Systems of Finance/Economy
A well designed financial system in a company provides the resources with which the company can operate, thus forwarding the goals and purposes of the owner of the company.
One of the major requirements of such a financial system is to create and maintain the solvency of the business. By smartly handling finances the prosperity and expansion of the company is ensured.
Financial stress, emergencies
Such emergency or stressful situations arise when the bills to be paid overcome gross revenues. This principle is easily understood, yet it can just as easily be neglected.
What can guarantee avoiding such situations?
Only when a business manager has full and detailed financial statements and records can he correctly execute financial planning.
This correctly done financial planning then can guarantee the continued solvency of the business and it promotes financial stability in general.
How can financial stability be increased?
An obvious answer is by producing more revenues. Yet countless examples show that businesses even with increased revenues have gone bankrupt nonetheless. Without an exception all of these companies violated the principle of keeping income higher than outgo.
When each and every income source, business segment or portfolio of a company individually produces more income than it incurs expenses (outgo) that company can be said to be financially stable. Fulfilling this requisite each and every fiscal year is good. Fulfilling it on a monthly basis is outstanding.
But when you see this requisite being valid for each and every week then you are looking at a brilliantly operating company with outstanding financial results.
How will your business finances be outstandingly stable?
By the time the above principle will prevail and you can make it happen not only on a weekly basis but broken down to individual activities as well, you will have achieved this kind of stability.
The following step in establishing a rock-solid financial system is to keep in mind during financial planning to always pay expenses in a way to generate even more income.
If your business pays a bill, any bill, that expense must cause in every case a return of at least the amount just paid out or more in income in the near future.
If you are able to look at your business from the perspective of how an old-fashioned banker would look at a company requesting a loan – which means only invest in businesses that will have a heavy return of the investment in the near future – then you will be in the best place in your own market. And you will have an outstandingly performing, stable company to boast with.
Following the business analysis we find and handle those points that primarily endanger the long-term financial stability of your business. Based on the above principles we form up a tailor-made financial system for your company. The introduction of workable financial planning will keep income over outgo plus increase the assets, wealth and general well-being of your company.