Without a good rudder (financial management), the risk of drifting or capsizing is high. Whether you’re running a small startup or a well-established business, financial management is one of the key elements that will determine your success or failure. The idea behind this article is to guide you through 9 concrete financial tips to better understand how to manage your company efficiently and sustainably.
1. Basic financial advice establishing a forecast budget
Why is this important?
A solid annual budget forecast is more than just an accounting document; it’s a plan of attack that will guide you throughout the year. This financial document allows you to anticipate cash inflows and outflows, thus facilitating the optimized management of your company’s cash flow
Consider the example of an entrepreneur who runs a furniture manufacturing business. By creating a budget forecast, they can anticipate the costs associated with purchasing raw materials, production expenses, marketing costs, and employee salaries. Without this budget, they risk facing unexpected expenses, such as a sudden increase in the price of lumber or a delay in customer payments.
Moreover, the State itself operates in this way by publishing a draft finance law every October in order to define the country’s revenue and expenditure for the coming year.
How to set it up?
To create this budget, start by listing all expected sources of income, based on signed contracts or projected orders. Next, list all the fixed and variable expenses you expect to incur. An often overlooked point is the importance of including a contingency fund, as few years go exactly as planned. For example, if you run a restaurant, budgeting for kitchen equipment replacement or unforeseen repairs will help you avoid cash flow problems.
2. Closely monitor the company’s cash flow
a key indicator of financial health
Cash flow is the backbone of your business. Imagine an IT services company that invoices its customers every 60 days. While waiting for payments, it must continue to pay its expenses, salaries, and suppliers. If this company doesn’t carefully monitor its cash flow, it risks quickly finding itself in an overdraft, and late customer payments can put it in difficulty.
Cash management tools
To avoid this kind of situation, implement daily cash flow monitoring. Use financial management tools that allow you to track receipts and disbursements in real time. For example, some software not only allows you to monitor your accounts but also sets alerts if critical thresholds are exceeded.
Additionally, consider implementing follow-up procedures for overdue invoices. The sooner you act, the more likely you are to recover your money quickly and prevent unpaid invoices from piling up.
3. Optimize company expenses
Analysis of fixed and variable costs
Consider a company that uses multiple vehicles for deliveries. Rather than purchasing these vehicles, it could consider a long-term lease that includes maintenance and insurance. This not only helps smooth out costs over the year, but also avoids unexpected expenses related to breakdowns or accidents.
Renegotiate contracts with suppliers.
Similarly, consider pooling certain purchases. If your business regularly uses office supplies,agreet with other companies in your industry to buy in bulk and get preferential rates. Another concrete example would be to optimize the use of company premises. If you only use part of your premises, why not rent the unused space to another company? This generates additional income and helps reduce your fixed costs.
4. Secure investments and asset management
Diversification of investments
Investments can be a powerful lever for growth, but they also carry risks. Consider the example of an SME that decides to invest in an expensive industrial machine to increase its production. If demand drops suddenly or the machine breaks down, the company risks finding itself in difficulty. This is where the concept of investment diversification comes in. Instead of investing all your resources in a single machine, why not divide these resources between purchasing the machine, improving your premises, and building a reserve fund?
Corporate Asset Management
Additionally, make sure you properly insure your assets. Ensuring your equipment, premises, or inventory isn’t an unnecessary expense; it’s a safety net. If a disaster occurs (fire, theft, water damage), your insurance coverage will help limit losses and ensure business continuity.
5. Monitor the profitability of the company
Calculation of essential financial indicators
The break-even point represents the revenue level at which your business begins to make a profit. For example, if you run an online clothing business, knowing your break-even point will help you determine how many products you need to sell each month to cover all your expenses.
Use of financial management tools
Additionally, by regularly analyzing the net margin of each product or service you offer, you can identify the most profitable activities and those that need optimization. Perhaps a high-value product accounts for 80% of your profits, but it only accounts for 20% of your sales. By focusing your efforts on this type of product, you optimize your overall profitability.
6. Implement a company savings strategy
The advantages of company savings
Business savings are often seen as a “plus,” but they should be an integral part of your financial strategy. Let’s say you run a construction company. Purchasing land or expensive equipment can be a worthwhile investment, but it requires available funds. A well-established business savings account will allow you to seize these opportunities when the time arises, without having to resort to costly borrowing.
