Increase Business Growth Potential with Financial Management Training
What if the problem in your business isn't due to declining sales, but rather to poor financial management?
Managing company finances is a crucial aspect that businesses must address if they want to avoid future losses.
Financial management skills are not only essential for the finance department; it would be beneficial for every leader, from middle management, managers, and even the executive team, to have a solid foundation of financial management knowledge.
Since the COVID-19 pandemic, many companies have implemented efficiency measures, one of which is mass layoffs.
Is this a sign that the company is experiencing a decline in revenue? These efficiency measures aren't always due to declining revenue; they are necessary for the business to maintain financial health, even if the company needs to pivot.
In its research, McKinsey stated that companies generally grew by only 2.8 percent per year during the ten years before COVID-19, and only one in eight companies recorded a growth rate of more than 10 percent per year.
One way to continue to increase company growth is to establish a sound and orderly financial management system, eliminating the need for smooth cash flow.
Therefore, all employees in the company need to have knowledge of financial management. One way to do this is by enrolling employees in financial management training.
Problems Companies Face with Poor Financial Management
The worst thing a company can face with poor financial management is legal issues.
If a company's financial management is poor, it could result in the company failing to pay taxes properly in accordance with applicable regulations, leading to legal issues.
Other problems that arise with poor financial management include:
- Disorganized Inventory Management
- Pricing Pressure and Profit Margins
- Unhealthy Cash Flow Problems
- Lack of Financial Planning and Difficulty Projecting
- Difficulty Obtaining Funding
- Inadequate Cost Control
Why do companies need good financial management?
Financial management is a crucial foundation for healthy business growth.
Poor financial management can lead to manipulation of financial reports, which can erode investor confidence.
Such as what happened to the startup E-fishery, which was suspected of fraud by manipulating its finances. This disappointed investors and undermined the company's credibility.
To prevent bad things from happening to your company, it is important to implement good financial management.
Here are the benefits companies experience from having good financial management:
Improved Operational Efficiency
Companies with well-managed finance functions have demonstrated significant cost reductions and increased effectiveness.
A McKinsey study of hundreds of corporate finance divisions over a decade to determine how costs and effectiveness have evolved over the past 10 years shows that finance departments have reduced operational costs by almost 30%.
These cost reductions are focused on activities that add value to the business, thus contributing to business growth.
Encourage Strategic Decision-Making and Data
Strategic financial management encourages companies to employ data-driven decision-making processes that align with long-term corporate goals.
By integrating financial planning with strategic objectives, companies can assess investment opportunities, manage risk, and optimize capital structures to maximize shareholder value.
Improved Cash Flow and Capital Allocation
Effective cash management practices, such as optimizing working capital and capital expenditures, directly improve Return on Invested Capital (ROIC).
This disciplined approach not only garners investor confidence but also gives companies the flexibility to invest in growth opportunities, even during times of economic crisis.
Support for Organizational Transformation
During periods of transformation, the CFO plays a critical role in guiding the company through change.
By monitoring performance metrics, managing cash flow, and establishing key performance indicators, financial leaders ensure that strategic initiatives are executed effectively, contributing to the success of overall organizational change.
Aligning Financial and Organizational Performance
Integrating financial management with organizational performance metrics helps companies identify areas for improvement and align resources accordingly.
This holistic approach ensures that financial strategies support broader business objectives, leading to improved overall performance.
How Does Financial Management Help Unlock Business Growth Potential?
Unlocking business growth potential doesn't always involve creating new products. It can also involve improving financial management.
Improving a company's financial management unlocks business growth potential by providing the framework and tools needed for strategic decision-making, resource allocation, and risk management.
How can financial management help companies unlock business growth potential? Here's how financial management can contribute to business growth.
Helps Manage Capital Allocation and Investment Decisions
Effective financial management helps identify the best investment opportunities, ensuring capital is allocated to high-return projects or business units.
Effective financial management can also evaluate ROI (Return on Investment), which is essential for increasing market share, expanding operations, or launching new products.
Furthermore, businesses can optimize resource utilization, ensuring funds are used efficiently to generate long-term value, not just short-term profits.
Controlling Costs and Increasing Profitability
Financial management focuses on minimizing unnecessary costs while maintaining quality and productivity.
