Two Ways To Improve The Fund Reserves Of A Company

[Good-Guy]

Fund reserves and cash reserves basically refer to extra cash that a company or any organization holds that could be used to deal with extraordinary expenses or many other business problems. Fund reserves are the backbone of any company. It is not only a company that has extra fund reserves rather a country also has its own cash reserves. This is all about macroeconomics. But fund reserves also play a big role in microeconomics, too. So what are some of the ways a company or a country could actually improve its fund reserves?

Foreign Exchange And Fund Reserves

The relationship between foreign exchange and cash reserves is a deep one. usually the economy of a country improves when it has more foreign exchange. If a country has more foreign exchange in its cash reserves, its economy will improve gradually, especially if the local currency is devalued. This is because the value of foreign exchange will increase by the passage of time.

Cost Cutting Could Improve Fund Reserves

Many people do not realize that cutting the manufacturing cost and expenses can have a really huge impact on your fund reserves. This is because when the expenses of a company decreases, they become capable of saving more funds and this could actually improve the finances and in return it improves fund reserves of a company.

 

[Suba]

Each country will apply different policies to the rules of a company's reserve fund, so that the application to accounting records will be slightly different (GAAP). Reserve funds are generally divided into 2, namely mandatory reserve funds and other reserve funds that have different purposes and uses. To improve the Reserve Fund, it will be taken from Retained Earning, which is net profit after deducting dividends. The addition of the Reserve Fund will continue to be made until it reaches at least 20% of the paid-up or issued capital. In my opinion, to increase net profit by cutting costs (efficiency) of production costs, both raw materials, labor and overhead costs will have an impact on decreasing the quality of production goods. Another way to improve the Reserve Fund is through shareholder meetings, to reduce the portion of dividend distribution so that retained earnings will be greater and part of retained earnings can be allocated to reserve funds.

 

[Holicent]

Having a good fund reserve is essential for a company’s success in the long run. This is because there might be times when your business will experience slow sales and even lack of profit. Therefore, it is important that you plan ahead and start improving your funds to avoid any financial trouble in the future.
Follow these:

1) Determine how much money you need to save - Before anything else, you have to determine how much money you need to save. You can do this by looking at your company's net sales as well as other expenses like rent payments or loan repayments. Then, take note of these numbers so that they will serve as guide on how much money should be put into your fund reserve each month.

2) Review all transactions regularly - Make sure that all transactions are reviewed regularly especially those which involve payments for loans or rent. This will allow you to identify which ones need improvement on whether there are unnecessary expenses being paid for each month such as subscriptions from magazines or newspapers which may no longer be relevant with your business operations anymore.

3) Cut down costs - Just like you stated. The next thing that needs attention when it comes improving your company’s fund reserves would be cutting down Costs.