There is a popular saying that people only take action for love or pain. Deep right? It may seem a bit dramatic but when it comes to financial control , that is the absolute truth!
According to OOL, in April 2019, 63.2 million Brazilians had a dirty name , which is a little over 40% of the population! In order not to let your financial life get into this situation, or if you are already in debt, the only way to solve the problem is to roll up your sleeves and make the good old excel personal financial control spreadsheet .
Another high statistic among the Brazilian population, which gives a great reason to think about financial control, is that of new entrepreneurs . The entrepreneurship rate in Brazil, or TTE (Total Entrepreneurship Rate), reached 38%, according to a survey by the Global Entrepreneurship Monitor. If you are part of this group of about 52 million Brazilians have a business of their own, but not yet have someone to do the financial management of their business, you must be crazy to know how to take care of a company’s finances, right?
If you still don’t know where to start, don’t worry! You don’t have to be the most controlled and disciplined person to take care of your personal finances. In this article, we’ll help you get organized, show you some free financial control apps , explain how to control spending so that no one goes wrong, talk about the key indicators you need to control in your business, and more! Come on?
What is financial control?
Simply put, financial control is a set of practices that keeps your finances healthy , whether in your personal life or in your business. To do this, you need to organize all sources of income, all costs, and closely monitor all movements to ensure you are using your money to the best of your ability.
How to do financial control?
When it comes to financial management in your personal life, you don’t need very complex mechanics, just be clear about how much you get, how much, and what you spend . In addition, you need to know your fixed expenses, incidentals, and even superfluous expenses to find out where you can spend less or look for ways to get extra money . Finally, having greater financial control helps you find options to invest and make your money multiply.
Corporate financial control has a slightly more complex system and, depending on the size of the company and the number of customers, suppliers and employees, requires a specialized team and management software to keep the financial health of the business up to date. Among the main types of financial control of a company are: cash flow , working capital , accounts payable, receivables control, invoice management and income statement.
How important is personal financial control?
Having well-managed financial management in your personal finances is critical to avoiding debt and making plans for the future, such as travel, study, buying property such as a property or car, and even expanding the family.
If you are in debt and wondering how you are going to make plans if you can barely repay the debt, calm down! Financial planning is also a great ally for placing order in the home. Start by organizing your finances to be completely clear about how much you earn and how much you spend. Thus, you will find out if you need to resort to an emergency resource, such as a personal loan, to avoid the snowball effect.
How important is financial control for companies?
Financial control in companies has the same function as personal financial planning, but with a more complex system of organization. Here, the idea is still to avoid debt, maintain healthy finances, and make plans for the future. In this sense, investments in business expansion can be physical, with the purchase of new space or equipment, or an expansion of value, investing in more senior professionals, innovative segments or having the security to venture into new markets.
To clarify the impact of a financial management operation on the company, let’s talk a little more about the financial control fronts.
Cash flow: Here, the company’s cash inflows and outflows are monitored. It is one of the most basic practices, but if not done well can be the kick start for a financial disaster.
Working capital: It represents the set of values that make the company work. Here you enter receipts, vendor payments, wages, inventory, etc. To know how much working capital you have, you need to add the cash you have in cash + receivables and subtract the monthly costs.
Accounts payable: These are all your expenses such as salaries, infrastructure, equipment, etc. Some values are fixed but tend to increase with business expansion (hiring new employees, increasing space and equipment, new suppliers, etc.). Important! Never forget to have detailed control of the taxes paid on each of your operations.
Receivables Control: This is the part that everyone likes, make money! An important detail about managing accounts payable and receivable is deadlines. You will not always receive the amounts within the same time frame as you have to pay your suppliers, so it is so important to have a working capital reserve.
Invoice Management: A very important step in having all operations well detailed is to make good invoice management. In addition to being clear of your profits and expenses, you avoid problems with the IRS.
Income Statement: Continuous monitoring of the company’s financial situation. This item is critical to understanding if your investments have been profitable for the business and, if need be, outlining new strategies.
What are the main objectives of financial planning?
We talked a lot about the importance of controlling finances and commented that one of the gains of a well-done financial control is thinking about the company’s long-term success . Ma, this only happens if you have financial planning as well structured as your control.
Quoting one more popular saying, they say that when you don’t know where you are going, any path will do. Therefore, lack of financial planning and, consequently, decision making without a strategy can ruin business. Therefore, the main goal of financial planning for your company is to be able to chart a path to success, that is, to know what you need to do each month, quarter, semester and year to achieve your business goals.
For example, if you want to triple your revenue in five years, you have to come up with a plan for acquiring new customers, increasing the buying potential of customers you already have, reducing costs, and so on.
It is also important to remember that financial planning is a cyclical process. You set goals and lead time, and when you meet them, you set new goals and create new planning, keeping your business going .
But if, for some reason, you failed to fulfill your planning, or worse, had an unforeseen event and ended up having financial problems, do not despair. You can postpone growth goals and make planning focused on restoring business health. The important thing is always to have a north to follow and clear steps on how to get there.
What tools can help in financial control:
Now that you know what financial control is for, how important financial planning is, we’ll give you some good tips on how to apply it to your finances . No need to disintegrate, you will not do everything yourself! Today there are several applications and management systems that make great personal and business financial control:
There are several software that provide financial management systems from the simplest to the most complex plans. This varies according to the types of management you are interested in doing and also the size of your business, how many people will have access to the system and so on. This is why it is important to compare plans well to find the best option for your business.
For those who want to put their personal finances in order, there are several free personal financial control tools as well as some apps with paid plans and more advanced features. Most apps, even paid ones, have some trial version that you can download and use for a while to understand if it meets your needs.
Another option that is still new to the market is Olivia , an artificial intelligence app geared to personal financial control that, like other apps, gives you insight into your financial moves and gives you some tips on how to best use your money. Olivia is a launch and has a queue for invitations.
Personal Spend Control Worksheet
If you really like the idea of starting to take care of your finances but are afraid to download one more app and never use it, you can resort to the good old spreadsheet. More traditional but still foolproof method for those who want to better visualize and control their income, their spending and take care of financial health in detail. Since we won’t let you down, we made a personal finance spreadsheet from Bcredi to help you!
You have seen that there is no shortage of solutions to fix your financial organization, right? It has corporate financial management system, free personal financial control app, all for you to have no more excuses! So start planning now to start 2020 on the right foot, plan the future of your business and leave all accounts in the blue!