It seems like an obvious factor for your business, but financial management is important for many different reasons. Regardless of whether you hire an accountant or manage finances yourself, you must make sure all finances are managed correctly.
Coleman & Co provide financial management for all businesses throughout Lisburn and the surrounding areas.
Features of Good Financial Management
It can be easy for your business to quickly fall when it comes to your financial performance. However, having good financial management can be the key to success, ensuring you are constantly evaluating finances. There are several features of good financial management that will help your business flourish. Just some of these features include:
- Completing Audit Trials
- Keeping Payments & Receivables Transparent
- Maintaining Data Integrity & Security
- Managing Statements & Balance Sheets
- Organising Prepaid Expenses
- Reducing Paperwork
- Tracking Liabilities
- Updating All Records
By successfully managing your finances and all aspects of your financial performance, this makes your business much easier to run. It is important to deal with all transactions your business records and make sure accounts are always updated. If you begin to fall behind, tracking your expenses, income and profit can become more difficult.
Failures of Financial Management
Poor financial management isn’t just susceptible at small businesses, as even some of the larger companies nationwide can quickly derail. There have been many examples in the past where poor financial management has led to business closure and administration. Just some of the biggest examples of poor financial management include:
- Northern Rock
- Toys ‘R’ Us
All these companies were at fault for poor financial management. Whether this is growing the business too fast or investing too much money, it ultimately led to their demise. Blockbuster famously had the opportunity to buy Netflix before both companies went their separate ways!
Organising & Planning Payments
The most common problem when having poor financial management is that you eventually run out of money. With financial management, you can organise and plan all your payments, ensuring you have a good understanding of when you will be lacking in funds and when budgeting needs to take place.
By creating a budget, you can begin to limit your spending, ensuring that even when revenue is not as high, you can still make a large profit. If you fail to manage your expenditure correctly, it will lead to a continuous overspend as you are not accounting for all expenses. As payments come out, it could quickly lead to a decline in financial performance and profits.
Failing To Save
Regardless of how large, small or successful your business is, you must plan to save money as much as possible. Whether this is for future growth or to cover the costs of any unexpected payments, saving funds for the future is essential to maintain your business’ success. If you do encounter payments that you have not planned for, having a saving pot to cover this will keep your business running smoothly.
If you manage your finances correctly, savings can be used for much more beneficial areas of your company. Whilst it is important to have this for emergencies, if you continue to save without any issues, you can grow your business and the services you offer, allowing you to make an even bigger profit.
Without financial management, you will struggle to save the correct amount of money which could hurt you in the long-term.
If you are struggling with financial management or would simply like advice, contact Coleman & Co. Our team of accountants will work closely with every client, improving financial performance with our services. For more information, get in touch with our team today. Call us now on 028 9266 3599 or fill in our contact form to make an enquiry.