What is financial intelligence and how to apply the concept in your company?

After all, financial intelligence can be a relevant element for business management — contributing to its maturation and enterprise development. Therefore, it is worth knowing how the concept can be applied in the administration of your business.

Want to know the answer? Continue reading this article to understand what financial intelligence is, how important it is for companies and how to apply the concept to your business!

What is Financial Intelligence?

Financial intelligence represents a set of good practices related to the way you handle money. On a personal level, many people tend to associate the concept with the accumulation of resources.

However, although there is a relationship between financial intelligence and the expansion of equity, the ideas are not synonymous. Instead, the focus of financial intelligence is on making the best use of your money — no matter how much money you have available.

Therefore, there are several elements linked to this concept. Day-to-day savings, healthy consumption habits and good investments in the market are examples that deserve to be highlighted.

In addition, financial intelligence can be developed in your daily life — both personal and business. From it, you can achieve more balance in these areas of life.

What is the importance of this concept in the business scope?

As you have seen, the concept of financial intelligence also applies to business management. In the business environment, it represents good corporate finance management practices.

Even in the business context, financial intelligence can be even more important than in the personal context. This happens because, naturally, managing your business budget can be more complex than controlling your personal finances.

The adoption of good financial practices helps, for example, to manage the company’s working capital . In this way, the business can have resources available to cover daily expenses, minimizing the risks of the operation.

Financial intelligence will also be valuable to enable the company’s growth. Through more conscious use of available capital, it will be possible to execute expansion plans and take the business to new heights.

Still, failing to adopt these good practices can bring risks to the company’s processes. If there is inadequate management of resources, indebtedness can increase. In this situation, the business may have its development compromised.

How to apply financial intelligence in the company?

Now that you know what financial intelligence is and how important it is for companies, it’s worth knowing how to apply the concept in your business.

Check out the main steps to consider when adopting this practice!

Diagnose the current situation of the company

The first step to having financial intelligence in the company is to diagnose the current situation. Through this process, it will be possible to identify how the business is in terms of financial health and what are the management challenges.

The diagnosis will also function as a business mapping. From it, you will understand how the current results are and whether they are satisfactory for the company’s objectives. In addition, the process makes it possible to identify areas for improvement in financial management.

For example, if the company has many financial commitments, it will be interesting to categorize them according to the term. Thus, there is a way to organize finances to avoid accumulating debt and even find better payment terms.

Strategically plan development

After diagnosing the company’s situation, the next step in adopting financial intelligence is to draw up development plans for the business. Therefore, it is necessary to define the company’s objectives for the short, medium and long term.

These goals must be achievable and, in fact, important to the organization. In this way, it will be easier to allocate the necessary resources to each area of ​​strategic planning in order to achieve the objectives.

It is also necessary to analyze the results frequently. Practice will be essential to see if the current planning is having the expected effect or if it is necessary to make adjustments to the route.

Adopt performance indicators

Performance indicators are key elements for business management. They collaborate, for example, to increase employee productivity and optimize the execution of internal business tasks.

They can also serve for finance management. There are even many relevant financial indicators for small and medium-sized companies, such as:

  • fixed and variable costs;
  • cash flow;
  • profit margin;
  • average ticket;
  • customer acquisition cost;
  • between others.

Understanding them and regularly monitoring the numbers contributes to an increase in clarity about the company’s financial situation. If inconsistencies are identified, you can work faster to find solutions.

Make data-driven decisions

Company management becomes smarter when decisions are made based on data. That is, managers must have relevant and current information to study the next steps of the business according to the market moment.

Financial indicators, for example, will contribute positively to effective decision-making. In addition, it is worth analyzing market projections about the company’s niche to have even more solid information.

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