Do you know how important it is to know what is the best way to control income and expenses? This is essential for your company’s health, ensuring a more sustainable performance. Having control over your establishment’s cash inflows and outflows is part of a more efficient and secure management. After all, according to data from a report made by the Brazilian Micro and Small Business Support Service (Sebrae) in 2016, for every four companies that open their doors, one of them ends its activities before completing two years of operation. There are a number of factors involved in this scenario, the main one being linked to inadequate management of the business, which involves everything from the unpreparedness of the partners to the difficulty in managing the company’s cash. For this reason, it is essential to implement the necessary tools so that the control of your establishment’s income and expenses is within the ideal range, ensuring that it can remain in full operation. Therefore, if you want to know more about how to better manage your company’s financial sector, making it grow and become a reference within your segment, read on in this article.
Understanding more about your business finances
Every company, whether it specializes in servomotor repair or a store selling decorative items, needs to know how its finances work. It is possible to divide the budget of a business into two main points: income and expenses.
The revenues correspond to the inflows of money in the establishment, coming from sales of products, investments, interest earned by investments, among others. Expenses, on the other hand, are expenses involving the location, both with maintenance, purchase of equipment or raw materials, and with payments of wages and fixed consumption bills e.g online store expenses. For a manufacturer of industrial tanks , as well as for companies from other different branches, it is essential to know what all the values are in and out of the business.
This is because, with this data in hand, it is possible to manage the establishment in a correct and assertive manner, making it possible to understand each financial transaction in the place. All of this makes a difference in the management of the business, so that all margins are adjusted and fit the company’s budget. This starts from planning, where each item involved in the manufacture of the product is broken down, so that it can be added to the total production value. In addition, expenses with labor and installation of the company should also be considered.
So, knowing all the manufacturing costs, it is necessary to include the profit value, which must make sense taking into account the segment, the market price of the item and the quality of the product. As important as knowing how to price your product, it is knowing what are the costs that an industrial boiler company has with its structure. After all, if the expenses are higher than the revenues, certainly the account will not close and, with that, the establishment will have its accounting shaken. Therefore, it is essential to know the inflows and outflows of your business finances, so that it can be managed without surprises, ensuring profitability and growth of the brand.
Tips for managing your income and expenses
Knowing that you need to manage the financial area of your business is the first step in controlling the situation. But, to be more effective in this task, some tips may be essential. Are they:
Periodicity and organization of finances;
Registration of entries and exits;
Use of management tools;
Price negotiation with suppliers;
Control of pending receipts;
Planning and containing extra expenses.
Periodicity and organization of finances;
In order for you to better understand and organize your finances, it is essential to have an estimated time for this monthly. This means that the managers of a company that supplies customized SP cardboard boxes , for example, need to know what to expect so that the cash flow is always on schedule. With this, it is possible to organize the establishment’s budget more appropriately, knowing which payments must be made and how much is available at the company’s cash register.
Record inputs and outputs
Each financial transaction that takes place in the company needs to be registered, so that, at the end of the period, it is possible to follow the positive and negative numbers. Thus, an SP tent rental establishment must register each new payment entry that has been made by its customer. Likewise, if she invests in the purchase of a canvas, for example, it is also necessary to create a corresponding note. With this, it is possible to have a very precise control of all the movements carried out in the company, yielding a more efficient control.
Use management tools
There are several ways to manage your business finances, ranging from paper and pen notes, spreadsheets and an ERP system for the chemical industry . It is possible to choose a software or order a totally customized one for your business, so that it meets all the demands of the establishment. When using a financial system, the annotations referring to the income and expenses of a company are made in an automated way, which may include new exits and even installments of acquisitions of the establishment. In addition, software that allows a more practical administration of the financial area still issues management reports, so that all the necessary information is accessible in the palm of your hand. Therefore, if your company does not yet have a management tool, it is important to look for one that can assist in the routine of the place.
Negotiate prices with suppliers
Just as important as knowing what your company’s expenses and revenues are, finding ways to improve revenue, making your business grow. Therefore, it is worth looking for alternatives that bring benefits to the establishment, making the financial outflow always less than the entry. A tip, in this case, is to negotiate raw material prices with your suppliers, gaining some advantages for the purchase of larger quantities. A metallic mezzanine company , for example, can obtain discounts and benefits whenever it orders a new quantity of material, so that it can offer good prices to its customers and increase the number of business services. With this attitude, both the customer, the company and the supplier can benefit, making the whole process more interesting.
Control pending receipts
It is of fundamental importance that the company receives all services performed that have an open payment. In this sense, the registration and control of each movement is essential so that the establishment does not suffer losses that could compromise its budget. Therefore, it is essential to include in your management tool each new business closed by the company, so that all the expected entries happen on the correct date and the establishment is always up to date. This type of control allows the establishment’s accounts not to be harmed, since each payment directly influences the company’s results. Therefore, with each registration properly done, the business is able to avoid high default rates, preventing other expenses from the site from also suffering payment delays, yielding interest and losses.
Plan to avoid extra expenses
With the help of financial planning, it is possible to avoid that extra expenses are generated for the business, compromising the company’s cash. If the establishment needs to invest in a fire detection and alarm system , it is possible to research and choose to hire a company that has a good price and offers ideal payment solutions for your business. This is essential because, normally, the purchase actions that involve equipment or machinery for the place must be done in a thoughtful and planned way, avoiding extra expenses for your business. Thus, the company’s cash will always have the predictability of costs that must be included in the establishment’s expenses, without compromising the available budget for the period.
In this way, it is possible to find good solutions and also choose investments that make sense for the company. In this scenario, it becomes easier to understand the importance of properly controlling the revenues and expenses of a business, so that the entire financial sector works without unforeseen circumstances and losses. The benefits obtained from a more regulated and complete management range from saving resources to increasing profits, directly influencing the company’s results. Therefore, it is essential that there is strict control of each exit, as well as each entry, ensuring an adequate cash flow for the location. This text was originally developed by the team at the Investment Guide blog , where you can find hundreds of informative content about different segments.