their business:
• Makes effective use of all available resources
• Fulfills stakeholder commitments
• Gains competitive advantages
• Prepares for long-term financial stability
Financial management should become a key element of the processes within the business and be included in all ongoing business plans and strategies.
Good Practices for Financial Planning
As a continuous process, businesses should consider that their approach to financial planning includes:
• A clear business plan to project where the business sees itself in the future, with key goals.
• Monitoring financial positions and progress of the business to ensure that targets are being met.
• Ensuring that customers pay on time with clear and understandable terms and conditions regarding payment.
• Reducing outstanding debts and costs that could impact on business profits and cash flow.
• Regular comparisons of budgets against actual results from the business.
• Tackling problems as they arise with the help of financial professionals and advice as soon as possible.
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For more business financial and strategic ideas speak with your LT accountant and business advisor.