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Financial management hacks for SME growth

Article provided by EasyBiz

“The financial management decisions of SMEs have a direct impact on the efficiency, processes and resource management of a business”, says Gary Epstein, MD at EasyBiz Technologies.

The financial management decisions of small- to medium-sized enterprises (SMEs) have a direct impact on the efficiency, processes and resource management of a business. This holds true regardless of whether they take on mundane cash-flow tasks themselves, hire high-priced professional financial managers or opt to utilise online software tools.

“The financial management approach chosen can also mean the difference between an SME achieving sustainable business growth, or not.”

This is according to Gary Epstein, Managing Director at EasyBiz Technologies, who adds that SME owners can optimise future growth opportunities by ensuring that they have their books in order all year round and have an accurate idea of their company’s expenses, budgets and projections at any given time.

Epstein shares his top three suggestions for SMEs to encourage business growth through better financial management decisions.

1. Be realistic with your options

When assessing how best to manage your company’s finances, it is crucial to look at the funds available to allocate to the task, as well as how much time existing team members could realistically spend on day-to-day financial responsibilities like tracking value-added tax (VAT), invoicing and reporting.

So, for a start-up with a core team of less than five, it may not be realistic for the team member managing sales and operations to also tackle financial management. Adding the expense of a full-time financial manager may also not be an option due to a limited staffing budget. In this case, affordable online software would likely be the most suitable, covering all the bases of accounting, budgeting and analysis while not adding financial strain which may hinder growth. On the other hand, for a large multinational organisation, a dedicated financial department would be completely viable and somewhat essential for growth.

2. Plan, review and adapt

It is important to remember that businesses go through various life cycle stages. While the majority of start-ups have to endure a period of negative cash-flow in the early stages, as a business becomes better established, the financial management process needs to evolve.

With this in mind, SMEs need to set reasonable goals and be flexible to adjust these as the business matures. While the initial goal might have been to relocate to a bigger office in three years, for example, profits may be better invested elsewhere when the time comes. Keeping a close eye on cash-flow patterns and forecasts play a major role in effectively reviewing organisational objectives and budget requirements or shortfalls.

Planning and budgeting for changing financial and operational needs which promote growth, like buying more stock or hiring more employees, also becomes more challenging if a SME does not have the necessary resources or tools in place.

3. Invest in innovative software solutions

Leading business software developers offer online and desktop tools that help businesses of all sizes manage their finances and set the foundation for business growth.

In addition to delivering on convenience, accuracy and efficiency, online accounting, budgeting, payroll and invoicing solutions are an accessible and cost-effective alternative for small businesses working with tighter budgets.

When it comes to accounting software, select a package which addresses the current needs of your business. As your business grows, you will be able to invest in more comprehensive options. The basic tasks which should be included are invoicing, expense tracking and managing tax requirements.

There are also business budgeting and payroll software tools on the market which, for a low monthly cost, simplify time-consuming tasks. This gives SME owners more time to focus on other tasks that will help grow their business.

“With successful and efficient financial management being a key contributor to sustainable business growth, it’s lucky for SMEs that it’s never too late to take control of your finances and gain a deeper understanding of your business, where it has grown from and where it has the potential to go,” Epstein concludes.

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