Financial management and accounting: Strategies for business growth

The ability to manage the nuances of financial management and accounting is crucial for achieving sustainable business growth.¹ It enables companies to navigate the complexities of managing operational costs, optimizing investment strategies, and responding to changes in market trends. Organizations also need financial literacy to manage budgets, earnings, and tax benefits and to make the most of the resources available to them.²

A business’s growth and longevity are closely linked with its financial management and accounting practices.³ All executive decisions can be made with the company's bottom line in mind and how efficiently it can manage and allocate its financial resources.

This post explores several financial management and accounting strategies for business growth.

Effective financial management enables companies to optimize resources, mitigate risk, and generate future growth opportunities using current and acquired capital. By making strategic decisions, business leaders can help drive the long-term viability of available resources and take advantage of emerging markets.⁴

For shareholders and interested partners, effective financial management is a key factor in considering long-term partnerships and relationships between vendors and service providers. The two leading indicators of a business’s long-term success are:

• Liquidity: The ability of businesses to generate enough funds to pay expenses⁵
• Profitability: Reliable return on investment in the long term⁵

While the financial situation of every company differs based on its industry, size, and objectives, there are a few tried-and-tested standard financial management strategies that can be used to maximize the profitability and efficiency of a business.⁶

Implementing automated accounting software can reduce the rate of manual error, save time, and increase efficiency.⁷ The same application can often be used for managing financial transactions, invoice processing, and record-keeping.

Periodically reviewing and analyzing expenses in order to identify areas of deficit or excess can help companies adjust their budgets according to their needs.⁸ Managing expenses can also include renegotiating contracts and taking advantage of bulk purchases and long-term contracts.

Establishing more than one revenue stream, such as subscription fees, renting ad space, and consultation services, can reduce the financial stress of having to depend on a single product or service offering in the market.⁹ This can enhance the company’s financial stability and attractiveness to investors.

Planning for the tax deadline allows companies to take advantage of tax credits, deductions, and government incentives.¹⁰ Similarly, you need to remain updated on taxation and business law changes to minimize legal liabilities.

Ensuring the financial health of a business is fundamental to its stability and growth.

Regularly monitoring financial statements, managing cash flow efficiently, and controlling business expenses are critical aspects of maintaining a healthy financial status. By leveraging robust financial data and strategic financial management, businesses can make informed decisions that drive long-term success.

Accurate and timely financial statements provide a clear picture of a company's financial performance and position. They are essential for making informed decisions, securing funding, and ensuring compliance with regulatory requirements.

Financial statements include the balance sheet, income statement, and cash flow statement, each offering unique insights into different aspects of the business's financial health. Utilizing comprehensive financial data, companies can assess their financial management strategies, identify areas for improvement, and make necessary adjustments to maintain fiscal responsibility.

Effective cash flow management ensures that a business has enough liquidity to meet its obligations and invest in growth opportunities. This involves monitoring inflows and outflows, optimizing receivables and payables, and maintaining adequate cash reserves.

Strategic financial management of cash flow is crucial for sustaining daily operations and funding future investments.

Through the implementation of financial planning techniques, businesses can forecast cash flow trends, prepare for potential shortfalls, and seize new opportunities without compromising their financial stability. A robust cash flow strategy is a cornerstone of sound financial management.

Controlling business expenses is crucial for maintaining profitability. This includes regular expense reviews, cost-cutting measures, and strategic investment in areas that offer the best returns. By analyzing financial data and identifying spending patterns, businesses can implement financial management strategies to reduce unnecessary costs and enhance efficiency.

Effective expense management supports current financial health and contributes to long-term financial strategy by reallocating resources to more productive areas.

Through disciplined financial planning and proactive management of business expenses, companies can optimize their financial performance and drive sustainable growth.

For those looking to deepen their expertise in financial management and analysis, the course FIN 706: Finance offers an excellent opportunity to build essential skills.

This 3-credit course is a key component of KU’s online MBA core and is designed to lay the groundwork for more advanced studies in financial analysis.

