The new calendar year is here! So, as you start getting busy putting your business plans into action, just don’t forget to also be mindful of all the domestic and international factors that could potentially impact you this year. With rising inflation and the threat of recession looming in the first quarter of 2023, your priority should lie in safeguarding your business finances against possible risks, in addition to looking up at the horizon for opportunities. Having stable and robust finances empowers you to remain resilient amidst all adversities in the environment while also ensuring you are growing as a business. So, how do you protect your business finances, as well as achieve financial goals throughout this year? To give you a head start, here are our 7 financial tips that can help you navigate Q1 of 2023 (and beyond!).
Our top financial tips for Q1 of 2023
Nothing beats being proactive in business, especially when you’re facing a lot of uncertainties in the market. Our team of finance function specialists have compiled a list of tips to help guide you towards making smarter decisions – starting this quarter, throughout the year and onwards.
- Come up with the best-case and worst-case scenarios that can possibly happen.
Even if you have a well-laid-out plan, it can still go out the window if something unexpected hits and you’re not prepared. Fortunately, you can be more proactive with scenario planning. Scenario planning determines the best and worst possible situations that can occur, including the necessary pivots that you can make within your budgets and overall financial model. At Dexterous, we use a variety of tools and software programs to assess and overlay different scenarios that can positively and negatively affect your finances – thus, helping you adapt your financial model to ensure you will still be able to make ends meet no matter what happens.
- Make sure that your cash balance can adjust to abrupt changes.
Any profitable business can quickly go under if they don’t have sufficient cash to sustain their operations. As a business leader, you must always be fully informed about cash flow levels. The amount may vary from business to business, but it should always meet both short-term needs and obligations. So, let’s say your comfortable cash balance is $200,000 to $250,000 – this, then, should be your new “zero” in case sales fall away. Just remember to also have a cash reserve that can keep up with the growth of your business.
- Be alert and always look for finance triggers.
What are typical signs that your finances are at risk? Some experts predict that there may be a recession in the next 12 months, while others believe that inflation will start declining this year. Nevertheless, you must be aware of what’s happening in your environment, so you know whether to expand your business or conserve more funds. You can do this by observing what your competitors are doing, researching how the industry is performing, identifying market trends, as well as tracking your own figures in your company. You can also assess where your biggest sales are coming from and secure them for the rest of the year or have a contingency business plan in case these sources dry up.
- Re-assess the past 6 months and learn from them.
Understanding how your financial resources were spent over the past few months is the first step to effectively allocating funds this quarter. You can review previous budgets, sales data and assumptions not just to learn where things went wrong, but to also determine what specific action steps must be taken to ensure you won’t make the same mistakes again.
- Follow your experience in thinking ahead and putting plans into place.
As a business leader, you know your organisation and operations best. You understand what signs you should look out for. However, rather than just being reactive, you can also have rolling forecasts that enable you to always look ahead and make continuous adjustments as predictions and trends change. Your finance function should be proactive in doing this. If your finance department isn’t able to do this effectively, speak to us.
- Start with the financial year in mind.
How does this financial year’s performance fit into the overall goals of your business? How can it help you reach your planned financial objectives? By aligning your short-term trajectory with your longer-term one, you’ll be able to make more relevant plans this year. One good strategy is also being on the lookout for new incentives, grants and policies that may impact your tax planning, budget and other aspects of your finances. After all, the first quarter of 2023 is a good preparation period to finish another financial year more effectively and efficiently for your business. Again, your finance function should be proactive in doing this. If your finance department isn’t able to do this effectively, speak to us.
- Take advantage of a hybrid finance team.
Do you need greater business reporting, better financial insight or improved business data accuracy? Or are you just tired of recruiting and training staff for your finance team? If you’ve been continuing down the traditional path of resourcing but you’re still not getting the results you need from your finance team, why not try a fresh approach to an age-old business problem? At Dexterous, we offer a hybrid approach that combines a global workforce with innovative technology. Our team serves as your external finance department working internally for your business – all without the excessive headcount expense. We take care of your business’ financial function, so you can focus more on achieving growth and success this 2023. Learn more about how we can help you cut costs and not productivity with our Finance Department as a Service solution here. Want an instant and reliable finance department to support your success this 2023? At Dexterous, we go far beyond virtual bookkeeping and external accounting services. We provide a turnkey managed finance solution that works for you through a financial, operating and growth lens. This means that we leverage all the latest business tools including Robotic Process Automation (RPA), access global talent and manage your finance department with the local expertise of our Sydney team. We also equip you with a strategic approach and cost-effective function not just to address the challenges of recession today, but to also help you thrive and achieve more growth in the future. Reach out to Dexterous and transform your finance department today. For more information, get in touch with us today or connect with us via LinkedIn.
