The start of a new year is a time to review and develop goals for the following year. This process helps individuals set goals and develop a strategy to improve their financial health. Moreover, the new year brings new opportunities to improve your financial planning.
The financial plan is a vital part of any business, and it’s often considered one of the most challenging areas to develop. Having a sound financial plan can help you attract investors and manage risks. There are several ways to help you plan for the future and avoid making costly mistakes. Listed below are some of them:
1. Hire a Fractional CFO
This Chief Financial Officer is a part-time CFO who provides outsourced services to small enterprises. Using a fractional CFO rather than a full-time independent contractor saves money.
While sales size is a primary indicator of whether a company should use a fractional CFO, it’s not the deciding factor. Thus, knowing what a CFO should do helps determine if you need a part-time or full-time CFO.
For example, a company not developing rapidly may not need to communicate to investors or bank underwriters. In this case, a fractional CFO may be preferable. In addition, you may look for onboarding fractional CFO services to take care of your strategic planning, cash flow management, negotiation, and financial analysis.
2. Create a Finance Process Map
You may improve your financial systems this 2022 by starting to identify their flaws. Furthermore, you may detect faulty processes that need fixing. The quickest option is to create a finance process map.
A finance process map depicts processes in the same order as the organization—anything from budget approvals to mileage reimbursements. A business may identify job completion times and possible barriers by mapping all intermediate phases in conventional procedures. This is a great way to start discussing process improvements.
3. Reassess Your Portfolio Allocations
Aside from creating a finance process map, it’s also an excellent time to reassess your portfolio allocations. This is especially important since the bull market has left many investors’ portfolios overweight inequities.
The month of January is also a great time to consider whether your portfolio is overweight in any area. It would be best to reassess your asset allocation and rebalance if it is. The purpose of a balanced portfolio is to achieve your goals in terms of risk and return. Thus, it’s essential to start with a strategy and allocate your assets according to your business needs.
4. Automate Some Business Process
Automate finance operations that are inefficient and error-prone by using cloud computing. When corporate executives are aware of the obstacles limiting the Finance department’s efficiency, they may devise innovative strategies for maximizing effect while carrying out vital financial procedures. One of these steps is automation.
If you automate repetitive financial planning procedures, you may significantly reduce your difficulties in this business process. Here’s the list of financial strategies that may be made more efficient by the use of automation:
- Billing and payment processing in the accounts payable and receivable department
- Financial forecasting and budgeting based on analyzing and interpreting data
- Clean and audit-ready financial statements for cash flow management
- Reimbursements and card reconciliations are part of expense management
You may save your finance team’s time and effort by moving to a system that enables data integration and automates data gathering and consolidation. As a result of using automation, financial professionals perceive a reduction in errors, shorter cycle times, and higher productivity.
5. Be Flexible and Adaptable
As businesses adapt to the changes brought about by the rapid advancements and various circumstances, they need to adopt a hybrid approach to work seamlessly across multiple departments and work environments. This approach can help minimize costs while still adapting to changes.
For instance, many businesses were forced to work remotely due to the pandemic. Regardless of its skeptics, many were surprised by how it turned out. Many are investing in technology suitable for remote working, like application software for specific purposes. Others ran scenarios using the financial planning models they created.
Moreover, businesses that have moved their focus from the conventional brick-and-mortar to eCommerce and internet marketing are an excellent illustration of this. As a result, they could identify places where they might save money while still investing in others.
6. Prepare for Possible Valuation
Because it’s never too early to improve your business valuation, doing so can help you avoid getting carried away with the high valuations currently prevalent in the market. Many factors that will make your business stand out to investors are as simple as good business practices. These include developing a solid financial structure, building a reliable management team, and investing in sales and marketing.
Since the pandemic has affected many, if not all, businesses, several firms have started improving their financial processes. It can play a huge role in helping your employees reach their goals. As you track your business revenue and prepare for your 2022 financial planning, make sure to stay up-to-date with the latest business trends. Doing so will help you spot potential issues and allow you to make changes as they arise.