Systems, Processes and Controls
Our Digital CFOs know that every company is different.
So when they support you in putting in place systems, processes and controls they ensure that they are proportionate for the size of the business.
By focusing on these three key areas, your business can accelerate its pace of growth and increase the value of the business.
Our Digital CFOs are skilled in all three elements and can support you to get in full control of your business. These internal systems, processes and controls can create headspace for the senior team and ensures your business is more efficient and more valuable.
Our Digital CFOs will conduct a thorough analysis of the existing policies and review the future outlook of the company, before implementing effective financial control polices.
In addition, they will ensure the following four processes are completed before implementing financial control in a business:
1. Detecting overlaps and anomalies
Financial budgets, financial reports, profit & loss statements, balance sheets, etc. present the overall performance and/or operational picture of a business. Hence, while formulating financial control policies, it is very important to detect any overlaps and/or anomalies arising out of the data available. It helps in detecting any existing loopholes in the current management framework and eliminating them.
2. Timely updating
Financial control is the essence of resource management and, hence, the overall operational efficiency and profitability of a business. Timely updates of all available data are very important. In addition, updating all management practices and policies concerning the existing financial control methods is also equally important.
3. Analysing all possible operational scenarios
Before implementing a fixed financial control strategy in an organisation, it is important to thoroughly evaluate all possible operational scenarios. Viewing the policies from the perspectives of different operational scenarios – such as profitability, expenditures, safety, and scale of production or volume – can provide the necessary information. Also, it helps establish an effective financial control policy that covers all operational aspects of the organisation.
4. Forecasting and making projections
While implementing a financial control policy, forecasting and making projections are very important steps. They provide an insight into the future goals and objectives of the business. In addition, they can help establish a financial control policy in accordance with the business objectives and act as a catalyst in achieving such goals.
Our Digital CFOs will work with you to develop five key Financial Controls to ensure your company has the building blocks for future growth and to ensure it is in the best possible position should you be lo
1. Cash flow maintenance
Efficient financial control measures contribute significantly to the cash flow maintenance of an organisation. When an effective control mechanism is in place, the overall cash inflows and outflows are monitored and planned, which results in efficient operations.
2. Resource management
The financial resources of an organisation are at the very core of any organisation’s operational efficiency. Financial resources make available all other resources needed for operating a business. Hence, financial resource management crucial in order to manage all other resources. Effective financial control measures hence are crucial to ensure resource management in an organisation.
3. Operational efficiency
An effective financial control mechanism ensures overall operational efficiency in an organisation.
Ensuring an organisation’s overall operational efficiency leads to the smooth functioning of every organisational department. It, in turn, increases productivity. which comes with a direct, positive relationship with profitability. Hence, establishing effective financial control measures ensures improved profitability of any business.
5. Fraud prevention
Financial control serves as a preventative measure against fraudulent activities in an organisation. It can help prevent any undesirable activities such as employee fraud, online theft, and many others by monitoring the inflow and outflow of financial resources.
Examples of Financial Controls
1. Overall financial management and implementation
Placing certain qualification restrictions and employing only certified, qualified financial managers and staff working with the formulation and implementation of financial management policies.
Establishing an efficient, direct chain of communication among the accounting staff, financial managers, and senior-level managers, including the CFO.
Periodic training sessions and information sessions among accounting staff, etc. to ensure being updated with the changing laws and evolving business environment concerning business finance.
Periodic, thorough financial analysis and evaluation of financial ratios and statements wherever fluctuations are significant.
Delegation of financial duties in a segregated and hierarchical fashion in order to establish a chain of operation and efficiency via specialisation.
2. Cash inflows
Stringent credit reporting policy for all customers before entering into a creditor-debtor relationship with them.
Periodic reconciliation of bank statements to the general ledger in addition to annual reporting for more efficient financial control.
Establishing a periodic review policy with all existing customers that the business establishes a creditor-debtor relationship with.
It also ensures the ongoing creditworthiness of customers and eliminates the probability of bad debts
Support files and backups for all financial data in a separate secured database with access only permitted to senior management staff.
3. Cash outflows
Automatic/subscription payments to be monitored and requiring proper authorisation in order to control extravagant business expenditure.
Maintaining a vendor database with detailed purchase records with restricted access in order to monitor cash outflow efficiently.
Periodic reconciliation of bank statements to the general ledger.
Clear and precise expense reimbursement policy to be maintained, including detailed expense reports and receipt verifications in order to curb extravagant business expenses and employee fraud.