In addition to business management stimulate sales Looking for a partner to increase business growth channels or manage various matters? Finance is another matter that is equally important for business owners. AIRA has 10 financial recommendations. That SME entrepreneurs or business owners should know as follows:
- Cash flow is the heart.
From the economic situation and the past COVID crisis. Most entrepreneurs probably recognize the importance of having more working capital for their business. Because having working capital Helps keep the business going, at least for a while. Therefore, managing and estimating cash inflows and outflows is very necessary for SME business owners.
By estimating cash inflows and outflows. Entrepreneurs should prepare a cash flow forecast at least 3 months in advance. To see the overall situation of the business first In order to prepare the revolving fund in time. - Profit is not cash.
It cannot be denied that the goal of doing business is profit (earning more than cost of goods sold). and administrative expenses) and what business owners must focus on is Cash Management so that profit performs its function perfectly
For example, Selling products on credit (Trade debtor) If the debt cannot be collected within the time period. Like this, even if there is profit But there may not be enough cash for management as well. - Reduce only unnecessary expenses.
Reducing expenses is another key to increasing business profits. But the next thing to consider is Expenses that need to be reduced Is it a necessary or non-essential expense to our business? The necessary expenses are Expenses that generate future income If the business owner has a vision Choosing to reduce only unnecessary expenses (for now) will make your business more agile. and results in sustainable profits over time.
Therefore, before reducing costs All entrepreneurs You should ask the question: Expenses that you want to reduce Is this a necessary expense? And what do you want to reduce these expenses for?
- See the data first and then decide.
No matter what business decisions entrepreneurs make, data will help them make decisions. Whether in the form of data, reports, ratios, proportions or various comparisons. That is better than making decisions based on Instinct alone
For example, Deciding to invest in new assets for business use It may be necessary to consider information about the cost of maintenance. Debt repayment period (In the case of purchasing with credit), efficiency and income-generating opportunities come together. Because investing based on just feelings or intuition It may have a significant impact on the finances of the business. - It’s not just about reducing taxes. But you must reduce costs.
Taxes are an important expense that many business owners want to reduce. However, you should consider that How much does it cost to reduce that tax? This is because the cost of hiring experts, teams, laying down principles, or organizing business planning is quite expensive. - Expenses are different from assets.
Another one of financial decisions where mistakes are often found. of business owners is thinking that assets and expenses are the same thing, but actually they have a huge impact on business finances. For example, Investing in purchasing various equipment thinking that it can be used as an expense in the entire accounting period (to reduce taxes or reduce profits), but in reality Purchased assets must be gradually amortized as expenses over their useful lives. (Depreciation) according to the accounting system and the purchase of such assets also affects cash flow in the short term. (If you have to pay a lump sum) and it also affects long-term profits. (Because it is an expense for many accounting periods) Therefore, plan and understand well before deciding to buy any assets. Therefore, it is an important matter that business owners should not miss. - Cope with crises by preparing projections.
Estimates here refer to 2 aspects. The first side is an estimate made for planning, such as an estimate of cash inflows and outflows. Estimating income and expenditure (as in point 1) and on the other hand, referring to limiting the budget for crisis management, such as how much should be invested to manage the problem. And what should be the maximum ceiling for expenses? so as not to affect other aspects - Payment of benefits to those involved must be clear.
Business must be strictly separated from personal matters. Therefore, business owners must clearly define the benefits for themselves and their partners or related parties that they receive from the business, whether it be salary, wages, commissions, or dividends. (share of profit) how much it should be And there should be reasons why it must be so. Because the benefit planning is clear. It will make the business know the exact costs. Meanwhile, business owners themselves can survive without needing to find hidden benefits from the business as well. - There is no shortcut to saving on taxes.
Many entrepreneurs Think of a simple tax saving plan. By relying on the guidelines that people around you recommend. However, that is a huge risk. Because taxes are a difficult and complicated matter. To understand and choose from various approaches It must be considered appropriate from many perspectives. From value for money and expenses to the risks involved. - The most important thing is the accounting system.
If we set up the accounting system of the business well from the beginning It will surely help the business travel correctly. And you don’t have to be afraid of various problems that will arise as well.
In the case where the business operator is a seller of goods or services Have business partners who are government agencies or large private companies? and immediately need cash flow to enhance liquidity within the business I don’t want to wait until the credit is complete.
