Everything you need to know about business financial management: what is it based on? How to implement an effective control strategy? What software can help you?
The Wise account helps you to streamline certain processes related to financial management: it allows you to do large payments and works in sync with some software like Xero.
Learn more about the Wise account for business
Business financial management: what are we talking about?
Financial management refers to how a business manages its resources to achieve its objectives.
To put it simply, it’s about rationalizing the company’s financial flows to find the best balance between financial health and development.
There are two types of “financial flows”:
| Recipes | Costs |
|---|---|
How to establish an effective finance?
Financial management is based on 5 aspects:
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Costs & budgets
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Funding
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Taxes
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Investments
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Management control
Costs & budgets
Expenditure and budget management includes ensuring that the company’s resources are used rationally.
For this, we rely on:
With these indicators, it is possible to establish a forecast budget for the next year, but also to be able to adjust the company’s strategy according to this year’s results.
Funding
Are you looking for an investment? You have to convince your future creditors of a financing plan and a solid forecast budget. This will give them a clear view of the objectives and how the money will be used.
Once you have your credit, managing your expenses is essential to paying off your debts on time. Especially since investors can ask you for the right to check, or even decide, about the progress of your company.
Taxes
Tax management is twofold: tax payment and optimization.
Businesses are subject to the following taxes:
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VAT: must be declared monthly or quarterly, which requires daily monitoring. You need to make sure that you submit the returns on time, but also have the money needed for payments.
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PEEC: Employer participation in the acquisition effort
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CET: territorial economic contributions
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Paying taxes
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Social costs…
Depending on the amount of tax you pay, tax optimization can be an interesting solution to improve your profitability and your competitiveness on the market.
Investments
Sometimes investments are needed to accelerate the growth of the company: purchase of equipment, renovation of a building, opening of a new branch.
If you want to make the right decision at the right time, you need to have reliable indicators. Especially in terms of financial flows and credits to be paid back.
Management control
An annual financial review is necessary to assess the competitiveness of your business and set strategic goals.
Symptoms to watch for include:
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Commercial margin: difference between the selling price of a product or service and its purchase cost. The higher it is, the bigger the profit. A low margin can indicate problems related to production costs, selling prices or competition.
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Gross operating surplus: profit made before finance charges and taxes are deducted.
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Profit rate: it must be as low as possible with your operating strategy.
The more detailed the financial control, the more leverage you have to change your strategy.
Invest in business financial management software
And management software enabling you to automate and streamline a large number of processes inherent in your business operations.
Discover a selection of some of the most popular:
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SAP S/4HANA: a set of tools for business management. It also includes financial management, inventory management and human resource management. Works on Linux only.
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Oracle NetSuite: an integrated cloud platform including accounting, inventory management, CRM, and other features for businesses of all sizes.
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Quick Books: software that is popular with small businesses for financial management, invoicing or payment. Ability to sync your Wise account with this program.
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xero: Popular online accounting software for small and medium businesses. Assists with accounts, expense management, bank reconciliation. Wise is compatible with Xero.
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Sage Intact: Cloud-based financial management solution designed for growing businesses, with features such as accounting, revenue management, financial reporting.
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Zoho Books: Online accounting software that supports invoicing, expense tracking, inventory management, and other financial tools for small businesses.
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wave: Free software designed for freelancers and small businesses, offering invoicing, accounting, revenue and expense features.
How to manage SME invoices better?
Invoicing is the backbone of running a business. Here are some easy-to-implement strategies to improve their management.
Establish clear procedures
The creation, sending and tracking of invoices must be subject to a strict protocol followed by all relevant staff. This will reduce the processing time and the risk of errors.
Use management software or an online invoicing system
Financial management tools help simplify the invoicing process by automatically creating, sending and tracking invoices.
Some software also offers payment management and due date tracking features.
Issue invoices as soon as possible
Send invoices as soon as possible after providing services or delivering products. This reduces payment delays and shortens the time between providing the service (or product) and receiving payment.
Find payments
Regularly follow up on pending payments and send reminders to customers who are late.
This will reduce delays and improve the company’s cash flow.
Would you like to pay customers faster? You can :
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Provide flexible payment options: credit card, bank transfer, PayPal…
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Establish clear payment terms: mention the due date, late payment penalties and early payment terms in your invoice.
Automate reminder processes
Use tools to send automatic payment reminders to customers. You will save time and improve the efficiency of invoice management.
Wise Business Account: for financial management of your business
The Wise business account is ideal if you work with many colleagues around the world.
Thanks to it, you will be able to improve your company’s financial management:
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Bulk payments: Make transfers to multiple recipients at once. You save time on your account.
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Sync with Xero and Quickbooks: no more juggling between your account and the software. You will have a detailed view of your balances and transactions on the same screen.
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Interbank rate on changes: pay internationally at market rate. So you will have less bank charges, which will improve your competitiveness.
* Please check it out Terms of use and the goods available for your area, or visit Smart pricing and fees page for the latest pricing information.
This publication is provided for general information purposes and does not constitute legal, tax or professional advice from Wise Payments Limited, its subsidiaries and affiliates. It is not intended to replace the advice of a financial advisor or other qualified professional.
We make no representations, warranties or guarantees, whether expressed or implied, as to the accuracy, completeness or timeliness of the content of the publication.
2024-05-02 22:31:11
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