Good financial planning ensures that the company has the resources it needs to operate and grow. It is therefore essential to develop a strategy that allows the company to optimize its solvency and to have the financing it needs for its commercial and economic operations.
Different factors are involved in the plan, from cash control to the company’s financing. The objective of financial planning is to always have the resources to keep the company in operation and, to this end, it is necessary to make realistic forecasts that are adjusted to the company’s reality.
1. Preparation of cash flow statements
The experts recommend having two cash flow statements, one reflecting sales and the other reflecting collections, since the company starts to function well when it receives the money from its sales. The difference in timing is one of the issues that can impede the smooth running of a start-up company.
To optimize this type of process, entrepreneurs have tools such as a free invoicing program from which to manage their economic operations. Thus, with a correct management, situations of asphyxia very common in companies that have arranged their resources for the start-up and are in difficulties when they need financing for the commercialization are avoided. With good financial planning, the company’s cost control is optimized.
2. Cost analysis
It is very important to know in detail the real costs that a company has. Many companies have problems in this regard because they do not measure or quantify correctly the time required for a particular job. Through an invoicing software, the preparation of budgets that include the real costs of a given job is streamlined and optimized, especially when it refers to a service and not to the sale of a product.
3. Increasing financial needs
The experts advise to be foresighted in the financial needs and to raise them by 15 % to the initial estimate that is realized. The objective is to have a cushion that allows the company to face unforeseen events. It is more economical to increase the initial financing to cover possible deviations. In the absence of these drawbacks, the company will always have a larger cash balance.
4. Avoiding cost overruns
If you invest in R&D, for example, you must launch the version on the market within the stipulated time so as not to incur cost overruns that were not initially planned. In this way, you get a short-term return on your R&D investment.
5. Collecting from customers
The management of collections is fundamental in a company. By opting for a policy of total or partial advance payments, the company will improve its economic situation, since it will not be obliged to finance its own customers and the risk of cash mismatches is minimized.