Finance is the bloodstream of every organization. Every decision a company makes is based on its ability to bear monetary risks. CFOs may advise the company’s management to invest in product development ideas or a new venture if the business’s bottom line is heading in the upward direction. Contrarily, they may suggest cost-cutting measures to protect the finances.
In a nutshell, regardless of the organization’s plan, the CFO is always stuck in the dilemma of fulfilling financial demands without straining the available resources.
Believe it or not, without adequate knowledge, it’s way more complex than it may sound.
Though you need not worry, as we’ve got you covered, below are the five money management tips you can try to improve the financial planning process.
- Think Strategically
Generally, when CFOs have to save finances, they presume cost-cutting as a practical approach. For instance, minimizing expensive company dinners, reducing administrative and operational costs, and using economic means of conferences.
Certainly, these ideas are effective; however, only for the short-term. If these measures become a pattern, they’ll negatively influence the company’s environment.
Therefore, with the beginning of a new quarter, CFOs need to pen down innovative methods to lower the overheads and save costs. They must wonder, “Is there a different approach to streamlining the recurring complications?” If yes, implement the same as quickly as possible.
- Uncover The Hidden Cost
Hidden costs are an integral part of a company’s operations. These individual costs are often overlooked, from availing necessary licenses to supporting the remote IT team. Yet, collectively these overheads can burden a hole in the financial statement.
As a CFO, it’s your responsibility to discover these miscellaneous expenses and eliminate them as much as possible.
For instance, if your IT team is working remotely, troubleshooting frequent complaints on an everyday basis will lead to unnecessary expenses. You can get comprehensive IT support for your remote IT team to overcome this issue. This support team can lower the expense by 50% while ensuring safety across the network.
In addition, managed IT service will boost employee productivity, provide on-site support, reduce downtime and improve auditing. As a result, the company will generate better revenue, covering the overheads.
In simple terms, you need to leverage technological advancements to your favor. Deploy the latest IT to identify vulnerabilities, get real-time support, and manage the projects.
- Redefine The Finance Goals
With the growth of the business, it’s natural for corporate expenses to grow. Therefore, CFOs need to redefine the financial goals to align with the corporate changes. There is a need to expand the budget for different departments and discover the unnecessary expenses and areas for improvement.
If it seems necessary, the changes in company policies related to leave, working hours, or overtime can be improved significantly.
Note: Defining and implementing the new financial goals is easier said than done. Therefore, you have to make efforts to ensure that employees understand the business viewpoint. It will make the transition as seamless as possible.
- Teach Trade-Off To The Employees
Though trade-off is the basic concept, many employees are unaware of it, especially the new recruits. In a literal sense, a trade-off is getting something done in exchange for something. To facilitate this, setting up employee criteria would be a wise decision.
This criterion should define what employees should prioritize when spending money and when they should scale down. Doing so will provide authority to the CFO to say no to the overheads irrelevant to the department or for business growth.
In fact, setting up non-financial criteria should also be incorporated into the plan. It will provide clear guidelines for everyone.
- Forecast Risks
Last but not least, the CFO needs to forecast the risks before implementing any changes or creating a new plan. They need to access the company’s financial future to navigate to the lowest end. For this purpose, they need to conduct a competitive analysis, leverage IT and diagnose any possible issues with supply chain, competency, and personnel problems.
Of course, this is not going to be an easy task. Therefore, creating a credible team to rely on for cost-effective analysis is recommended. After all, it would be best rather than to get caught up by surprise.
The Bottom Line
In a survey, 90% CFOs accepted that they often focus on meeting all the financial support demands made by their team. However, it is like casting a wide net, hoping to catch a big fish. More often than never, the end result of this situation is a shortage of funds.
Remember that “Money begets Money.”
To combat the loss and prevent these circumstances in the future, you should consider the tips stated above. It’ll assist you in fulfilling your responsibilities while lowering the pressure.
