Any organization requires finances for its daily operations. Business finance is the amount of money that is owned by an organization. This finance does various functions in the business for example the general management of the business. Management of business finance has been a challenge to most managers or the owners of the organizations.
It requires knowledge from various disciplines such as accounting, financial management, financial mathematics and economics. Proper management of business finance is required to ensure the business generates the highest profit. For the successful management, an organization must have a recognized bank account particularly a commercial bank account. The bank account facilitates efficient and effective financial transactions of the business . Book keeping must be ensured.
Transactions that take place at any point in the business can be accounted for and be a reference point at some future date. These transactions include purchase, sales, payments and receipts by the organization. Book keeping has currently been made easier by use of book keeping software like quickbooks or quicken because they are simple, quicker and convenient to use Good management of business finances calls for establishment of payment terms. It is very important to establish clear written terms and conditions to clients before providing services or delivering services to them.
Payments terms and conditions must be elaborated on your estimate forms included in formal contacts, work orders and printed on your final invoices and your monthly account statements. Another way of managing business finance is through establishing a culture of securing deposits. Business transactions that involve orders or provision of services calls for prior deposit by the client before commencement of serving the client. In this case deposit should at least be of equal value of the service for example if you are supplying human resource, you need a prior deposit of at least a third of the total payment to be made. Progress payments is another way to avoid financial risks.
The secret to successfully securing a progress payments is to make initial agreement on the terms and conditions of the progress payment to ensures payment is done continually. Percentages are used for example 30 percent deposit, 25 percent upon delivery, 20 percent upon substantial completion and the remaining after some definite period of time.Other ways of managing business finance is establishment of a way of extending credit and and debt collection. In conclusion, management of business finance is the key to success of an organization hence one should take into consideration the above ways to have a thriving business.