Financial management is the central pillar of a company's performance and sustainability. For growing SMEs, particularly in the digital, IT services, SaaS and eCommerce sectors, good financial management is essential to maintain healthy cash flow, maximize profits and support growth.
But beyond these statements that everyone has already heard many times, what does this really mean for your business on a daily basis?
It's simple: every financial decision has a direct impact on the success of your business .
Obviously, as an accounting firm , we're not going to tell you otherwise... But while this may seem obvious to us, we know that not everyone necessarily wants to spend their evenings analyzing balance sheets. That's where we come in: to transform these choices into real growth levers, without accounting headaches.
So, what are we actually talking about when we talk about “ financial management ”?
And most importantly, what types of decisions need to be made to ensure the financial health of your business?
Let’s dive into the three key types of financial management decisions together.
What is Financial Management?
Financial management encompasses the set of practices used to plan, organize, direct, and control the financial resources of a company. Its goal is to maximize the value of the company while minimizing risk. This includes cash flow, investment decisions, financing decisions, and much more.
To simplify, financial management can be divided into three broad categories of decisions: investment decisions , financing decisions , and dividend management decisions .
1. Investment decisions
Investment decisions concern how a company uses its funds to generate value. This may include investing in fixed assets, acquiring new technologies, developing new products, or expanding into new markets.
These decisions determine the company's ability to grow and remain competitive . A bad investment can lead to significant losses, while a good investment decision can transform an SME into a leader in its industry.
For an SME, making investment decisions involves juggling often limited resources. How do you decide whether to invest in a new ERP tool, for example, when cash flow is already under pressure?
Let's imagine a SaaS company that wants to develop a new feature for its software. It must decide whether the investment in R&D is justified by the additional sales potential that this new feature can generate.
💡This type of decision requires a precise assessment of initial costs, expected revenues, and expected return on investment .
2. Financing decisions
Financing decisions concern how a company will raise the funds needed to support its investments and operations. This may include external financing such as bank loans, equity capital raising, or the use of venture capital, as well as internal financing through the reallocation of profits.
Good financing helps maintain a balanced capital structure and manage the growth of the company without taking on excessive debt. A bad decision can lead to high financial costs or even a loss of control of the company.
For SMEs, it is often complex to choose between a fundraising that dilutes equity and a loan that could limit financial flexibility. Access to financing is sometimes limited, and the conditions can be restrictive.
An IT services company looking to open a new international branch, for example, must decide whether to finance this expansion through borrowing or fundraising. Each option has its advantages and disadvantages: borrowing can weigh on cash flow, while fundraising can lead to a partial loss of control.
💡This type of decision involves a detailed assessment of financing conditions, borrowing costs, and capital structure implications.
3. Dividend management decisions
These decisions concern the share of profits that will be redistributed to shareholders in the form of dividends, versus the share that will be reinvested in the company to support its growth.
Dividend decisions influence investors' perception of the company. A generous dividend distribution may attract investors, but limit the funds available for future investments.
For a growing SME, choosing between paying dividends to reward shareholders or reinvesting to support growth can be a real headache. How can you convince shareholders of the relevance of reinvesting when they expect rapid returns on their investment?
For example, let’s take an eCommerce company that has just had a great year of growth. It must decide whether to distribute some of its profits to shareholders or reinvest in a digital marketing campaign that could further increase sales next year.
💡This kind of decision requires a careful analysis of shareholder expectations, reinvestment opportunities, and potential long-term profits .
Blendy's expertise to support you in these decisions
At Blendy, we know that financial management is not exactly what makes entrepreneurs tick every morning. And yet, these decisions have a huge impact.
Got something better to do than spend your evenings poring over financial tables? That’s where we come in: to help you turn those challenges into real opportunities, without the hassle.
Our expertise in digital accounting and strategic consulting allows us to support our clients at every stage of their growth.
For investment decisions, we help you analyze the potential profitability of your projects using tools like Pennylane and Finthesis , in order to maximize return on investment while limiting risks.
When it comes to financing , we advise you on the different options available, whether debt or equity financing, helping you identify the best strategy based on your financial situation and growth objectives.
When it comes to dividends , we help you find the right balance between shareholder compensation and the ability to reinvest in the company's growth.
In short, every financial decision has a direct impact on the success of your business , and calling on experts like Blendy to support you in this process can make all the difference.
Because, in the end, every financial decision can be a game changer for your business. You don’t need to be an accountant to understand that good financial choices make all the difference.
So? Ready to make the right financial decisions and optimize your business management? Contact us today to find out how Blendy can help you turn these challenges into real growth levers.
With Blendy, English-speaking French & international accountant, take advantage of digital accounting to accelerate your financial process and develop your business.
Pennylane, Dext, QuickBooks and Stripe certified, we support digital, e-Commerce, IT services, SaaS companies in France and internationally.