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One of the most important elements of a successful business strategy is effective financial planning and management. Planning is essential to building your business, making smart decisions to grow, and potentially getting funding when needed.

To maximize your bottom line, it’s imperative to have a carefully crafted business plan that you not only execute well on but continually assess and adjust. You should also use all of the tools you can to maximize savings and minimize inefficiencies to secure your financial future.

In the sections that follow, we’ll walk you through the four types of financial management strategies:

  • Evaluating your historical spend
  • Building your P&L
  • Setting and then sticking to a budget
  • Proactively track your spend

Once we have that basic understanding, we’ll cover some of the biggest challenges of implementing financial management and how to overcome them as a business owner.

Access Ramp's free PDF examples and templates of financial statements in our Accounting Documents Library.

Note: It’s always best to consult a professional when making financial decisions about your business. This article is not intended to replace legal and financial advice.

Fundamentals of financial management

A solid financial plan is critical to succeeding in business.And understanding the fundamentals behind financial management is the key to nailing every stage of the planning process.

To help maximize control over your company’s finances and keep everything running efficiently, you need to make sure that your financial management is sound.

The three fundamental principles to keep in mind are:

  1. The purpose of your financial plan is to predict your company's future financial performance. And to be able to show proof of your business’s creditworthiness you need funding. Your plan can help you set a long-term road map to follow, including major milestones and goals.
  2. Your plan should prioritize long-term gains and how you plan to get there, so you can secure a sustainable financial future.
  3. A strong plan must be customized to your business. Consider the type of business you’re running, market conditions, your business organization, competitors, and use what you’ve learned from running your business already to help forecast budgets and expected spend..

These three principles are what make a successful financial management business strategy. No matter what strategy you pursue, what type of financial planning you’re engaged in, or what challenges you face, sticking to these fundamentals will see you through.

4 financial management strategies for success


Your company will find success by tailoring these general principles to the company’s specific goals, needs, and means. Keep that in mind when reading about the four financial management strategies below.

1. Evaluate your historical spend and historical revenue


They say that those who fail to learn from history are doomed to repeat it. The same goes for financial management.

In order to learn from your past, be sure to track your historical and current expenses accurately.

Your past financial statements are considered historical revenue. The numbers from previous balance sheets can tell you a great deal—where you failed, where you succeeded, and areas you improved or still have room to improve. Your previous numbers act as a barometer, a weathervane that lets you see where your company was at financially in previous quarters or years.

This financial information gives you the context necessary to evaluate your current situation and see the areas where you’re succeeding or falling short. You can use that information to judge your current performance against previous years and current targets. From there, you can set new goals and benchmarks toward increasing profitability.

2. Build your profit and loss (P&L)


A key component of your financial statements is your P&L, also known as the profit and loss or income statement. These statements use that historical revenue and expense data and act as a financial summary of your business performance.

These statements act as a summary of your income and expenses, letting you know whether you were profitable or operating at a loss in that given month. Typically, your P&L statement will cover:

  • Revenue (sales)
  • Cost of goods sold (COGS)
  • Gross profit (revenue minus COGS)
  • Expenses
  • Net profit (gross profit minus expenses)

These numbers will help you clearly see the costs of doing business and how much money you’re actually bringing in. Which you can then use to determine the steps you need to take to push for continual success and improvement. By tracking historical revenue and expenses to map to your P&L, you'll force yourself to understand exactly where you’re spending money in the business and where you’re making money too. Check out our page on P&L management for more information.

3. Set a budget and stick to it


Tracking historical budgets and understanding where you are spending money is just one part of the equation. That’s because another one of the biggest components of financial management is proactive budgeting and forecasting.

A budget can help you:

  • Set guidelines to manage your spend
  • Understand where you have key financial dependencies and predict what you’d need to continue to fund your operations
  • Make wise financial decisions to meet your business goals
  • Stay on track to maximize your bottom line

Any business owner should be aware of what gross profits and operational expenses currently are for the business and what they will be in the future. That way, they can minimize all deductions from the top line to maximize the ultimate bottom line—net profits.

To set a clear budget, start by asking the following questions:

  • What are the projected sales for the period?
  • What are the direct costs of sales? Consider materials, implementations, etc.
  • What are the operating expenses, including overhead expenses? Payroll, including commissions; marketing; meals & travel; rent; utilities

It can be helpful to have the previous year’s figures on hand. These can be used as indicators of likely sales and costs, helping you create the most realistic budget possible.

The majority of budgeting work typically takes place before a new financial period, like a new financial quarter, or half. That said, budgeting often can and should be an ongoing process. On a monthly or quarterly basis, the finance team, or the business owner if your operation is small, should conduct a budget to actual analysis to see how the company’s actual spend in the previous period compared to what was originally projected, and then measure what can be adjusted.

4. Proactively track your spend


Modern business technology makes it easier to have visibility on every transaction and the power to reconcile your books in an instant.

Having a corporate card and an automated spend-management platform that provides advanced controls for business allows you to set built-in budgets by user or department. Benefits include:

  • Real-time visibility over spend and financial data—Know who is spending what, where, and how much in a moment.
  • The ability to empower managers to oversee their team’s spend—Managers can keep tabs on their team’s spending habits as they occur. These figures can be compared against your budget and P&L sheets to gauge your financial situation.
  • Automatic sync with accounting platforms—Reconciling your spend is seamless, thanks to built-in synergy with major accounting and financial management software like QuickBooks and Xero.
  • Customizable view of spend—Don’t wait for the end of the quarter to see how much you’ve already spent. Powerful tools allow you to take a topline view of your company’s spend or zoom into a single user or transaction.

