7 financial management tips for SMEs

Financial management is the ability to correctly manage your company's resources. Beyond what you sell, it is essential that you manage what the company owns because this has a positive impact on its management.

The post-industrial company has to make selling a priority, of course, but in today's competitive environment and with such low margins, finance-related issues are crucial. Having a good cash flow or better financing possibilities will give you an additional advantage, for example.

There are a number of tips that can help you improve your management. The most relevant aspects are the following:

1. Be clear on the metrics

The metrics you use for the financial management of your company must be useful, clear and easy to implement. The most important thing, in the financial area, is to know how much you sell, your customers, the profitability per customer, your cash flow, your ROI (Return on Investment), debt ratio and profits.

In short, all this data will help you to have a true picture of the company's financial status. Selecting the right metrics is also a way to avoid wasting time with irrelevant information.

2. Be strict with the payment to suppliers

Payments to suppliers must always be treated as a priority, and this for several reasons. Firstly, because this is the way to avoid problems with stocks and to avoid compromising your cash flow. On the other hand, and no less important, because it will be easier for you to negotiate price reductions if you are punctual.

Therefore, meeting your payments to suppliers in due time and form must be non-negotiable. This is something that, in the long run, you will notice for the better. One of the details that mark out the solvency of a company is, precisely, the payment to suppliers.

3. Reduce your costs and review them

Cost reduction is a premise of every company, but so is its review. This implies, for example, that you have to review your expenses continuously and compare them with previous months or years. One question you have to ask yourself is, do I really spend for what I need?

Another aspect you have to do in parallel is to check the market. After all, the general external context will give you clues as to where you can save. There is always something where you can save a few euros and that is crucial for the bottom line.

It should be noted that cost reduction is not only due to previous mismanagement. Time lag is possible and catching up as soon as possible also makes a difference.

4. Review your external financing

The external financing you resort to is a recurrent source of expenses. In this case, it is important that you pay attention to issues such as the status of your loans, credits and policies. And, what's more, you should make sure that your level of indebtedness is in line with what you need.

In addition, it is advisable that, if you need financing, you check the interest you are going to pay. This is an issue that makes a difference and that, in the long run, is noticeable. Many companies go bankrupt due to lack of financial maneuvering, so this is a key issue. In addition, failure to repay a loan in due time and form has other negative consequences, such as inclusion in delinquent files or the non-granting of new financing.

In recent years, new financing formulas have appeared, such as fintech companies or crowdlending. It is good to consult these possibilities, as long as they compensate you.

5. Periodically check your results

Periodically checking your results will let you know if you are doing things right. It is true that you have to take into account the global economic context, but it is one of the most reliable variables of your financial management.

Remember that your results are not only related to what you sell, but also to your cost management. It is, therefore, a magnitude that you have to compare whenever you can. The reality is that this question is central to your ability to improve your financial management. Without having a place to compare, you will be going in blind and that multiplies your chances of getting it wrong.

The emergence of Big Data and ERP has made this process faster. Now it is possible to compare not only fiscal years, but days and months of successive fiscal years.

6. Manage collections diligently

Payments need to be diligent, but collections even more so. It is essential that you have a history of each customer to know if they are paying in a timely manner. And, of course, you should remind them if a customer is late. In addition, this information should help you to stop working with customers who do not offer guarantees.

Cash flow tensions are all too often related to this mismatch between payments and collections. Consequently, and as a general principle, you will have to have clear dates and ceilings to avoid problems.

7. Incorporate a comprehensive management software

The management software is one of the key tools for you to know quickly and in real time the financial status of your company. The ERP SAP Business One allows you to perform financial management in an agile and efficient way, consulting the information in a timely manner.

Today, automation is a path of no return and is applied by almost all companies. Having first-hand information is necessary to make decisions and these tools make it easier.


The guidelines we have indicated on financial management for SMEs will allow you to be more competitive. And, of course, investment in management software is a strategic issue. In SEIDOR Business One we have several solutions adapted to the idiosyncrasies of your company.