What is a Financial Strategy in the company?

The Financial management aims at profit maximization For shareholders, to be able to comply with this, the company needs a financial action plan, so it is important to implement an adequate financial management strategy.

A company, first of all, in order to carry out a financial scheme that is efficient, must establish the corporative strategy, which must be a long-term project. This will only be possible by making use of an action plan composed of management strategies (financial, marketing, communicational, etc.), based on achieving the objectives and goals set.

The financial strategy It is a very important part of corporate strategies, as it encompasses different investment and financing decisions necessary to achieve maximum profit.

What is financial strategy?

It is that part of the strategic management and planning process of any company, which is related to obtaining resources necessary to finance business operations that contribute to the achievement of objectives outlined in the plan, short, medium and long term.

When talking about financial strategy, allusion is made to the way in which the company's money is used intelligently, thinking of the most convenient way in which the greatest amount of money can be benefit.

The management or handling of resources will depend, in the first instance, on the general objectives that the organization seeks to achieve. These strategies are financial decisions in the planning and control of the upper levels in the company, which are fundamental in the life of the company and decisive in the achievement of resources.

In this sense, the financial strategies in a certain company are summarized as policies, objectives and plans based on combined actions undertaken by management to achieve the objectives financial

Bases of a financial strategy

The financial strategy is composed of certain elements that conceive finance as a useful tool designed to comply with the general strategy of the company:

• Study and analysis of the environment (can be used Porter's 5 Forces Tool).
• Setting of objectives and goals.
• Definition of performance evaluation and control devices.

How is a financial strategy composed?

This type of strategy should focus on all financial aspects contained in strategic decisions taken by management, which go hand in hand with the interests of shareholders and markets financial

It is necessarily integrated with two sub-strategies:

• Investment strategies, which establish rules for the selection of possible investments with diversification of risks.
• Financing strategies, which establish the structure of the sources of financial resources.

Once aligned with the general strategy of the organization, it is necessary to obtain numerical information on the operations of the company, (Purchasing Process, sales, inventory management, payments, collections, etc.) in order to manage real data and measure the effectiveness of the strategy.

Purposes of the financial strategy

In order to achieve the objective set in the corporate strategy, the CFO draws up financial strategies with the purpose of:

• Obtain enough capital to cover the assets of the business.
• Achieve sufficient performance in a robust and predictable way.
• Achieve optimal cash flow management.
• Minimize the chances of fraud and other money losses.
• Reduce as far as possible the tax burden on the income of the company and its owners.
• Facilitate the forecast of the financial needs of the business.
• Attach value to the business given the moment.

Benefits of a financial strategy

Due to the sensitivity of money management, it is necessary that the strategy be developed systematically and reflected in a report that will serve as a basis and reference to the organization.

This role must be performed by a financial manager trained to face the difficulties and needs of the company, who has the knowledge and experience necessary to solve in the best way the different contingencies that may arise, in this way the The company is sure that it acts in the best possible way in any situation that affects the business in a competitive market and changing. In this sense, the benefits that a company can have when setting an adequate financial strategy are:

• Any financial strategy should help the company develop a administrative process that ensures the financial and economic sustenance of the company.
• Constant analysis of financial statements, to ensure the correction of any incident.
• Facilitates decision making based on the achievement of organizational goals.
• The perfect combination of all monetary flows, in such a way that the proceeds and the initial capital are integrated and are sufficient for the company to meet its commitments and debts acquired.
• Facilitates effective management of company assets.
• Helps to invest wisely, facilitates decision making regarding future investments.
• It helps the company to have the necessary means for its long-term growth.
• Improves decision-making related to how to finance the company.
• Help to meet the needs of employees and customers.
• Compensates shareholders for the risk carried