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5 tips on how to best control your costs and expenses

Strategies that optimize the financial management of a large company are indispensable for decision making. After all, every action taken by directors and managers needs to be aligned with your company’s financial planning and cash flow. This is why your control of costs and expenses should offer extremely consistent information.

Below we present 5 tips on how to best control your costs and expenses. Understand how to analyze your company’s finances efficiently, without giving too much importance to losses or negative indicators.

1. Financial planning

To achieve the best results, your company should follow detailed financial planning. Using good software, it’s possible to analyze and forecast estimated costs as well as revenues for a given period. It should be emphasized that these analyses should consider all of the companies fixed expenses.

2. Organization of your cash flow

Together with financial planning, you should consider having an organized and clear cash flow. To organize with clarity all expenses, revenues, accounts payable and receivable, investments and other indicators, it’s interesting to:

  • Define a period for the cash flow, which can be weekly, biweekly or monthly.
  • Use personalized identifiers for revenues, expenses and other items, adopting different colors for each type of item, for example.
  • Select recurring revenues and expenses, so that you can forecast costs and revenues for the next few periods.
  • Register accounts payable and receivable so that you can analyze the consolidated and provisional balances, which will make you more secure in terms of which financial strategies to follow.

3. Stock planning

Bad stock planning can lead to unnecessary expenses directly affecting your company’s finances. Your company should invest in stock planning, always considering sales levels: keeping an item with low sales in stock leads to large storage costs which are not desirable.

The best way to organize your stock and plan it to maximize your company’s returns is to use stock management software. Automating this process reduces your risk of errors and therefore losses.

4. Anticipating payments

There are some decisions that improve the reputation of companies, especially from the point of view of suppliers. One of them is anticipating payments or making them on their due dates.

If a supplier of products or services offers considerable discounts for anticipated payments, this may be of interest. In addition to a good image, anticipating payments improves your credit. For your company’s finances, these discounts can economize resources that in other scenarios could be useful.

5. Hiring or firing employees

Hiring and firing employees are processes that involve costs. Defining the best possible moment to alter your workforce is a strategy that directly helps you control costs and expenses. In addition, you should consider the real necessity of training, mainly performed by external partners.

The great secret to controlling costs and expenses is the adoption of processes that simplify decision making. Obtaining precise consolidated information — through automated processes — reduces the risk of erroneous decisions and losses.

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