The Biggest Mistakes in Financial Management
Doing the financial management of your company is something of utmost importance. If you have already made your financial controls, then you are already one step ahead. But still, there are pitfalls in financial management.
And so we will show five common mistakes in financial management.
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Failure to maintain discipline in financial controls
This can be classified as the most common among entrepreneurs. In the beginning, many control, but because they have the scarce time and because they are worried about the company’s operational activities, they end up not keeping the controls regularly.
And this causes the accumulation of accounts, downsizing of worksheets and budgets are ignored. They may even be unable to visualize the financial health of companies.
To solve this, separate a portion of your time to take care of these managerial aspects. Over time, you will get into the rhythm and your most important numbers will always be at hand.
Do not control cash flow
Controlling goes much further than tracking the bank statement and updating spreadsheets. You need to check what has already happened, but you also need to use Cash Flow to plan the future.
You have to know the expenses that are still going to happen. And it is crucial to register them to have control and not forget to pay.
Read also: 5 steps to get out of debt
Ignore hidden costs and small expenses
Entrepreneurs, even with account planning, are still surprised when they need money to heal some hidden expenses. Obviously, not everything is easy to predict, but some are predictable to stay tuned.
Keep in mind to make a monthly reservation for the 13th and the holidays of your employees and employees. Also make a financial reserve for other hidden expenses, such as, for example, labor terminations.
Also pay attention to small expenses. Generally, small amounts are ignored, but they can compromise the financial health of the company throughout the year.
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Sell products and services for the wrong price
It has become common for entrepreneurs to calculate prices in comparison to competitors’ values. Or without correctly considering all the costs.
Knowing the costs of the products and services is the first step to knowing if you are going in the right direction. Thus, you can take action to improve productivity, find new suppliers, or revise the sales price.
And the way you calculate these costs changes as your business grows.
Failure to measure company performance correctly
Registering all expenses and earnings is not enough if you do not analyze the information. Know that an efficient management should consider actions of control, planning and analysis of the financial activities of the company.
Many entrepreneurs do the profit calculation just by considering the difference between revenue and expenses.