Today’s business world is not as calm and predictable as in the past. Competition has grown extra fierce and new technology keeps popping up. This means that businesses have to be constantly evolving and improving their systems to remain competitive and profitable. Most managers are confused on how to go about restructuring their finances. But as is common with such business processes, there is always a way around it.
6 Tips for Financial Restructuring
1. Complete overhaul of the finance department
This is a little bit on the extreme side but is quite doable in many situations. For instance, where the finance department has been proven to be corrupt or to have a mediocre structure affecting its functions, you may need to start over.
This may have had a negative effect on the financial health of the company in the short-term but end up saving the business in the long-term.
As such, there are cases where it is cheaper to terminate all the employees in a department than force them to change their negative but deeply held cultural inclinations. You can then hire new employees and make it clear that they will face the same fate if they slack in their financial duties.
Your finance office might be ineffective due to an excess number of employees, some without clear roles.
Typically, lean departments are more effective and efficient, so you might want to downsize your employee number to achieve that. Essentially, you should get rid of the least valuable workers in such a case.
3. Automating key processes
Let’s face it, unless you’re a multinational business, and chances are that your business’s finance department is running on some older software and may still use paper reports. Such programs and operations may have cause work delays in retrieving records and probably increase financial risks.
It is easier for malicious employees to use such loopholes to siphon money from the business. Fully automating all finance functions with integrated back up and foolproof security features will eliminate almost all the loopholes and keep you in control of your finances. Automated systems are safer since they contain automatic activity logging.
4. Regular audits
When your employees know that you will not carefully study the financial records, they might mess up with the figures or fail to fill some crucial records.
To minimize this and prevent unnecessary losses, you can introduce regular internal audits. These are to be done randomly by an external auditor on the finance department. This will keep all the staff on their toes, and it will be sure to avoid costly mistakes.
5. Redefine your finance strategy
Your financial plan is the reference point of the finance department. If you suspect that the numbers do not add up, you may want to take a second look at your monetary policy to figure out the obstacles. As the business environment changes, your strategy has to change too as business needs are also changing.
For instance, if you have a new company branch in another country, your financial strategy has to accommodate its operations for as long as necessary.
6. Find creative ways of raising capital
Raising finances has the potential to transform the department. This can be in the form of government grants, leasing out property and title loans.
One important aspect that business owners often overlook in their evolution and restructuring strategies is finance. Restructuring your finance department can be one of the most rewarding financial decisions that you can make. The finance department is the most important unit in any business.