Ramp’s platform is flexible and works with operations both large and small. Configurations are customizable, allowing you to tailor them according to your specific business needs.

Challenges to financial management


Overall, financial management is closely tied to overall business success and healths. Your books are a reflection of the work and financial planning taking place within your company.

The true test of a financial management strategy is how well it holds up under pressure. With solid financial planning you can face and overcome challenges as they arise. Thanks to the work you do to prepare, be flexible, and be efficient in all of your business practices.

The challenges your business will face will be either internal challenges, or external challenges.

Internal changes

As your company and capital structure grow over time, there are bound to be changes to internal dynamics. These changes can present challenges for all facets of business, and financial management is no exception.

Financial management may be impacted most by things like expansion and diversification of your services.

The biggest challenges that come from internal changes are:

  • Shifts in focus or business model—Adding additional services or goods, or modifying your current offerings, can mean major shake-ups in your bottom line. New processes could mean new expenditures, which are counterbalanced by new streams of income.
  • Expanding and diversifying your client base—If you build it, they will come. And the bigger you build it, the bigger and more diverse “they” become. Adjusting to increasing markets and market share means new products and initiatives and rapid changes to your income and expected growth. And it might mean the need to hire and expand your team too.
  • Changing workflows due to personnel changes—Besides expanding clientele, changes to personnel can also spell trouble in terms of reorganized expenditures and efficiencies.

Aside from these growing pains associated with your company’s evolution, some challenges come from shifts in the general business environment your business exists in.

External changes

You offer goods and services that impact the world, and even if you currently occupy a niche, your own success is certain to create competition. To be successful you must keep an eye on your competitors to stay on par with them and to be a step ahead.

Here are some of the biggest environmental shifts that complicate financial management:

  • Evolving competition—As your company grows, your competitors are always trying to do the same. New competitors, or shifts in existing competitors’ position relative to your own, will necessitate constant evaluation and correction of current budgets and risks.
  • Shifts in the market—The companies in your industry aren’t the only ones changing over time. The consumers of your offerings are also evolving, and these changes translate into uncertainties for your ROI. Even macro-economic changes can impact the buying habits of your customers.
  • Changing laws and regulations—Your business needs to comply with all relevant laws with respect to labor practices and controlled materials. Any changes to these, however slight, can mean major changes to both spending and expected income.

Between these and the internal challenges detailed above, financial management can be difficult to maintain. But luckily, there are fundamentals to guide you. Plus, any business can benefit from implementing flexibility into its financial management scheme.

How to overcome challenges


It’s important to foresee the challenge as much as possible, prepare for every contingency, and have a detailed plan of action for all possible scenarios.

But even the best plans can sometimes be disrupted. ‍

We detailed strategic management above, primarily focused on long-term gains, prioritizing stability, and the holistic health of the company.

Tactical management on the other hand is more concerned with short-term gains for your business.This form of management concerns short-term gains and adjustments in day-to-day activities. Any successful financial management must strike a healthy balance between the short and long terms, so tactical management involves:

  • Shifting current practices to adjust to rapid changes
  • Introducing exceptions or special case solutions

Maintaining a balance between these two focuses is the best way to ensure success despite any and all challenges your financial management plan faces.

But rather than doing it all yourself, you can enlist the help of professionals.

Whatever your strategy, execute it with Ramp

A successful financial management strategy can make or break a business.

But what constitutes a successful strategy depends on your company’s objectives, needs, and means. That’s why identifying the proper goals and strategic planning is the baseline from which every company begins.

Once you have these core steps implemented, it’s time to find the right business card to partner with.

That’s where Ramp comes in.

Ramp is more than just a corporate charge card. It’s an all-in-one solution for financial management—both tactical and strategic. With the Ramp Savings Insights program, you can track and optimize all of your company expenditures. Plus, unlike other cards, our mission is to help you save money rather than overspend. That’s why we don’t charge interest, or any kind of fees, to our valued cardholders.

Interested? See what Ramp can do for your company!

Try Ramp for free
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Content Lead, Ramp
Fiona writes about B2B growth strategies and digital marketing. Prior to Ramp, she led content teams at Google and Intercom. Fiona graduated from UC Berkeley with a degree in English. Outside of work, she spends time dreaming about hiking the Pacific Crest Trail one day.
Ramp is dedicated to helping businesses of all sizes make informed decisions. We adhere to strict editorial guidelines to ensure that our content meets and maintains our high standards.


What is the difference between financial management and financial planning?

Financial planning is the process of building a roadmap to achieve your financial goals. Financial planning includes budgeting, forecasting, and FP&A. Financial plans often include financial resources such as expense policies and T&E policies.

Financial management, on the other hand, is the execution of your financial plan. Having a strategic financial management process can help big and small businesses achieve their financial goals and increase cash flow.

What are the key strategies of financial management?

Evaluating your historical spend, historical revenue, and other historical metrics and key performance indicators (KPIs) can help improve decision-making and shape short-term and long-term goals. Building your profit and loss (P&L) can give helpful insights into things like revenue, cost of goods sold, gross profit, expenses, and more. 

Setting a budget and sticking to it can create the proper financial allocation, minimizing risks of things like maverick spending and zombie spending. Proactively tracking and monitoring your spend habits can give you real-time visibility and the ability to reconcile your books instantly.

Does Ramp help with financial management?

Yes, Ramp is an all-in-one financial automation solution that supports tactical and strategic financial management. Ramp Savings Insights can help businesses track and optimize company expenditures and save money in the process.

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