The different savings products available
You can also use your savings to invest in low-risk financial products, such as government bonds through bond ETFs or euro funds in capitalization contracts for legal entities. In addition, it creates a financial cushion that will allow you to cope with periods of crisis or downturns in activity.
7. Optimize company taxation
The importance of tax planning
Tax optimization isn’t about “finding tricks” to pay less tax, but rather about knowing the legal mechanisms that allow you to reduce your tax burden. Here’s why this planning is important:
1. Reduction of tax burdens
By wisely planning its financial operations and taking advantage of available tax benefits (such as tax credits, tax deductions, or exemptions), a company can significantly reduce its tax payable. This frees up resources that can be reinvested in developing the business, thus improving the company’s competitiveness.
2. Better cash flow management
Tax optimization helps manage cash flow more effectively . By anticipating tax deadlines and structuring payments to spread out expenses, a company can avoid cash flow pressures and maintain greater financial flexibility to cover unforeseen expenses or strategic investments.
3. Compliance with legal frameworks
This involves taking advantage of existing legal mechanisms in a transparent manner while avoiding the risk of reclassification or heavy fines related to tax errors.
4. Valuation of the company to investors
For companies seeking to attract investors or secure external financing, optimized and well-structured tax management is a significant asset. It demonstrates the company’s financial health and its managers’ ability to maximize profits while reducing costs, thereby strengthening the confidence of financial partners.
5. Adaptation to tax changes
Tax regimes evolve regularly. Proactive planning allows you to adapt your tax strategies to new regulations. By staying up-to-date on tax reforms and adjusting your practices, your company can maintain an optimal tax level and avoid unpleasant surprises related to unexpected changes in tax laws.
Tax optimization schemes to know about
To optimize the taxation of your company’s cash flow in France, there are several measures you should be aware of to legally reduce tax burdens while strengthening your financial management.
1. Research Tax Credit (CIR)
The CIR allows companies to deduct up to 30% of research and development (R&D) expenses from corporate tax. This encourages companies to invest in innovation and benefit from significant tax advantages. This scheme is particularly attractive for technology or industrial companies that devote part of their cash flow to innovation.
2. Tax Credit for Management Training
Managers can benefit from a tax credit for expenses related to their continuing education. This amount corresponds to the number of hours spent in training (40 hours/year per company, or €460.80 for 2025) times the minimum wage (SMIC) hourly rate. This allows the company to develop its skills while benefiting from tax relief.
3. Optimization of Deductible Expenses
Expenses related to the company’s daily operations, such as personnel, rental, and travel expenses, are deductible from taxable income. By maximizing these expenses, you reduce your corporate tax base, thus easing the tax burden on your cash flow.
4. The Dutreil Device
It offers a partial exemption (up to 75%) on the value of the transferred business, provided certain retention commitments are met.
8. Anticipate financial risks
Identify risks
Anticipating financial risks means, above all, taking a proactive approach. For example, if you work with a limited number of clients, the risk of dependency is high. Imagine if one of them went bankrupt or stopped working with you; this could lead to major financial difficulties. To limit this risk, diversify your client portfolio and ensure you don’t become overly dependent on any one client.
Implement protection solutions
When it comes to risks associated with exchange rate fluctuations, an importer purchasing products in dollars must anticipate currency fluctuations
9. Surround yourself with financial management experts
No one can master every aspect of a company’s financial management. That’s why it’s essential to surround yourself with experts. A certified public accountant, for example, can help you prepare a projected balance sheet, anticipate tax liabilities, or optimize your cash flow management. A wealth management advisor can guide you in choosing the investments best suited to your goals, whether financial, real estate, or industrial investments.
Surrounding yourself with experts doesn’t mean losing control, but rather giving yourself the means to make good decisions and maximize your business’s chances of success.
In short, managing a company’s finances isn’t just about keeping track of accounts or tracking invoices. It encompasses a multitude of elements that, if properly managed, will enable you to make your company a sustainable and profitable player. Never forget that the key to success lies in anticipation, rigor, and support from competent experts. If you would like to go further and benefit from personalized support, S’investir Conseil, ur wealth management consulting firm, is at your disposal to help you build a tailor-made financial strategy, adapted to your needs and objectives.
