A business entity has to go through so many different functions and decisions as a part of its daily operations. One of the most important of them has to do with finances, particularly financial planning. As its name implies, this process refers to the planning, controlling, and organizing your company’s financial resources. The overall goal should be for your business to achieve stability and all the other business objectives you’ve outlined, periodically.
So, what does financial planning entail? It’s a must to be able to make effective use of all the resources your organization has so as to have little to no waste. The more stable your financial figures are, the higher the chances you are of surviving the economic uncertainties of the market – giving you a competitive advantage over other businesses within the same industry.
Good corporate financial planning is key to keeping your enterprise’s finances in order. And, that begins with failproof tips like these below.
Get Advice from a Professional
The benefits that a professional can bring to your business can’t be emphasized enough. Financial experts exist, and that’s definitely for a very good reason. They’re well-versed in helping different types of businesses with their financial woes. Strong corporate financial planning starts with getting advice from a professional if you do not have the internal resources.
So, if you haven’t already, get hold of an accountant or a financial expert whom you can hire on retainer for your business. At any time you need it, you’ve got them to run to and talk to for professional advice.
For example, if your concern relates to finding other ways to improve your cash flow, then bring in a professional. Or, if there are any other updates with funding and other finance-related matters, they can also keep you in the loop about those.
Separate Your Business and Personal Goals
This second tip applies if you’re reading this and you’re the owner of the business, too. You may have both business and personal goals and that’s great. Remember, however, that the two shouldn’t interlock with each other. Rather, for better corporate financial planning, separate your business goals from your personal ones.
This step is very important as, in the pursuit of improving your corporate financial planning, somewhere along the lines, you may have to sacrifice a personal goal to give way to your corporate goal. For instance, this year, you want to add new stocks to your inventory. But, with your personal life, a baby is on its way and you also want to invest in health insurance for that child. So, which takes priority?
Being objective about both your business and personal goals can help you keep track of your progress – in either of them. Start by goal setting and creating visions for both. And, if you’ve still been keeping one account for both personal and business purposes, it’s a good idea too now to open a separate account for both. It is best that you do not mix personal and business interests together.
Review Your Business Plan
Now that you know what your corporate goals are, it’s time to review your business plan. Remember that your business plan is set into motion everything there is to set about your business. Review your business plan to see whether or not your short-term financial goals have been met. Are you satisfied with your objectives so far? Or, is there a need to revise your business plan?
Moreover, your business plan will contain pertinent information such as how you will finance your business and all other activities. How much money have you made and how much more do you need to make to reach your periodic targets? Where will that come from?
All those information is necessary for good corporate financial planning. And, it’s through reviewing your business plan that you’ll also be able to answer those queries.
Recover Outstanding Debt
Do you have a high number of accounts receivable at the moment? Start by recovering as much of that outstanding debt as you can. Chase any delayed payments. Send out early reminders for outstanding debts that are about to fall due. If you’re having a hard time enforcing those payments, then take in the services of good debt collection agencies.
Moving forward, once you’ve recovered those unfulfilled debts, it may be a good signal for you also to revise your sale agreements. Be very specific about your terms and conditions, like the following:
- The percentage of interest you’ll charge on overdue payments; and
- The maximum grace period a client will have to pay the debts.
Tips for Strong Corporate Financial Planning – Summary
Corporate financial planning is about looking ahead into the future. It’s the key to being proactive with your business processes and expenses, with proper projections and forecasts of your income.
The main premise of financial planning is about having that sort of early warning system, so you can effectively plan for dips in cash flow and other economic uncertainties. When applied, the tips above may just strengthen and improve your corporate financial plans.