You may have previously heard about the financial resources of a companybut surely you still have doubts about what they are, how they work or how to get the most out of them so that your business prevails over time.
For this reason, throughout this article, we are going to explain to you in the simplest way possible what they are made of and, above all, the keys to manage financial resources Regardless of whether they are your own or someone else’s.
Clever? Here we go! 🚀
What are the financial resources of a company?
First thing’s first. When we talk about financial resources we refer to all those resources that provide a certain degree of liquidity. And what is liquidity? It is what allows your company to obtain cash to meet its financial obligations.
To make it easier for you to understand, we will develop the following example.
Imagine that you have a safe and inside it you keep a collector’s watch from the 19th century. That watch is a highly liquid asset. Why? Because you can sell it and turn it into cash anytime you need it. In other words, this is known as optimizing financial resources. Something that we will talk about in detail later.
But, Does every company need financial resources? In one way or another, yes, since these are the ones that allow you to achieve the strategic objectives in the short, medium and long term. Now these can be classified into two types of resources, own and others. Both with their corresponding features and benefits:
Own financial resources
This classification includes the assets of the company as such. Namely, the total amount of money you have at this precise moment. Here we take into account the money available in bank accounts, profits, cash, petty cash, the one generated by the sale of products or services and the one that comes to the company through partners or shareholders in exchange. of one or several shares of the company itself.
External financial resources
In this second category are those resources that become a debt with other companies. Therefore, suppliers, bank loans, private loans or securities issues are included here. The latter being the ones that focus on publicly offering the shares of the company a .
Why are financial resources so important?
Although we shared with you above that managing financial resources is the basis for meeting the objectives of a company, we also it becomes essential to hire services that the company itself cannot provide.
These types of services can include raw materials, general maintenance of the offices, cleaning of the property, selection of human talent, an accountant who keeps a record, technological equipment, among many other resources that are not strictly financial, but that are directly linked to the performance and evolution of a company.
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What is the optimization of financial resources?
In order for your company to achieve its strategic objectives, it needs to optimize its resources, but what does this really mean? The optimization of financial resources is nothing more and nothing less than good management of money to ensure that it increases without putting the life of the company at risk.
And for this, it is important to contemplate both the various actors and the different scenarios that surround your company.
Steps to optimize the financial resources of my company
Let’s assume that your financial resources are in a healthy state. In other words, your company is in good financial health because it does not need to ask for help or resort to external financing. If this were so, the next step would be to optimize these resources, but how to manage financial resources of a company to preserve, or increase, liquidity and profits?
Next, we share the steps to follow so that you fulfill this objective and achieve optimize financial resources successfully.
- Prepare a detailed budget
- Define all the objectives of your company
- Improve your cash cycle
- Review your collection processes
- Continuously analyze cash flow
- Review the results on a recurring basis
1. Prepare a detailed budget
Starting with this step will allow you to correctly manage both your income and your expenses. And what are you going to achieve with this? On the one hand, it will be possible for you to make better decisions, informed decisions. And, on the other, you will be able to integrate the habit of saving. Something that also favors your goal of achieving different goals in the short, medium or long term.
2. Define all the objectives of your company
To know when and what to invest in, it is essential that you define where you want to take your company. For this you require that it allows you to have clear objectives. And what benefits does the creation of such a strategy bring you? It prevents you from making unnecessary expenses and helps you to be realistic with each move you make.
3. Improve your cash cycle
Also known as the cash cycle. This cycle basically defines the average time that elapses between inventory being sold (on credit) plus the average time in which accounts receivable are converted into cash or liquidity. This entire process is measured in days and is part of the process of financial administration.
4. Review your collection processes
Assigning one or more people to your collection processes is an excellent decision. This will prevent mistakes in the billing process and will avoid delays in the days of payment by customers.
5. Continuously analyze cash flow
Both your processes and your operations depend on the cash flow available to your company. If you frequently analyze this aspect, You will be able to act quickly in any unforeseen situation.
6. Review the results on a recurring basis
Only when a review process is carried out is it possible to improve, correct or avoid any margin of error. In this analysis you must include four, which allow you to exhaustively visualize everything that happens within your company: balance sheet, income statement, cash flow statement and statements of changes in equity.
These are some of the keys to manage financial resources contemplating not only the current status, but also anticipating any deficit that may arise over time.
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Other tips to better manage your company’s financial resources
While the six points above will help you reach your financial goals, There are some other actions that can be useful to you when wondering how to manage a company’s financial resources. Here we share some additional tips for your company to increase its profitability and generate greater profits.
Incorporate technological innovation into your management
Acquiring software tailored to your business allows you not only to view all your financial information in real time or manage your financial resources, but also obtain a global vision of everything that is happening with your money. So that, in this way, you can make assertive decisions.
Train your work teams
It will be of little use for you to invest in innovation or technology if you do not get your entire team to know the tools well and to get the most out of them that your business requires. One of the pillars of resource optimization is ensure that both you and your work team are constantly in tune to face any scenario.
monitor the market
Keeping your eyes wide open to what your competition does, or fails to do, has more to do with acting in a timely manner than with copying. Monitoring what happens around your business allows you to keep it updated, current and ready for decisions consistent with its objectives, projections and strategic plans.
Monitor your suppliers
There is a commonly used saying that goes like this: long friendships clear accounts. Something that applies perfectly to the relationship with your .
These types of relationships, although they may be very well established, can change from one moment to another due to the national and even global situation. For this reason it is important that the back of your business is well protected through a clear, effective and constant communication between you and your supply channels.
Monitor your customers
How is the current relationship with your customers? They are happy? Do they trust your business as much as you think? They are a key piece to optimize financial resources in your company, so measuring their interaction with your products or services is key to safely increasing your liquidity.
Summary
To recap, one good financial management ensure the sustainable growth of your business. This, as a result of good planning, organization, and control of resources. Including cash, savings, loans, investments, among others. Do you mind if we quickly review point by point?
Does my company require financial resources?
Yessince it is the financial resources that allow your company to carry out its expansion and growth plans.
What are the two types of financial resources of a company?
The own resources, which include the total amount of money your company currently has. And the Foreign resourcesthese being the ones that become a debt with other companies or entities.
What exactly is optimization of financial resources?
The optimization of financial resources focuses on the good management of money to ensure that it increases without putting the life of a company at risk.
How can I optimize the financial resources of a company?
There are many actions that you can implement, but some of them are:
- Prepare a detailed budget;
- Define all the objectives of your company;
- Improve your cash cycle;
- Review your collection processes;
- Analyze cash flow;
- Review the results;
- Incorporate technological innovation into your management;
- Train your work teams;
- Monitor the market, your customers and suppliers.
As you can see, the financial resources of a company they become the main pillar for your business to acquire good practices while increasing your income and your position in the market.
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