The primary function of the person in charge of finances is to manage and control the company's finances.
In SMEs, this is often the owner/managing director or the owner/managing director herself, accompanied by an external trust agency.
But what if you have just founded the company (start-up) or have just taken on a new position in which you have assumed full responsibility for the financial management of the company?
Unfortunately, there can be many sources of error in financial management that go unnoticed in everyday business life. But you have full responsibility and must answer to management (or yourself).
One of the first measures must be to inventory cash. This gives you an overview of what the short-term financial risks look like.
The following additional indicators should give you insight into the company's performance and whether continued existence is assured:
a) Cash burn (consumption of cash)
Possible questions:
— How does the liquidity balance change between periods?
— Can outdated systems be easily replaced and financed from own resources?
— etc.
b) Sales growth
Possible questions:
— Is the company growing?
— Will more market shares be gained in proportion?
— Is the overall market growing below or disproportionately in relation to the company's own sales developments?
— etc.
c) Gross margin
Review the gross margin (sales after deduction of direct product/service costs) and make sure that enough profit is made to cover further costs.
Possible questions:
— Can gross margins be optimized through negotiations with suppliers?
— Are price increases of our own services/products tolerated on the market?
— etc.
d) Operating profit
Possible questions:
— Does the company have costs under control?
— Can costs be reduced (without any loss of turnover/profit)?
— etc.
e) Current obligations
Possible questions:
— Can current liabilities be paid on time in the short term?
— Is it necessary to take measures to adjust the deadlines?
-etc.
Regardless of whether you are a managing director: in, CFO or external trust agency.
Money Key AG offers a user-friendly controlling and reporting tool that can be connected to almost all accounting software.
