With 73% of businesses expecting revenue growth and 46% planning to increase investments in the coming year, optimism is clearly high. But to turn that optimism into tangible results, you need a plan. 

Building a solid financial foundation helps create the structure and foresight your business needs to succeed, whether times are challenging or booming.

Let’s explore some of the key financial strategies you should implement and revisit to boost business performance, maximize profitability, and stay ahead of tomorrow’s market challenges. 

What is financial management?

Financial management boils down to making strategic money choices to ensure a business performs in an optimal and sustainable way. It involves organizing, directing, and controlling financial activities — like budgeting, managing cash flow, forecasting, and investing — to ensure every dollar supports the company’s financial goals and growth. Ultimately, a strong financial management strategy should equip you to better navigate challenges, seize new opportunities, and ensure business profitability.

Importance of financial strategies

When it comes to business finance, having a plan beats guessing and hoping for the best. A proactive financial strategy empowers you to shape your business’ future rather than reacting to what comes your way. It helps you better anticipate challenges and direct resources where they'll make the most impact. Not to mention, you’ll have the flexibility to adapt, stay focused on company goals, and make decisions with confidence no matter what the market throws at you.

Key financial strategies for your business 

Whether you're looking to maintain stability or drive growth, embracing the right financial strategies will be a vital part of the process. Here are the top strategies to lay a strong financial foundation for your company: 

1. Capital structure planning

This strategy involves determining the ideal mix of funding sources — such as retained earnings and various forms of debt — to finance your company's operations and growth. The goal is to balance the benefits and risks associated with each type of capital. A well-planned capital structure will help you lower financing costs, reduce risks, and maintain flexibility to seize future opportunities. 

2. Investment planning

Investment planning is all about allocating resources to invest in long-term assets that help grow, diversify, and modernize your business. This process includes both acquiring new assets and disinvesting in outdated and underperforming ones. Implementing this strategy ensures you use capital in ways that will have the most impact, whether that’s expanding operations, entering new markets, or updating technology. It’s about making smart choices about where to put your money to achieve the best return, all while keeping the company agile and ready for growth.

 3. Working capital planning

Managing working capital ensures your business has the cash it needs to cover everyday expenses and keep operations running smoothly. It's about keeping enough liquidity on hand for regular expenses, optimizing cash flow, and preparing for future financial needs. By carefully planning how to use and allocate funds, you can maintain the right cash balance on hand while tackling unexpected costs.

7 Best practices for effective financial management

Now that you know the key financial management strategies to implement in your business, let’s explore some guidelines to keep in mind as you put these strategies into action.

1. Analyze financial statements

Review your financial statements regularly to get a clear picture of your business' financial health. Understanding your balance sheets, income statements, and cash flow statements will help you spot trends, uncover potential issues, and make informed decisions. This will not only clarify where the business stands financially but also where it's headed, allowing you to consistently evaluate and adjust based on actual performance.

2. Evaluate profits and losses

Monitor your income statements to evaluate your expenses, revenue, and net profit. This will help you pinpoint which areas are bringing in profit and which are driving losses, allowing you to cut unnecessary costs and optimize spending to boost profitability. Paying close attention to your income statements will also provide a clear financial snapshot, showing how well your strategies are performing and guiding future decision-making for better results. 

 3. Create and monitor budgets

Develop detailed budgets that align with your business goals, and regularly track how you’re performing against them. This will help you stay on target, identify areas of overspending, and manage resources more effectively. Keeping a consistent eye on spending will also support better decision-making and allow you to communicate accurate progress with stakeholders. Think of the company budget as the ultimate source of spending truth—a reliable tool to keep spending in check, meet business objectives, and lay a strong foundation for company-wide initiatives.

 4. Monitor debtors

Keep a close eye on your accounts receivable to prevent overdue payments and keep cash flow steady. Make sure you have clear credit policies in place and always follow up promptly on any outstanding balances. Decide how much credit you’re comfortable extending and set limits to manage risk. Regularly review and tweak your debt recovery strategies to keep things running smoothly. This will help improve your overall financial management and ensure the finances remain in top shape. 

 5. Update and safeguard records

Fraud and data breaches are more common than ever, so take the necessary steps to protect your financial data. Start by investing in reliable software specifically designed for data security, and make sure to update your settings regularly to keep your information as safe as possible. Set up controls like passwords and access permissions to limit who can see or modify sensitive financial details. This way, not only will you gain more peace of mind, but also strengthen your defense against potential tampering.

6. Track expenses in real-time

Stay on top of your spending by tracking expenses in real-time. To do this, you’ll need to leverage innovative payment tools, like virtual cards and expense management software, that let you monitor expenses as they happen. These tools give you instant visibility into all financial activities, helping you spot any issues quickly, make adjustments as needed, and prevent overspending. By staying proactive with your expense tracking, you’ll have more control over your budget and make smarter financial decisions on the fly.

7. Regular financial audits

Make it a habit to conduct regular financial audits to keep your records accurate and ensure compliance. Audits provide a clear view of the numbers by identifying any discrepancies early and helping you avoid costly mistakes down the line. They also reinforce the integrity of your financial management practices, giving you confidence that everything is in order. Think of audits as routine check-ups for your business’s finances — they keep you aware, prepared, and aligned with best practices so you can focus on growth without worrying about hidden issues.

Get started with Extend

Choosing the right tools can make all the difference in how well you execute these financial strategies and best practices. That’s why it’s essential to equip yourself with a platform that can simplify your company’s spend management. 

Extend offers an innovative solution for automating payments and expense management—all in one place. Want to see how it works? Try it out for yourself, or reach out to learn how Extend can support your financial goals and keep your business spending on track.