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Financial management best practices are essential finance functions that the Finance team uses in order to secure sustainability and success of a business. The role of a Finance Manager primarily consists of internal and external financial reporting, managing a company’s assets, taking charge of cash management, investing in digital technology to help a business to work faster and smarter etc.
These are important day-to-day tasks but in order to be one of today’s most successful Finance Managers, they need to think beyond the usual compliance and financial operations to gain valuable insights by capitalising on these practices in financial management.
The purpose of this blog is to highlight a few key points in financial management best practices they use to achieve sustainability and success. But having said that, the circumstances of your business are unique, so wise judgment is required in selecting which points below would work the best for you.
First and foremost, make your task of managing the finances easier by taking advantage of digital technology. The CFOs and Finance Managers today raise their stakes by investing in digital technology for two reasons – manage complexity and drive productivity.
These are great to the present finance leaders because they create a clearer visual picture to help improve business performance and accelerate decision-making in shorter turnaround time which is much needed in today’s volatile business environment.
To put these foundations in place, you will need to invest in technology that not only has a robust, integrated technology infrastructure but also gives you the highest accuracy, availability, and consistency of data at all times.
Big or small, startup or multinational corporation (MNC), profit or nonprofit, efficient finance systems must be integrated throughout the company.
This is best understood as integrating the most important functions in the business (such as commercial, operations and manufacturing etc) to provide more accurate insights in managing the finances. If this is done correctly, all your internal departments will be working on the same platform and seeing the same ‘single source of truth’ as the only data available.
Instead of having to “integrate” disparate systems and waiting for days or even weeks for various departments to be on the same page, everyone from accountants to operators can do their work with access to the same financial data.
This helps to open up dialogue between departments and it fosters a better flow of data between different areas of the business. Every conversation, every quote, every request will be accessible from one place.
Not only does this empower staff to provide immediate, high-quality support, but it also allows financial leaders to gain more accurate and valuable insights on the company’s business performance, leading to better decisions.
As a financial leader, you need to keep your eyes focused on results and not efficiency. CEOs usually want “more for less” from their finance leaders. Rather than focus on the business operational costs, you should master the art of developing new revenue streams, constantly look for ways to turn products into services and services into products, or know what sells and what delivers the highest margin – and why customers turn to your goods and services.
This shift in focus will help you seize the opportunity at the right time to expand business and build recurring revenue for your company. Many CFOs do not do this, and that is why the company’s business performance goes down unexpectedly.
Therefore, make sure you move in the right direction and capitalise on your best selling products and/ or services. If necessary, you can use them as case studies to replicate the same success for other products and/ or services throughout the business.
In summary, the best practices in financial management are largely executed and directed by the CFO top down. This helps the whole company to work faster and smarter, driving great business performance and continued success.