9 Tips For MSME
Financial Management For Beginners
Management is a company engine that determines the progress and decline of a company, both large companies and MSME-level companies. One of the most important things for MSMEs is professional business management. This time we will review MSME financial management for beginners.
As is known, finances are sometimes a problem in MSME business operations. This problem can actually be overcome by optimizing the financial management carried out.
So, what are the MSME financial management tips that can be applied?
Financial Management, What is it?
- In general, financial management is the process of handling business finances through budgeting, setting goals or targets, recording expenses and income, and investment. Through this process, finances will be healthy, so that the desired profit will be obtained.
- Incidents such as late payments, running out of stock, and bankruptcy can be due to errors in financial management in your business and that is one of the problems that often occur in MSMEs. That is why financial management is very important in your business.
SME Financial Management Tips
For companies, both large and small, they must provide resources for financial management. How do you manage finances for small businesses? Here we will review SME management tips for beginners.
1. Avoid Additional Expenses That Can Be Avoided
There is one small thing that sometimes makes you have to spend additional costs because you are not on time in paying. One of them is internet costs.One provider in Indonesia makes a rule that if internet payment is made after the 20th of each month, a fine of 5% of the total cost will be imposed.If your monthly internet costs are, for example, 800 thousand, then you will be fined 40 thousand. Maybe that feels quite small. But keep in mind, you may not only pay for the internet. There are electricity bills, credit cards, telephones, or it could be capital credit installments at the bank.If these points are accumulated, they will be large. And this happens only because of a ‘violation’ of one point, namely not being on time. The thing that can be done to improve is to always be on time in making payments.
2. Pay Attention to Expenses
Even though the business has been running perfectly, in essence you are only turning over money, similar to the game of dakon. In turning over money you need to pay attention to expenses. Every period of time you definitely spend some unavoidable costs.Monthly expenses such as monthly bills, funds to pay employees or operational costs must be paid attention to. Don’t let it happen that when you do an ‘improvisation’ to beautify the appearance of your business, it will actually be a burden on expenses.Continue to channel funds to monthly items consistently. However, observe if there are changes in the amount of expenses, besides that think carefully when you are going to add a new expense item.Will it benefit your business or will it only be a burden. Reduce unnecessary expenses such as the use of credit cards, subscription TV and so on.Expenses that have been made must be recorded properly by managing accounting books. You can also use simple software to record accounting transactions. Expense records will make it easier to monitor.
3. Beware of Debts and Receivables
The disease of entrepreneurs in general is wanting to have something even though financially the company does not yet have a stable and healthy income. Usually this will end up taking credit.In fact, credit is the same as buying goods at a price 20-7-% more expensive. Of course this is more economical if you buy with cash.In addition, do not easily give trust to people who take goods from your company but with non-cash payments. This means you have receivables from other people.
4. Company and Personal Finances
To facilitate the management of the funds you have, it is better to separate the funds from the company and your personal funds. Use different accounts for both.If company money is mixed with your personal money, it will be unclear how much personal money and how much company money. This will make it difficult for you to control your personal finances.In addition, record all transactions properly. Including when you take funds from the company for personal use or your debt to the company. So that one day you are required to return it.The owner gets money not from the company’s profits. However, the owner should still get a salary. You can set the amount of salary and pay yourself.
5. Buying Company Assets
Plan to buy assets that will be owned by the company. Especially everything that supports the company’s operations.Always pay attention to the company’s capabilities if you buy something in large quantities. You can plan with a specific target. Like this year buying item X and next year buying item Y and so on.If you don’t plan to buy something that can support your company’s operations, of course your company will not make significant progress.So think carefully, what should be owned and what is not needed. Focus on the usefulness and effectiveness of the company’s operations.
6. Create a Budget Plan
Creating a budget plan for the next period of time can be very useful for the company’s financial security. The budget plan will clearly describe the company’s income, operating costs, expenses and profits. The budget plan is a guide to using funds more wisely.The budget is also able to estimate the amount of income that will be received. If the income turns out to be lower than projected, you can find ways to cut expenses and increase income.
7. Manage Inventory
If you feel at a loss when you have to replace goods that are damaged due to use or age, then it can be said that you have failed to manage the company’s inventory.In fact, the goods you own, whether company goods or personal goods, will always experience depreciation until they are useless at a certain point. This is a certainty that must be accepted even though each item will have a different level or percentage of depreciation.It is better if all goods owned by the company have detailed records including depreciation records. This is related to planning for rejuvenation or procurement of new goods in a certain period.Usually, in a professional company, procurement of goods or rejuvenation will be carried out every certain period of time even though the existing goods can still be used.
8. Cut Expenses and Increase Income
Can companies cut expenses and increase income? The answer that entrepreneurs are waiting for is of course the answer ‘yes’.To cut expenses, first analyze the company’s expenses. By looking at the area and amount of current expenses, you can reduce and eliminate one of the expense items.For example, when customers start to come in and trust your company, and income starts to be constant or even increase.Well, with this condition you can try to stop advertising that can be stopped or started at any time such as paid advertising on social media. Or you can let go of your dependency on paid search ads and maximize SEO-friendly content.To increase revenue, you can do several strategies. For example, offering discounts, promoting products through free email marketing or social media ads, adding new products for sale, and building other programs.
9. Cash Reserves
The company must have sufficient cash reserves, cash reserves are reserves of money that can be cashed at any time, not in the form of receivables. This is to overcome unwanted things.The existence of a pandemic can be a lesson that company reserves are very important. Many companies have worked around business during the pandemic but ended up collapsing. Very sad.
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