In a dynamic and challenging economic environment, the strategic financial management has become a lynchpin for business sustainability and growth. It is no longer enough to keep accounts in order; organizations need to make informed decisions on how to allocate resources, plan investments and ensure a healthy financial structure.
A sound approach to strategic financial management allows us to face economic cycles, anticipate liquidity crises, sustain growth and improve decision making at all levels of the business. This approach is built on three fundamental pillars: working capital, Capex (reinvestments) and access to and cost of financing.
Working capital: ensuring operational continuity
Working capital represents the resources available to sustain the daily operations of the business. That is, the difference between current assets (such as inventories and accounts receivable) and short-term liabilities (such as accounts payable).
Adequate working capital management allows:
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- Ensure liquidity to meet commitments.
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- Avoid operational interruptions due to lack of resources.
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- Reduce the need for external financing.
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- Improve the relationship with suppliers and customers through efficient payment flows.
To achieve this, it is necessary:
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- Project realistic cash flows.
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- Optimize inventory turnover and accounts receivable.
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- Negotiate deadlines with suppliers and customers strategically.
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- Monitor liquidity levels on an ongoing basis.
A company can be profitable but fall into crisis if its working capital is misaligned with its operations. Therefore, this component must be managed with the same rigor as investment decisions.
Capex: reinvest wisely
The Capex or capital expenditure represents investments in fixed or long-term assets: equipment, infrastructure, technology, product development, among others. These are decisions that commit resources today with the expectation of future benefits.
However, not all reinvestments generate value. An effective Capex strategy must respond to criteria such as:
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- Expected return on investment (ROI).
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- Impact on productivity or efficiency.
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- Alignment with the strategic objectives of the business.
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- Risk level and maturity horizons.
Companies that evaluate their Capex decisions with a financial and strategic approach achieve:
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- Prioritize projects with the greatest impact.
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- Avoid overinvestment or unnecessary purchases.
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- Better allocate scarce resources.
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- Clearly measure the contribution of each investment to growth.
It is also essential to have tools for valorization of companiesThe company has developed a number of tools, such as discounted cash flows, sensitivity analysis and scenario simulations, to anticipate the behavior of investments in the face of different environmental variables.
Access to and cost of financing: enabling growth without compromising stability
Within the strategic financial managementThe sustained growth of a company often requires external capital. But it is not only a matter of accessing financing, but also of accessing it under the right conditions and maintaining a healthy financial structure.
Decisions on indebtedness or capital incorporation should consider factors such as:
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- The total cost of financing (not just the interest rate).
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- The company's future payment capacity.
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- The required guarantees or associated conditions.
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- The impact on leverage and capital structure.
A financially healthy company:
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- Diversifies its sources of financing (banking, funds, leasing, issuance of instruments, etc.).
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- Accurately assesses the effective financial cost.
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- Maintains a balance between debt and equity.
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- It adjusts its financial strategy to its expansion or consolidation plans.
In this context, it is essential to have orderly financial statements, clear indicators, and a coherent business narrative, especially if you are seeking to attract investors or negotiate favorable terms with financial institutions.
The integration of the three pillars
Although each of these components can be analyzed separately, their true strength comes when they are managed in an integrated manner. For example:
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- An investment in technology (Capex) will affect working capital if it requires anticipating purchases or hiring new equipment.
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- A new loan can improve access to resources, but it can also increase the financial cost if it is not well structured.
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- A business expansion may require more inventory, affecting liquidity if working capital is not planned in advance.
The strategic financial management is precisely to balance these three fronts, aligning them with the company's objectives, its operational reality and the market context.
Active financial management is a competitive advantage
The strategic financial management is no longer a task exclusive to the accounting area. It is a critical function for the sustainability of the business, which must be approached with analytical tools, strategic vision and adaptability.
Companies that master these three pillars - working capital, Capex and financing - are able to make better decisions, minimize risks and move forward with greater strength in their growth plans.
Because at the end of the day, financial decisions not only define the present of an organization, but also determine its ability to build the future.
If you need to optimize the strategic financial management We invite you to contact our team of analysts at Valoriza, to manage and define a work plan.
