The issue of managing monies is very essential. Whether it is an individual or a corporate entity, money management is very has a role to play in personal or corporate growth. This writing will be more specific to a corporate entity, but there is no doubt that it will still be suitable for an individual as well. Money is the heart that keeps a business running. In order to make sure that your firm is still in business and moving in the direction of the goals of the establishment, you must examine your current practices of money management against the tips that will be provided below.
Tips for money management
- Create a budget for your cash flow. It is a proactive map or design which will enable you to effectively take care of your expenses and revenues. The cash flow budget is recommended to incorporate probable changes in your operating environment cum growth plans for your business as well.
- Be sensitive to some budget items. Some items which are capable of making a significant impact on the cash flow budget must be well considered. Such items may be overhead, price etc.
- It is germane to manage the credits you give to customers. It is recommended that you establish very important credit policies. The credit policies should make room for clients to pay as quickly as possible. Late charges and interest payment may become an integral part of revenue for your business as may be incorporated into the credit policies.
- Ensure that your payables are up-to-date as and when due. It is necessary to review your account payables. It must be well up-to-date. This will help you to know how your credit obligations are keeping up well.
- Cut your expenditures. One of the cardinal points of business growth is to increase profitability. This can be achieved in various ways – one of which is to reduce your expenses. As you reduce your expenses, you must ensure that the quality is not compromised. The expenses reduction should not be done at the expense of the quality standard or should keep in mind the quality standard of the firm if any. When the business needs more hands, you may need to hire contract staffs or part-time staffs instead of permanent staffs. In the same vein, a proper regular audit may show that some incompetence staffs may go on redundancy.
- Reinvest into your business the surplus cash flows. There must be a certain amount that is set aside for emergencies. This can be easily detected when you properly review the cash flow history. The surplus will enable the business to be expanded and growth will be experienced as well.
- Effectively make use of your credit facility. Many a time, a credit facility is necessary to explore business opportunities. It is good for a long term business operations. The credit facility can be used to take care of unforeseen business contingencies. If it is not well used, it has the capability of folding up or collapsing the business.