Running a well-established business may seem smooth and easy in the hands of experienced professionals, who, let’s face it, wouldn’t have come that far without a brilliant strategy in the first place. However, even the largest of corporations have their budget leaks and potential funding issues that need to be tackled. That said, even the best of CFOs can learn from new, emerging trends in the world of finance, and adjust their approach to maximize their success in the years to come.
If you are looking for ways to turn your finance department into a smooth, leak-free system, you can utilize the following tips to increase the efficiency and efficacy of your entire business operation. Let’s take a look at several crucial ways modern corporations can let their finances thrive.
Seek out the leaks
Before we move on to the ways you can discover and remove leaks from your current business strategies, you first need to be able to find them.
It’s important to remember that no extreme is a viable option for a company that intends to keep growing; as much as spending with no boundaries can be harmful, the same goes for sticking to a strict budget. When you stay true to the balance, the middle ground, you are bound to come across an occasional drain on your budget.
For larger corporations, some of the most commonly overlooked issues include your overpriced partnerships – it’s one thing to respect commitment and stay loyal, but a completely different one if there are vendors that offer the same service for half the price. The least you can do is negotiate a more affordable contract or start looking for new connections.
Then again, even your in-house decisions can turn into budget drains. For example, if the majority of your workforce can telecommute, you can save on equipment, rental space, not to mention utility bills, and mileage on the company vehicles. Imagine allocating that much money to better marketing or a new product line!
Diversify your payment options
Nowadays, everything is about flexibility and choices. We live in a world where customers like their payment options like they like their Starbucks menus: versatile and easy to mix and match.
Since running a business in the modern digital-first world means that you need to perform dozens of digital transactions every day, you should consider the safest, most reliable options for you as well as your customers and partners. Offering various payment options, such as credit cards and fee financing.
ACH payments are another secure method and once you understand how ACH payments are processed, you begin to realize the many perks of introducing such a seamless, automated system for your own finance department. This level of automation is particularly handy for recurring clients as well as partners with contracts that will last over the course of at least several months. When they authorize these recurring payments, you will also improve your cash flow, keep your relationships intact, and simplify the entire process by reducing your invoice filing system.
Source those outstanding debts
If you’ve been in business long enough, you already have a few of those unpaid invoices collecting dust. It’s capital waiting to be used by your business, and there are different ways you can at least attempt to collect on those debts without taking it to the authorities - this scenario being a last resort in the case of massive unpaid bills either by a partner or customer.
Go back to your contracts and check with your legal department if everything is as it should be in terms of collecting debt. Make sure that you have a backup plan, such as the contact of a reliable debt collection agency that can help you in case you cannot reach or reason with the person or company in question. After all, outstanding payments send a wrong message to others looking to do business with you – if they get the impression that you turn a blind eye to late payments, many might try to exploit your generosity.
Manage your cash flow
Corporations know that the key to improving and maintaining their business’s cash flow has little to do with dealing with it directly. In fact, the majority of smaller issues, roadblocks, and setbacks come from other areas of your business, and they can affect your cash flow to a great extent.
For example, perhaps a certain line of your products is underpriced and could produce better profit margins. Other products or services might need price drops or discounts to make them more appealing, or to incentivize early payments. Perhaps you are spending too much on equipment you could also lease, and while the final price may be higher, paying in smaller increments can give you more cash to work with on a daily basis.
Take a closer look at your marketing efforts. If you notice that you overspend on customer acquisition when you would benefit more from nurturing existing relationships while drastically cutting expenses, you can instantly help your cash flow by redirecting these stranded funds elsewhere in your company.
Ultimately, no corporation can afford to not take a closer look at their financial strategy and budget forecasts for the future. If your brand is built on innovation, the same should apply to your internal processes, and finance should be no different. Use these tips to refine your strategies, and watch your business grow.