Finance Management: Balance the Books to Keep Your Head Above Water
Finance management has become important again – as if it was ever unimportant! The past few years have been difficult times, and just when we all believed things were getting better, it is all starting over again. Sure, we should all keep an eye on what we spend, but people have been feeling more secure lately. Now with the American Dollar disintegrating and affecting world currencies that were already generally weakening, what can we do to balance the books and keep our heads above water?
Basically, we have to do what we should always be doing: spend less than we make. Whether you are at the head of a large corporation, are a manager, are running your own small business or are an individual trying to run your home, if you spend more than you make then the ultimate result is disaster. Effective finance management is essential. You must balance the books so you do not spend too much.
Hiring Help
If you are running a business and are having trouble looking after your finances, then get help. You don’t have to employ somebody full time just yet – but hire a consultant to help you. Maybe a part time accountant or bookkeeper will be able to keep you on the right track. You must manage your finances, whether your company is multinational or just a one-person business. The same is true if you are a family – you will also suffer if you spend more than you earn.
Essential Spending
Finance management is more than just being able to balance the books, but is also about spending where it is most effective. Essential spending must be targeted and you must leave what you can do without. In order to achieve this, you must have an accounting system that enables you to control how you receive and pay out money. Not only control, but analyze and improve, and help you to maintain your monthly budget.
Budgeting
A monthly budget is essential in finance management, and a great way to keep track of your spending. First, you must target unnecessary expenditure, and you should start with the office – not because the office is the least important part of your business, because all parts are important, but because that is where you have most latitude in reducing costs.
Savings
Look for bulk discounts on office supplies that will save you money over the year. Use your initial savings to upgrade to a computerized accountancy system that will ultimately save you a great deal of money, and will help you balance the books by recording and tracking income and expenditure. A good finance management system can be worth its weight in gold to a small or medium business that cannot afford an entire financial and accounting department.
Similar considerations apply to you as an individual. Finance management involves checking your income against essential expenditure and then knowing exactly what is left for non-essentials. It is as important to balance the books in your household as it is in your business. Then both can survive any crisis thrown at it if you spend less than you make.
Muhammad Aqib