3 common mistakes in corporate financial management

There are many reasons leading to business failure of small and medium enterprises. But the top reason comes from poor corporate financial management skills. Meanwhile, finance is considered a core factor to maintain and develop the organization. Or to put it simply, finance is the lifeblood of the entire company. In today’s volatile market, what should corporate financial management avoid? Let’s join consulting expert  Apexcorp to learn about 3 common mistakes when managing corporate finances.
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What benefits does corporate financial management bring?
It can be affirmed that financial management is an extremely necessary and important job for a business or organization. Effective financial management helps increase revenue, profits and expand business scale. Benefits can include: 
  • It is a necessary and sufficient condition for an organization to achieve common goals through financial reports, accounting, revenue forecasting and then making the right decisions.
  • By managing finances, business owners know the current business situation and revenue index to balance expenses such as office fees, employee salaries, equipment, etc. At the same time, check Check your loans to know your monthly payment ability and cut down on unreasonable spending.
  • Helps businesses promptly adjust business plans, diversify products/services, and choose strong consumer markets to accelerate profits.
  • It is the foundation for charting a path for future development, as well as being ready to restructure or boldly face crises.

3 common mistakes when managing corporate finances 

Excessive spending on customer search activities 

Customers are the ones who bring life to businesses. Therefore, small and medium-sized enterprises often invest heavily in finding new customers, leading to an imbalance between opportunity costs and the long-term value that the product brings to customers. This activity may bring in initial revenue, but profits will decrease quickly. Therefore, leaders need to balance and carefully consider necessary expenses and those that should be refined. 

Profits are not calculated accurately 

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Most businesses estimate they will receive quite a lot of profit. But in reality, it’s not much because we need to pay too many costs that cannot be controlled in advance. For example, a business company buys and resells 60% higher than the cost price. Business owners think they can earn 20-25% profit after deducting personnel, premises and other fees. However, the year-end report showed that profits were not as expected, or even losses. That’s because the company has not considered fluctuating fees such as transaction fees. Shipping fees, storage fees…

Not managing taxes properly 

Regardless of whether a business is large or small, taxes are always a mandatory expense. And it must be paid on time and at the right rate. Companies that pay taxes late will have a negative impact on business operations. Therefore, accurate tax calculation is a necessary item in the corporate financial management plan. In addition, organizations need to regularly monitor tax policy changes, especially in the field of import and export. This helps businesses respond promptly when import tax or consumption tax rates fluctuate over time. 
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Summary

Through the above sharing, you can gain experience about mistakes in your business financial management. These are great lessons to help you apply in company management. Please follow Apexcorp page to update daily business knowledge and skills.
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Email: info@apex.edu.vn
Website: apex.edu.vn

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