February 17, 2025

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20 Tips To Better Manage Business Finances In Unpredictable Times

20 Tips To Better Manage Business Finances In Unpredictable Times

Across industries, businesses continue to be impacted by high interest rates and inflation. These factors not only directly impact entrepreneurs by raising the cost of doing business at unpredictable rates but customers are also affected by increased costs across the board, causing them to become much more selective about where, how and when they spend their money.

With customers tightening their wallets, business leaders must have plans in place to effectively navigate uncertain times and ensure business operations aren’t impacted too much by financial constraints. Below, 20 Forbes Business Council members each share one thing a business can do to better manage its finances in the current economic climate.

1. Focus On The Core Business

There is less space for fancy strategies that require lots of fundraising and entail significant risk. During this time, you should focus on the core of your business and gain effective control. Which services or products are the bestsellers and have the best margins? What are the solid marketing strategies within your industry that have been working for the past 30 years? – Tom Cattarius, Arktisquelle

2. Deeply Understand Business Expenses

Organizations need to fully understand their expense profile at all times, especially in times of high inflation. With well-managed cost structures, organizations can avoid pricing increases, thus enhancing competitiveness. Understand which costs are core to delivering exceptional customer value and protect those expenses. Focus on opportunities to manage costs that don’t add value. – Elise Awwad, DeVry University

3. Adopt Strict Cash Flow Management Strategies

Businesses can stabilize their finances by adopting stringent cash flow management strategies. Building a substantial cash reserve provides a financial buffer against economic fluctuations, and this strategy is more effective when advanced budgeting tools are used. By implementing these measures, businesses can enhance liquidity, stabilize their financial footing and navigate economic uncertainties with greater resilience. – Glenn Gonsalves, RedSwitches

4. Optimize Current Processes

Streamline processes to cut waste and costs. Implement technology to automate tasks and boost productivity. Regularly review expenses and renegotiate supplier contracts. Train employees to be versatile and efficient. By tightening operations and being strategic with spending, businesses can better manage finances and stay resilient amid high interest rates and inflation. – Dr. Christina Carter, Her Practice™

5. Review Expenses

Review expenses with a fine-tooth comb and ask these questions: Is this driving demonstrable ROI? Would I choose to invest in this expense if I was making the decision fresh today? Each day becomes an opportunity to adjust priorities and expenses accordingly. If you’re a seasonal business with punctuated cash cycles, continue to respectfully seek opportunities to collect on accounts receivable sooner and pay later. – Leeatt Rothschild, Packed with Purpose

6. Optimize Business Financing

Optimize working capital in high-interest, high-inflation times. Manage cash flow, inventories and accounts closely. Explore flexible financing options, regularly renegotiate vendor contracts and invest in automation to reduce long-term costs. Maintain a cash reserve for uncertainties and opportunities in challenging markets. – Alessandro Lombardi, Elea Data Centers


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7. Reduce Waste

In the words of Ester Boserup, “Necessity is the mother of invention.” When there is a squeeze on margins, it necessitates a relook at a business. If a business can’t increase income, it must find efficiencies to minimize costs and waste. A sound business will also look to build a surplus or reserve in good times to allow some room for maneuvering when the market is less favorable. – Marian Evans, Elevate BC Ltd

8. Make Clear Financial Plans

Prioritize clear financial planning and stick to sound principles. This means understanding what kind of financing is right for each project, i.e., long-term loans vs. short-term lines of credit. It’s also about not intermingling debt, invoicing on time so cash-in/cash-out is on time and having good supplier negotiations. When the market is unpredictable, make sure to minimize any internal unpredictability. – Junaid Ali, Prismecs

9. Pay Down Existing Debts

Focus on aggressively paying down existing debt, starting with the highest interest-rate loans first. This will reduce the overall interest burden and free up cash flow. Then try renegotiating existing loan terms or consolidating debt at lower interest rates. Implement stricter accounts receivable practices to improve cash collection and reduce the cash conversion cycle. – Gaurav Kumar Singh, Guddi Growth

10. Implement Forward Contracts

As the interest rates rise, stronger currencies can affect a company’s profitability. To mitigate these exchange rate risks associated with foreign currency transactions, consider implementing forward contracts. These contracts serve as a strategic tool to manage and offset potential losses due to fluctuating exchange rates, offering stability in financial planning in changing market conditions. – Meg Yim, MSA Security, an Allied Universal company

11. Set Profitable Ratios

It is critical to set profitable ratios of staffing expenses and cost of goods relative to what a business sells. With rising inflation, a business that is watching these ratios will determine when it is time to raise its own prices to maintain profitability. Unfortunately, many businesses in settings of tighter competition are reluctant to raise their prices. – Sacha Obaid, M.D., North Texas Plastic Surgery

12. Adopt Lean Management Principles

Lean management principles can be followed to cut down on unnecessary additional overhead costs. Close monitoring and evaluation of your opening and closing stock of goods can help your business manage things in a more efficient way by reducing inventories in case of excess stock, which indicates an operational overhead expense not being put to its full use. – Vinay Chandrashekar, Long Boat Brewing Co.

13. Optimize Business Cash Flow

With high interest rates and inflation, it’s crucial to optimize cash flow and cut unnecessary expenses. Start by analyzing your cash flow to see where money is coming in and going out to find ways to improve liquidity. Cutting non-essential expenses helps preserve cash and maintain flexibility. Using technology and automation can streamline operations and reduce costs. – Greg Clement, Leadflow

14. Leverage Technology

In high-interest, high-inflation periods, startups should leverage AI and large language models for precise cash flow forecasting and cost optimization. Focus on smart budgeting, extend operational runway and secure financing with favorable terms. These strategies will enhance financial resilience, ensuring the path to profitability. – Vladyslav Panin, Med.Report

15. Adopt Automation

Embrace automation. For example, automating accounts payable reduces manual tasks to allow more time for strategic decision making while improving data visibility. It also helps capture early payment discounts, avoid late penalties and maintain strong supplier relationships. In turn, this strengthens financial resilience and cash flow, positioning businesses to better navigate economic uncertainties. – Laurent Charpentier, Yooz

16. Invest In Revenue-Generating Initiatives

While cost control is important in an inflationary environment, enhancing revenue is even more critical. Investing in initiatives that directly drive revenue, such as marketing and sales, is crucial. Cutting back on these investments can harm the business in the long run. – R. Paul Singh, The Modern Data Company

17. Consider Strategic Pricing

Don’t underestimate the power of strategic pricing. Analyze your costs, competitor pricing and customer value perceptions. Can you adjust pricing to offset rising expenses while maintaining profitability? Experiment with different pricing models, bundle offers or premium tiers. Communicate value clearly to justify price increases and retain customer loyalty. – Anthony A. Luna, Coastline Equity

18. Prioritize Client Retention

On the client-facing side, it’s easy to overlook the importance of retention in stable markets when the market is full of buyers there to replace lost revenue. Businesses that have grown through challenging markets know that keeping existing clients is more financially efficient than spending resources to find new ones. – Mike Sullivan, OneDigital

19. Adopt Remote Work

I’d recommend capitalizing on remote work where possible. It has been a game-changer for my company in reducing overheads. Less office space, reduced utilities and even hiring part-time or freelance workers for specific projects can significantly reduce operating costs, allowing businesses to better manage their finances. – Ran Ronen, Equally AI

20. Know Your Limits

Focus on things you can control. While inflation, interest rates and government policies aren’t in one’s control, many other things, such as customer focus and employee empowerment, are a few that would help deliver results in good and bad times. – Harsh Singh, Big Apple Admissions

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