Management of costs and expenses directly impacts the business

 Do you know the real difference between costs and expenses? The fact is that people often confuse costs, investments and disbursements and end up getting lost in the process. Before that happens, it's time to stop and evaluate. This is because clarity in this regard is essential for any business that seeks balance in finance.

A valuable tip is: getting started right costs less time and money than correcting the mistake later. By balancing and being aware of how much is spent and what the cost really is, the entrepreneur minimizes losses, defaults, losses, in short, the consequences are smaller.

Now, if there's a feeling that the years go by and the work increases, but the profit doesn't grow in the same proportion, some bottleneck exists and usually it comes from the finance department.

In this sense, if you feel this bottleneck in your company, stop and pay attention to cash flow. Evaluate what goes in and out every month, and always have working capital available to pay expenses. From there, with the cash up to date, it will be possible to make a financial assessment of the business.

It is worth mentioning that the billing is not responsible for the sustenance of your company, but the profit. But not everyone has this clarity. It's worth remembering: profit is the amount you bill, minus the costs and expenses committed to generating revenue.

Finance and time management

When there is no good financial management, costs and expenses are lost and the structure of the company as a whole is harmed. We can see this frequently in many businesses, which decline in a few years of existence, either because of the partners' indiscipline with the management of finances or for many other organizational reasons that impact the business.

And for those looking to structure and improve the management of the financial department, it is worth paying attention to these tips: list your expenses in a spreadsheet, it can be in Excel; put the installments, credit and debit card accounts in this worksheet, as well as fixed and variable expenses; and only then validate with the partners whether or not it is possible to make the minimum expected withdrawal.

This organization will also influence time management, which can be optimized, in addition to unburdening and optimizing the team's work. All this will reflect up front – in your profit.

Finally, remember that your business does not depend on how much you earn, but on how much you spend.

Posted By: John Labunski