If you're not a financial manager, then perhaps you leave the ins and outs of finance to the accounts department. That's all well and good, but you can save you and your business money if you recognise how to better manage your businesses' finances.
If you're a non-financial manager, you may think that the improvement of finance is little to do with you - and best left to the accountants. That's not strictly true, because finance has a domino affect on every part of the business, including your salary. For professional training, please take a look at our
finance for non finance managers courses.
For example, if a business is badly managed from a financial point of view, then salaries and bonuses will be less, especially if you participate in any kind of profit share. Keeping costs down is essential to any business, and frees up more money to inject into more exciting projects and extra staff.
If you're a small company and not a public one that has floated on the stock exchange, you're probably asking yourself how you can rate your company performance, since share indexes seem to be a regular way of measuring that. It's actually easier to assess the financial performance of a smaller company than it is a larger one, since the layers of red tape and administration are less, and therefore there are fewer levels of management for money to escape or not be accounted for properly.
So how can you improve your financial performance if you're not involved directly in finance? Here are a couple of examples. If you're a project manager - there are ways that you can better manage the budget you're given.
For example, are you using a certain contractor or supplier out of habit , rather than looking at them from a cost and competitive point of view? Was one company who used to be the best value now too expensive in a changing marketplace? Are you paying freelancers too much, or letting them have benefits that aren't now the norm in that particular field?
Another example is if you manage a team of people who have the ability to spend money on the business' behalf. This is pretty common if you consider every single expenditure, from stationery to photocopying.
You can better manage your business finances by first controlling who can actually spend the money, and setting procurement limits. Even if someone can only spend fifty pounds a day, that could add up to a staggering thirteen thousand pounds over a year - the equivalent of paying the salary of an office junior!
Stopping what businesses call 'leakage' is also key to better financial management. As in the example above, you have to prevent areas where spend is uncontrolled and not limited. Petty cash is a prime example of something that is not easily kept track of and can easily go astray and not be backed up by receipts - which brings us onto the other side of accounting - receipts are king and are also the Inland Revenue's way of seeing how expenditure left the business. Lose them at your peril!
Finally, reducing spend and having better expenditure records are not the only ways to have a better performing business. Saving money in the right places rather than looking at how you spend it can also be effective. For example, it may go against logic to overbuy on a certain product, but does this mean that you could save money by getting a larger volume for cheaper?
Also, saving money starts at grassroots, staff level. If you show yourself as a manager who is cost-effective and doesn't waste money, then others will follow: from every part of finance, from expenses to invoicing.
