Written by Cobus Terblanche, Training Force Chief Financial Officer
TIMES ARE TOUGH… This is a statement we often hear these days, and in our current environment, it’s a hard reality. From South Africa to Training Force, all the way through to our individual households, times certainly are tough. Hence, I thought it appropriate to write about some fundamental principles regarding good financial management.
In this environment, understanding the basics is the key to success. These principles do not only apply to our day-to-day operations but also to personal financial well-being.
Budgeting
For our operational teams, the concept of budgeting aligns closely with project planning and running of a successful project. It involves strategic thinking about where financial resources should be allocated to achieve the best project outcomes. A well-thought-out budget serves as a gatekeeper to show us where we might be going wrong in the way we’re running our projects and where we’re bleeding financially.
On a personal level, budgeting is a tool to showcase your financial priorities. Identifying and allocating funds for necessities ensures financial stability and protects you from unnecessary expenses. Again, it serves as a gatekeeper to show you where you are overspending + where you potentially have wasteful expenditure.
Expense tracking
Operational efficiency depends on meticulous record-keeping, especially when it comes to expenses. Tracking every transaction, no matter how small, allows us to maintain transparency and control over our financial activities. This disciplined approach contributes to the overall financial health of the company.
Similarly, on a personal level, maintaining a record of expenses is a practical habit. It provides a clear picture of where your money is going and allows you to identify areas where you might have wasteful expenditure or costs you no longer need/use.
Cash flow management
There is a saying “Cash is King”. It’s also referred to as “business oxygen” and is the most evidential sign of a strong balance sheet. Our business cannot breathe without cash flow.
All businesses need cash to achieve their short-term goals – to pay employees, trade suppliers, and a host of other expenses. It’s therefore vitally important to manage cash flow through forecasting, budgeting, and the use of variance analysis.
A sign that a business is doing well is one that regularly maintains a minimum cash reserve for rainy days/protection. At Training Force, the key to strong cash flow management is to invoice our projects timeously and collect the cash/payment as quickly as possible. Remember, every sale we make only realizes when the money is in our bank account.
On a personal level, the most important habit is to save. Once our salary hits our bank account, try to store/save some of it (however small amount) in a separate account. This will protect you for when life happens, and you need to pay an unplanned expense. Also, as mentioned under the expenses section, try to cut out wasteful expenses or costs you no longer need/use.
Team communication/shared financial responsibility
At Training Force, communication between teams is essential for financial success. Open communication about financial goals and challenges allows for a more cohesive approach to decision-making.
2024 is dubbed the “year of the client”. To honour this commitment, communication between our different teams is essential to ensure the best customer experience and empathy. This, in turn, will ensure our financial sustainability.
Likewise, at home, involving family members in financial discussions and decisions promotes shared responsibility. Establishing financial goals together and working towards them creates a sense of unity and purpose.
Recognising achievements, large and small
Excellence deserves recognition, and celebrating achievements, no matter the scale, is crucial for me. Acknowledging successful projects, meeting targets, and staying within budget fosters a positive and motivated work culture.
Similarly, at home, recognizing and celebrating financial milestones – be it a successful budget adherence or a well-planned purchase – reinforces good financial habits and encourages continued discipline.
In conclusion, these fundamental principles, when applied with diligence and consistency, lay the groundwork for success. Whether at work or in your personal life, embracing these practices contributes to stable and thriving finances.
Thank you, and here’s to the shared quest for financial success.
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