• Forecasting cash flows and cash flow analysis
• Working capital management
• Time value of money
• Operational and financial risks
• Valuation of real and financial assets
• Capital budgeting decision tools
• Modeling rates of return

Finance is a required course in KU’s fundamental Online MBA core that lays the groundwork for more advanced studies in financial analysis. With a focus on applying financial concepts to real-world issues, the course provides an overview of both personal and corporate investment with the goal of creating self-sufficient financial managers. Students will develop analytical, measuring, modeling, and forecasting skills through practice problem sets, case studies, and formal assessments.

Students should expect a cumulative learning experience as they progress through intensive modules that layer and build upon topics and skills. Students will begin with an exploration of markets and financial institutions from which they will define the role of the financial manager in a corporate setting. Corporate goals will drive analysis throughout the remainder of the course, addressing essential topics like the time value of money, cash flow analysis and forecasting, selective accounting and capital budgeting, differentiating risk, and modeling rates of return.

Using historical data to analyze market trends and forecast financial performance can help you set realistic budgets and manage expectations internally and with stakeholders.¹¹ Working around market changes is crucial for maintaining accurate financial reporting and laying a solid foundation for planning future growth.¹²

Developing multiple financial models based on different possible scenarios can act as a safety measure, preparing you to adjust to a variety of circumstances. This also allows for more flexible decision-making based on available resources and potential risks. Experienced business leaders can effectively adapt to sudden changes in market conditions or industry-specific challenges.

Company finance leaders can rely on past financial and economic data to estimate future expenses and budget accordingly. By carefully analyzing trends in historical data sets, they can better identify patterns and predict potential changes in costs and revenue opportunities. This allows for more reliable financial roadmapping, helping executives make informed and strategic decisions that optimize their financial performance in the long term.

Instead of starting from scratch every financial quarter, it's best to make changes to existing budget plans depending on performance, sales, and predictions. This incremental approach to budgeting promotes continuous adjustments based on recent financial outcomes, which can be more responsive to changing market conditions. It also helps maintain a stable financial strategy with a focus on flexibility to react to unforeseen challenges or opportunities.

By regularly comparing your current budget to past iterations and how well they achieved the desired outcomes, you can better understand performance gaps and inefficiencies.¹³ The variance analysis process allows business leaders to pinpoint where financial predictions diverged from actual results. They can use this data to forecast more accurate results for future financial quarters.

A proactive approach to financial risk management is necessary to ensure a business’ continuous growth even during strained times.¹⁴ This involves conducting regular assessments of potential financial threats and continuously monitoring risk management tactics. That way, businesses are more likely to survive and recover following financial or market troubles.

Investing in various insurance policies helps protect against unforeseen events that may affect the business’ assets or reputation, including natural disasters, liability claims, and cybersecurity threats. It’s a proactive approach that can offer more financial safety and stability by covering the potential losses of a possible disaster. Additionally, comprehensive insurance policies can enhance a company’s reputation with investors, partners, and clients.

Forming long-term partnerships and contracts with other businesses allows you to share future risks and work toward a solution as a team rather than individual entities.¹⁵ It’s a collaborative approach that combines resources, expertise, and networking opportunities to boost innovation in the industry through an agreement of shared risks.

Establish financial buffers in the form of liquid savings, assets, and equity to ensure sufficient funds during economic downturns. Those can act as a financial safety net for the company, allowing it to continue operations even when revenue is low. Furthermore, a solid emergency reserve can offer businesses added flexibility to take advantage of new market opportunities, like acquiring assets at reduced prices or investing in growth initiatives.

A financial management MBA provides a deep understanding of how financial decisions influence a company’s operations, ability to innovate, attractiveness to investors, and sustainable growth. The University of Kansas’ online MBA program instills the necessary skills to handle the operational, financial, and managerial aspects of running a business.

Interactive learning tools and collaborative assignments help you get to know your professors and peers while networking events connect you with the Jayhawk alumni community.

Earn your degree from the #9 online MBA program in the country, where 87% of graduates reported receiving a salary increase after completing the program.^{16, 17}

Get in touch with an admissions outreach advisor today.