You’ve worked hard, you’ve paid your dues, and you’ve climbed up the corporate ladder, and now you’re the CFO of your company. While being a CFO demands a high level of financial knowledge, your expertise in the field may cause you to gloss over some of the simplest parts of business budgeting. The job you have is extremely demanding, and for this reason, it’s difficult for anyone in your position to remember every tiny detail of business budgeting. Fortunately, we’ve compiled a mini-guide with some basic business budgeting tips and reminders for all CFOs.
Spend Time Creating a Budget That Works
Make sure that you spend enough time and effort on creating a budget that works for your company. Without the strong foundation of a steady budget, you’re setting your company up for financial turmoil. Even though it may seem tedious, take your time and create a budgeting system that works. Remember to make it unique to your company’s needs. Additionally, be sure to check in with your budget and to make modifications whenever necessary.
Keep an Eye on Your Company’s Fixed Expenses
If your company’s fixed expenses, such as rent, utility bills, payroll, etc. feel steady and reasonable, then they are probably in a good place, although it still doesn’t hurt to check up on them even if they seem fine. If the fixed expenses are fluctuating frequently or seem ridiculously high, then you might have a problem. Even though fixed expenses may feel like an afterthought, be sure to keep an eye on them to ensure that they never get out of hand. Nothing takes care of itself so be aware of any and everything going on with your company’s fixed expenses. You never know when it could spiral out of control.
Be Aware of Your Company’s Variable Expenses
Variable expenses are trickier than fixed expenses. With fixed expenses, you can set an amount for how much you want to spend monthly, but with variable expenses, the money coming out of your company’s pocket is always changing. Examples of variable expenses are inventory and raw materials, and the amount of these things that your company needs from month to month can shift very rapidly and quite suddenly. Be sure that the variable expenses stay in check, and that your company doesn’t go overboard on spending for them. Just because they’re subject to change doesn’t mean that they should be stretching your company’s wallet thin.
Always Consider Your Company’s Resource Allocation
As the CFO, it is your responsibility to know everything that there is to know about your company’s resource allocation or, in other words, where your company is investing both its time and its money. Before making any drastic financial moves, be sure to consider your company’s resource allocation and how your decisions will affect it. Always remember that every action has a consequence, and be sure to weigh out all possible scenarios before setting any decision in stone. Your company’s resource allocation concept, process, and implications are crucial for you to understand, so be sure that you have this information under your belt before doing anything else.
Don’t Forget to Analyze Your Company’s Cash Flow Frequently
Financial planning of any kind requires monitoring of cash flow. This means that you should be keeping an eye on the money coming both in and out of your company, and that you should be taking the next step forward and analyzing them to uncover patterns that can make your company more successful. Whenever you have the chance, take the time to analyze your company’s finances, and if you don’t seem to ever get that chance in your busy day, then it would be beneficial to set aside time in your schedule for some financial analysis.
When a person advances in their field, they might forget about some of the most fundamental aspects of the subject that they are hired to handle, and honestly, that’s perfectly natural. That’s why we have these tips for you. We understand that it’s easy to lose touch with some of the less obvious things about your job, and so we’re here to help. But most importantly, you are the CFO of your company for a reason, so don’t second guess yourself. Be sure to be aware, analytical, and responsive. If you remember to be these things, then you’ll have no trouble taking the financial world by storm.
Ami Sanghvi is a creative writer and currently writes content on behalf of the business budgeting experts at True Sky. In her spare time, she can be found writing poetry, reading, or sketching. Tweet her @AmiJSanghvi or connect with her on LinkedIn.