Effective financial control is vital for any organisation. It’s this that will ensure you’re able to make good on your commitments, pave the way for growth, keep up with competitors and make the best possible use of the resources that you have. There are lots of different elements involved in ensuring that you sustain effective financial control - these are some of the simplest ways to do it.
● Make sure you have a clear business plan. This should set out goals and objectives, as well as - crucially - the finances that are going to be necessary to help you reach them. A good business plan will show where the cash is going to come from and how it will be used so that you always have the transparency necessary for financial control.
● Track your financial metrics. Staying in control of your finances means staying well informed. Ensure that you always have access to the right data for key financial metrics. For example, do you know how much cash you have in the bank at any time, what your sales figures are and how much you’re spending on inventory?
● Avoid getting into trouble with late payments. If clients or customers don’t make payments on time this can seriously affect your cash flow and take away financial control. So, it’s vital to have systems in place to help avoid this happening. Use clear and accurate invoicing and don’t be afraid to chase payments. Make your policies and penalties for late payment clear from the outset so that there is no ambiguity.
● How much cash does your business need every day to tick over? This is a vital figure to keep in mind because it will ensure that you never end up out of financial control. The minimum that your business needs to survive will include expenses like wages, rent and utilities.
● Invest in a good accounting team. That could be people you train internally or external support that you outsource to. It’s vital to make sure you stay on top of your accounts and that you have a clear perspective on the financial position of the company. Poor records could have a lot of consequences for any business, from meaning that you don’t manage to make payments on time to not noticing where there are holes in the business’ finances from others not paying you.
● Pay your tax on time. Tax penalties and interest add to the cost of running your business so these should be avoided where possible. It will be vital to implement robust accounting so that you’re not trying to complete and file your documents at the last minute every year.
● Deal with problems quickly. Leaving something for later can lead to escalation that ends up being very costly in the long run so it’s always preferable to tackle financial problems quickly, as and when they arise.
● Establish a strong funding source. There are many different funding sources available for businesses of all sizes. Look into loans, investors, grants and any other funding that could provide a vital cushion when you need it.
These are some simple ways to sustain effective financial control in your business. Find out more by booking onto our Sustaining Effective Financial Control training course...