Before going into business, there must be enough financial resources which will be used to carry out the day to day activities of the company. This is necessary to achieve the goals and objectives of the company.
There must also be a business plan in place, the plan should focus on both the internal and external goal.
How to cover the cost of a new product including raw materials, a location for the business, a new service, etc are often among the internal goals of the company.
For the external goal, we are looking at how to meet targets of every stakeholder.
Financial resources are cash available to a business used in meeting day to day operation. These are the cash funds which fills the deficit as a result of the timing differences between a company’s disbursements and cash receipts.
Financial resources are offered by different investors such as shareholders, lenders and debt holders in exchange for remuneration which can be dividends, interest and capital gains
Ways to manage financial resources
1. Maintaining a balance on how resources are to be used
Some organizations do not have enough resources to cover operating cost. This may be as a result of previous decisions that had the effect of protecting staff salary, whose support was provided by a central authority and is not even part of the organizational budget.
Managers should endeavour to align resources in ways that make it possible to accomplish the organizational goal. This implies the need to maintain an appropriate balance between salaries and operating expenses.
2. Using information to improve efficiency
Most firms know the importance of regular feedback from within and outside the organization, the data will be used to measure efficiency.
Regular updates from the public could help improve production as they always know better, staying close to them impact positively on the organization and help avoid waste.
Multinational companies mostly employ professionals to help manage and arrange data.
3. Setting the right price
When offering a new product, it is always important to set up price acceptable in the market, the key to do that is to find out what the competitors are doing. By doing that, management will be able to gain new customers, make more sales which translates to more earnings.
Price skimming may not work in a market where there are already established producers. Penetrating the market with low price is one of the easiest ways to gain ground
It could also hit back at the company if a proper implementation is not done, the firm may lose a lot of money as it may not be able to recover costs.
Despite that, the best way to manage financial resources of a company is to set a competitive price, price that will be almost difficult to beat elsewhere and also quality products or services. Consumers may love low prices but they also tend to favour quality products.
4. Keeping track of financial resources
The main function of the management is to recruit, lead, organize and to do that effectively, money plays an integral role. Employees works in assurance that wages or salaries will be paid, that is enough boost for staff. A satisfied worker could bring about an increase in output.
Managers need to know what to do at the right time and that is being aware of their responsibilities, especially financial constraints common to firms. This can be done by making day to day record of their revenues and expenditures.
To keep track of their income and expenses, take an inventory of all account, and categorized them according to their nature. Microsoft excel provides support for such, admin personnel can use the software to record expenditures and revenues and also present them graphically for better understanding.
5. Predicting organizational cost
One of the core functions of the management is to determine, evaluate and interpret expenses and expected income even before they are needed.
An organization who does that a lot tends to have an edge over others, it gets them prepared to whatever challenges that may occur if finance is not enough, they would have sourced for the available funds instead of waiting until things get out of hand.
Managers must take the business of planning as one of the important duties, draw budget and use it to run financial resources of the company.
6. Have several funding outlets
Small business owners and organizations can not afford to depend on one source of funding, having few funding channels gives them a less fighting chance when they hit a little hiccup.
Having enough finance companies to call upon is what have been the reason for most company’s success. Financial managers must find different methods to get finances, both internally and externally but they should always favour funding from within than from outside as it always comes at no charge.
7. Understand the market
Suppliers play significant roles in an organization by providing small business owners and organizations with products or raw materials needed to convert into finished goods.
To avoid issues that are rampant in trade across boundaries, managers must understand how to shop safely in order to avoid shortage of resources.
Organizations use online stores like eBay, Alibaba, and aliexpress, despite the best actions taken by ebay, there are sellers who still try to gain from customer through dishonest methods.
Feedbacks from past sellers is one of the ways to avoid losing resources, a customer with strong ratings on aliexpress and eBay shows he can be relied on.
Alibaba also has some mechanisms in place to help buyers know trusted merchants, some suppliers have already been filtered.
You will know through the badges they have earned on Alibaba.
8. Decentralizing the decision making process
The percentage of total resources spent on salaries might vary with the mixture of staff members, for instance, the number of village workers or paraprofessionals and the number of the subject matter.
Central staff should limit their decision making to determine financial commitments to program areas and leave decision making regarding how money is spent on support of programs to others to close the scene.
An organization must always provide regular training to employees, mostly on how to study trends and come up with a perfect decision which will no doubt improve the output of every personnel. While providing training to employees, financial managers also must not relent in training of their own.