Proper financial management is an essential part of any business, though it can also be incredibly difficult to get right. While small and medium sized enterprises (SMEs) may always be looking for the secret to financial management success, the truth is that isn’t actually a single secret that will make a difference.
Instead a variety of factors need to be taken into consideration, discussed and implemented into the business in order for healthy financial management practices to take root. Here we take a look at five different approaches that, when combined, should have a drastic impact on your business.
- Risk management
All business decisions involve some form of risk, so it’s important to remember that risk isn’t necessarily bad. However, having proper measures in place to monitor the risk a business exposes itself to and to prevent it from making poor financial decisions is absolutely essential. How this is implemented will vary from business to business, but it’s essential that risk management is discussed amongst managers in order to decide upon some safeguards for the business.
- Clever accounting
When we talk about clever accounting, it’s important to recognize that we don’t actually mean anything all that clever at all, but want to impress the importance of diligent, precise and well-kept accounts to businesses of any size. While this really should be common sense, it’s all too often the case that SMEs don’t keep proper accounts. With the amount of technology available to make the whole process easier, such as cloud accounting, professional accounting software and mobile apps from firms like Sage One, this shouldn’t really still be an issue.
- Have a clear structure in place
Many businesses suffer from not having a clear organizational structure in place to deal with questions of financial management. In all workplaces it should be clear as to who is responsible for what aspect of financial management and who employees need to speak to if they have concerns.
- Aims and objectives
It’s actually very difficult to know when things are going wrong if you don’t actually know what your targets are or what you’re aiming for. Consequently, it’s necessary to have a well-defined set of objectives and a clear path marked to reach them.
This will ensure that when a business begins to wander from the path, they are able to recognize their deviation and make changes.5. Understand the basics Finally, business managers need to ensure that they understand basic business practices and their relevance to competent financial management.
This Guardian article stresses the importance of getting the practical side of business management right and should be taken seriously by all those interested in financial management