How to Measure Confidence in Your Company’s Finances

In the midst of a global crisis, a CEO sits in her office, staring at a spreadsheet that outlines the financial health of her organization. The numbers are grim, and the future looks uncertain. She wonders how her company will weather the storm.

This scenario isn’t uncommon, especially during times of upheaval. Organizations that lack financial confidence find themselves vulnerable, unable to adapt or grow. Often, they become statistics in the annals of companies that couldn’t survive challenging times.

Financial confidence is a vital component of your organization’s leadership success. It provides the foundation upon which all other business activities are built. Without it, companies are susceptible to a myriad of risks, from operational inefficiencies to insolvency.

So, how can your organization build and maintain financial confidence, especially during times of uncertainty?

Aligning financial confidence with organizational goals

As your organization matures, it’s crucial to keep a pulse on its financial health, much like how you’d regularly survey employees about culture and engagement.

This feedback loop is essential for identifying potential issues before they escalate into significant problems. Are your financial goals aligned with your team’s expectations and the market’s demands? Are there areas where you’re falling short or opportunities you’re not yet seizing?

Financial confidence can be your competitive advantage. Here’s how you can build a financially confident culture:

• Stress test your finances: Be explicit about the importance of financial resilience. Conduct regular stress tests to simulate different economic scenarios and understand their impact on your organization. This practice should be as routine as performance evaluations.
• Build an actionable scorecard: Recruit your team to participate in the creation and maintenance of an actionable financial scorecard. This scorecard should align with your organizational goals and culture, focusing on key performance indicators that matter most to your vision.
• Clarify financial drivers and cash flow: Celebrate your financial wins and learn from your losses. Make it a point to clarify the drivers of your financial performance and how cash flows through the organization. Transparency will improve decision-making and foster a sense of ownership among employees.
• Set a budget and pro forma: Just as you would make operational decisions that align with your culture — perhaps choosing sustainable options over higher profits — your budget and pro forma should reflect your organization’s values and long-term goals. This alignment ensures that your financial planning isn’t just a numbers game but a strategic tool for achieving your mission.

Making financial confidence accessible

Use technology and tools to make financial planning and tracking as straightforward as possible. The easier it is for your team to engage with your organization’s financial health, the more empowered they will feel.

Financial confidence isn’t a siloed aspect of your organization; it’s interwoven in your culture, your team’s engagement, and your long-term success. By taking a holistic and collaborative approach, you can build an organization that is financially confident, resilient, adaptable, and primed for sustainable growth.

How Wipfli can help

Want to learn more? Contact us today to learn how we can help.

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