Lead By Example With Your Company Finances

How to best control your company finance is often a hot topic of discussion, however there are many simple, yet effective ways of managing your cash that often go unnoticed. I will detail what I feel are the most important tips, to help you show leadership, by effectively managing your company finances.

Credit Cards

You can lead by example by using a business credit card. Business credit cards help build trust in a company by allowing your employees to use your credit card when purchasing supplies. The one problem that may arise here is if you are worried that an employee may misuse your card. Many business credit card providers appreciate this fact and they offer insurance that covers you against any exploitation of company finances.

Business credit cards also open doors to many supplier and purchase discounts, meaning they could help you to save a lot of money.  Using your business credit card helps build your business credit profile (different from your personal credit score) which in turn helps to build your company reputation and credibility.

Successful Planning – Monitoring Finances

Effective management of your company finances comes first from successful planning, which in turn leads to successful execution. You should always monitor your company finances to ensure you have an idea of what your income and expenditure should be for a given time. This way you are always aware of any changes in your finances, and for whatever the reason for the change you can then act on it.

If when monitoring your finances you realise you have spent too much in a given time period, then ask yourself why and come up with a solution. If you are finding this process hard, try and identify what the exact problem is and brainstorm a list of possible ideas that you feel may put an end to the problem.

If when monitoring your cash-flow you realise you have made more money than you expected to make, then that’s great; you can now identify why and reap the rewards, you should always try to build on the positives!

Budgeting

Your company should always have a budget, if you haven’t got one, then set one up. Work out your budget yearly (taking into account any dates where you will need to spend more than others) and divide by 12 to give you a monthly figure.

It is important when detailing your budget to be thorough and honest while noting down any expenditure you have. With regards to income, you can set up a forecast of what you feel your company will make in the next 12 months. Then divide this figure by 12 to give you a monthly average. Your forecast enables you to predict what you aim for your company to achieve based on previous years figures. You can then deduct your expenditure from your income and work out how much you have left for flexible cash.

You can then decide what you would like to do with the flexible amount of cash you have left. You could decide to keep all of the cash for use if and when you need it. Or you can decide to reinvest a portion of the money back into the company for any changes you need to make.

If when working out your budget you realise that you may struggle for the year ahead, then take action now. Identify where you can save money, whether it be through your utilities or supplies and save as much as you can to get your forecast looking healthy again.

Showing leadership with regards to your company finances helps build trust in the workplace, which makes for a better working relationship with your employees.

Article written by Andreas Nicolaides – a company finance expert for UK based MoneySupermarket.com.