7 Tips For Effective Financial Management

In some organisations, managers and leaders fall into the trap of believing that financial management is something that the accounts team are fully responsible for. While there will be areas like cash management, payroll, paying suppliers and collecting payments from customers that are likely to be handled by the accounts team, financial management falls into the remit of all managers and leaders. Mangers often have concerns about this area, often believing that it is difficult and complex. The truth is that if you are an expert in your area of the business, you can excel in financial management. So what are my key tips?

Tip 1: Be actively involved in setting a budget

Most businesses now devolve budget responsibility as much as they possibly can. As a result, managers have a chance to be actively involved in determining things like:

o Sales volumes

o Temporary staffing cover for vacancies

o Staffing levels to deliver the sales

o Buying preferences in terms of products that will be used in delivering agreed volumes

o Investment in new equipment or facilities

Don’t miss out on your chance to determine your budget.

Tip 2: Be clear on your assumptions

A budget is a plan for the future based on the best evidence you have at the time you prepare it. You will have to make assumptions about things like sales growth, staff turnover, sickness, price inflation, etc. Make sure that when presenting your budgets the assumptions are clearly stated.

Tip 3: Work with your accountant

Your accountant who works with you in the business is essentially your personal business advisor. Use your accountant in this way and you will reap numerous benefits. Your accountant gets a better understanding of your area of the business and what the key drivers of revenues and costs are, which will be immensely helpful when it comes to reviewing performance throughout the year.
In addition, your accountant can model results for you based on different assumptions and help you to get a much clearer picture of the risks that might need to be managed.

Tip 4: Share the budget with your team

As a manager and leader, your success depends on the results of the team. Take the time to share your budget with your team, including the key assumptions on which it is based. If the team know what they are aiming for in terms of financial results, they will look to do the right things operationally to get the best result.

Tip 5: Take responsibility

When the going gets tough it is so easy to start to look elsewhere for excuses. If you have been involved in setting a budget which you have signed up to, focus your energies on getting results rather than the injustice of the current situation.

Tip 6: Monitor performance and take action

Make sure that you have a process in place to carefully monitor your actual performance against the budget. If things are going well see if there is more you can do to boost performance even further. If on the other hand things are not going as well as expected, focus on the changes you need to make or action you need to take to get back on track.

Tip 7: Focus on the most important numbers

When it comes to financial management, managers can sometimes get lost in lots of detail and trivia. Be clear on what are the 2-3 big numbers that you need to pay attention to, as they will more than likely constitute about 90% of your budget. In most businesses this will be:

o Income from sales or services

o Salary costs of employees

o Major non salary cost such as materials

Make sure that you have as good an understanding of what impacts on these numbers at the business unit level so that you can keep things on track.

At the end of the day, internal financial statements such as budgets merely reflect what is happening operationally in a common currency called money. Keep this at the forefront of your mind and you have a great chance to excel as a manager.

Efficiency at Work – How Leaders Should Manage Teams

Working as a team leader can be challenging. There are so many pieces that need to come together in order to create an efficient work environment. Leaders are specially prepared for certain issues in executive leadership training, but there are still many unexpected issues that arise in the workplace. For example, social loafing and group norms are challenges that need to be handled carefully. In order to learn how to effectively deal with these problems, it’s important to first understand what they are.

Group norms are guidelines or operating principles that everyone understands and agrees upon. Groups benefit from having strong norms. However, norms don’t just evolve. Especially when groups are made up of diverse individuals, it’s important that they don’t take norms for granted. Executive leadership training explains that the difference between satisfied and productive group members and group members who are frustrated is often the difference between groups that have well-established norms and those that are floundering.

The next issue that can arise involves something called social loafers. Social loafing is when group members get away with not doing their share of work and when other group members let them get away with it. Sometimes this occurs if a worker is likeable, other times it occurs because the other group members just don’t want to speak up about the other’s performance. It’s important to speak up and to be proactive. Right from the beginning, group members need to know what will happen to social loafers. If the group has specific operating principles in place, and everyone understands the consequences, social loafing is much less likely to occur.

Similarly to executive leadership training, in financial management courses future managers are taught the importance of honestly addressing social loafers because they can affect productivity negatively. Financial managers learn how to communicate with different levels of executives as well as communicate strategies, which is important in motivating people to meet goals. It is the financial manager’s job to deliver results, which directly depends on the success and organization of their team.

It’s necessary to have an organized and cohesive team in order to thrive. There are ways to see if you have a cohesive team on your hands. For example, you should first think back about all of the teams that you have belonged to whether it is in the organization you are in now or in previous positions that you may have held. If you think about the best group experience you have ever had, chances are that you are thinking of a highly cohesive team. A cohesive team works together, and you feel valued. You feel your contributions are valued and that people listen but may not necessarily agree. In fact, one of the hallmarks of a cohesive team is that members feel comfortable disagreeing with one another but do so respectfully. Financial management courses discuss how managers should deal with disagreement respectfully in order to be successful.

Overall, leaders can successfully manage their teams by recognizing social loafing before it negatively affects the rest of the group members, harming morale and the team’s performance. Also, managers can be effective by communicating honestly with all team members. Organization, strategy, honesty, and speaking up are keys to establishing strong group norms and ensuring that diversity is a positive influence on the group.

When do You Need a Financial Management Company on Your Side?

We live in a crazy world. Someone ought to sell tickets. It seems that people, especially those in the US, are always clamoring for products and services that they don’t need and ignoring those that they do. Financial Management is a prime example. Companies that provide financial management services are often inundated with requests from potential clients that really can’t benefit from their services while many people that should be using a financial manager of some kind are literally flying by the seat of their monetary pants without anyone to navigate for them.

So, how do you know when you need an accountant or financial manager of some kind working for you? Just ask yourself these questions:

o How many bank accounts do you have and what are the balances in each?

o How many investments do you have and what are their values?

If you couldn’t answer these questions without getting out files and statements to look up the answers, you may need to higher a company or individual to meet your financial management needs. If your bank accounts include a checking, savings, and maybe a CD or IRA account and you own ten shares of stock in some XYZ company, you probably don’t need a financial manager at this time.

Most reputable financial management companies will let you know up front whether you can benefit from their services. A few, however, will take on as many clients as they can, regardless of whether that client really needs a financial management team working for her.

Financial management companies can do a wonderful job of helping you turn your money into more of your money. Everyone would like to see a thousand of their favorite dollars become ten or twenty thousand of their favorite dollars. If, however, a thousand of your favorite dollars represents all of your dollars, you don’t need to worry about a financial manager at this time.