Financial management is the core factor for company existence. Daily operations and company expenditure rely on proper finance decisions. Stakeholders and competent human personnel are easy to maintain when a company is excelling. However, uncertainties may arise, and if the company finances are not adequately planned for, this can be a significant setback for its development. We analyzed some practical ways a company can implement in preparation for unpromising situations.
- Being keen on a robust framework for managing supply chain risk:
Continuous supply is critical. This carries a lot of future forecasts for company operations in the long term with trusted suppliers. Taking, for example, a financial institution, customers from whom a financial institution benefits most from, have to be treated with epitome care to keep and grow the pipeline.
- Being clear on deliverables and expectations:
Most companies adopt identical key performance indicators that could potentially save money, time and mitigate risk. Therefore, companies should assess realistically on the outcomes and outputs to achieve during an ongoing crisis to really maintain their desired income over time.
- The right choice of supply:
With the wave of financial crisis across the world, a company should come up with several products for business, suppliers and customers to avoid being held ransom by a specific product. This helps a company to remain competitive in volatile periods.
- Ensure your own financing remains viable:
This applies most to companies in the financial services sector. The company management should be proactive enough to plan on the timely needs of their clients that will be of relevance during the predicament period. Remaining financially viable should be the top concern for the CEOs and CFOs(Chief Finance Officers).
- Focusing on cash to cash conversion cycle:
Companies operating on liquid cash have a high chance of reviving after a crisis. Companies on debts like microfinance institutions risk most of their investment, and once their customers have challenges in paying, their source of revenue become sabotaged.
- Assessing the variable cost:
These are sensitive expenses that changes in proportion to production output. Depending on the impact of a predicament, variable costs rise as production increases and lowers as production decreases. The management should be at a position to decrease these expenses and maximize output like raising their prices of final products and services to mitigate the crisis.
- Capital investment plans:
Revisiting funds invested for purposes of furthering a business, it is advisable to keep the funds on hold during a crisis. The reason behind such a decision is the unforeseen predicament that no one can predict it. The funds can later be used to restructure company finances into shape or as a miscellaneous expense. CFOs have a lot of task during a crisis hence should be knowledgeable enough to sustain a company.
- Inventory management.
Try adopting safety stock inventory; this will go a long way in managing extra orders beyond expected demand. This technique will be used to prevent stock lapse typically caused by incorrect forecasting or unforeseen changes in customer demand, especially in times of crisis.