12 Examples of Financial Strategies

Nov 30, 2022

Every strategy in finance involves points such as: investments, working capital, profit sharing, financial restructuring, etc.

Once the current status of your company has been assessed, you need to establish the objectives you need to reach and then plan the necessary steps to achieve them.

1. Reduce inventory to its minimum expression, trying not to affect demand and daily production.

2. Defer accounts payable as long as possible, taking care not to compromise the company's image. Paying reduces the company's liquidity and, on the other hand, if you defer payment to a supplier, he may increase the price in the future because he may consider you as a high risk.

3. Whenever possible, give discounts on large amounts for cash payments.

4. Invest in an expansion of your company if you identify the possibility of creating new products or services.

5. If you realize that demand is expanding and catching up with your production capacity, then it is time to seek financing to extend your assets or replace them with updated and efficient ones.

6. You may choose to acquire or merge with another company that generates or provides the same product or services as yours, thereby eliminating a competitor.

7. After many years, many entrepreneurs make the decision to merge with suppliers to streamline their services or to have greater control of raw materials.

8. It is advisable to diversify your products and services, thus covering your fixed costs in low seasons or preventing risks due to changes in policies or agreements that could affect your business.

9. Companies that choose to increase their financing through bank loans also increase their financial risks in terms of possible default; this is aggravated when there is a default on accounts receivable.

10. As a general rule, it is advisable to contract financing within the formal financial system to avoid being subject to fraud or usury.

11. Leverage is a good idea, as long as the return is greater than the total cost of leverage.

12. Clearly establish your objectives, whether they are short or long term, and in this way you will be shaping your financial strategy.

13. If, despite your business experience, you feel that you need help, then you can hire an investment advisor or financial planner, who will then analyze the recommendations that he or she can suggest.

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