By streamlining operations, businesses can achieve higher profitability, which can be reinvested in growth initiatives.
By closely monitoring costs, revenues, and financial performance, businesses can increase their profit margins, allowing more funds to be allocated for innovation and expansion.
Improving Cash Flow Management Effectiveness and Financial Flexibility
Effective financial management ensures that businesses have sufficient liquidity to operate smoothly, even during periods of economic downturn.
This flexibility allows companies to capitalize on growth opportunities as they arise.
Becoming a Tool for Risk Management and Sustainability
Financial management helps identify and manage risks, including market, financial, operational, and strategic risks.
By minimizing risk, companies are more likely to thrive and invest confidently in future growth.
Financial management also ensures businesses focus on sustainable practices, maintaining a balance between growth and financial stability. This is essential for creating long-term shareholder value.
Improving Data-Driven Decision-Making
Financial management enables companies to forecast trends, budget effectively, and set achievable goals. This is essential for both short-term goals and long-term strategies.
By analyzing financial data, companies can track performance, adjust strategies, and stay on track to achieve their growth goals. This ensures that businesses are proactive rather than reactive.
Attracting Investment and Capital Access
Healthy and well-organized financial statements will attract investor confidence, which can increase capital inflow.
Companies that demonstrate strong financial discipline and profitability are more likely to attract investors, which can drive further growth.
This also improves the company's ability to obtain loans, funding, or equity investment, providing the necessary capital to expand operations.
What is financial management training?
After understanding the importance of financial management training, companies need to provide opportunities for their employees to improve their financial management skills, one way of doing this is by participating in financial management training.
Financial management training programs are designed for business professionals and executives to develop the ability to think, act, and make decisions in an integrated and cross-functional manner.
The existence of financial management training is motivated by the understanding that financial management knowledge is no longer solely the domain of those in the finance department. Today, all professionals, especially those at the mid-level and above, need to understand corporate financial management to achieve optimal performance.
The financial management training program conducted by Prasmul-Eli is not just ordinary training, but a certification program that equips participants with financial management skills, including:
- Financial Analysis Skills
The ability to read, understand, and analyze financial statements (balance sheets, profit and loss statements, and cash flow statements) to assess a company's financial health and performance.
- Valuation Skills
The ability to assess financial assets such as bonds and stocks, and evaluate a company's value. This is essential for investment and M&A decisions.
- Investment Decision-Making Skills (Capital Budgeting)
The ability to evaluate and decide which long-term investment projects are worth accepting or rejecting using methods such as Net Present Value (NPV), based on the concepts of Time Value of Money and Cost of Capital.
- Working Capital Management Skills
The ability to efficiently manage a company's short-term assets and liabilities to maintain liquidity and ensure smooth day-to-day operations.
- Financing Strategy Design Skills
Able to design an optimal capital structure (debt and equity mix) and determine other financing policies such as dividend and leasing policies.
By participating in this financial management training, participants can benefit from:
Improving the Quality of Decision-Making
Providing a comprehensive understanding of the theory, practice, and current issues in corporate financial management to improve the quality of decision-making and investment strategies, both short-term and long-term.
Improving Risk and Return Analysis Skills
Improving executives' ability to understand risks and returns in the financial industry.
Optimizing Investment and Funding Decisions
With a better understanding of risk and return, participants can optimize decisions related to investment opportunities and choices, funding sources, and dividend policies.
Who should participate in financial management training?
Is financial management training only for finance departments or employees with financial expertise? The answer is no.
The following are the people who should take financial management training:
- Company Business Development Teams
- Credit Analysts, Risk Management Officers, and Bank Loan Officers
- Financial Controllers, Finance Managers, Treasurers, and senior finance staff
- Fresh graduates who want to become entrepreneurs
- Managers from non-finance departments who want to improve their knowledge of financial management to support their work.
- Consultants and other professionals who want to enhance their knowledge of financial management.
How Healthy is Your Company's Financial Management?
How is your financial management? Is it still considered safe or does it need significant improvement?
By managing your finances healthily, your business will grow. If you need the right partner to improve your financial management skills, prasmul-eli is the answer.
To equip professionals with adequate financial management skills, prasmul-eli offers a financial management training certification program.
The goal is to help as many companies as possible unlock their business growth potential.
Let's improve our financial management and keep moving forward.
