Effective financial control helps to keep your income and expenditure on track. When correctly implemented, it not only protects your business—it can also highlight opportunities to improve your profitability.
With business costs rising, it will be important to keep your budgets and business plans up to date this year, taking into account both internal and external developments that could impact your bottom line.
In the current environment, good financial control is essential. As well keeping tabs on your costs, it will protect your business in a number of other ways, including:
- Ensuring that you have accurate information available for forecasting and planning,
- Highlighting potential problems that may be emerging in your business so that you can address them before they escalate,
- Identifying opportunities to improve operational efficiency,
- Maximising the cash available to fund ongoing development and growth,
- Supporting compliance and helping avoid tax problems,
- Protecting your business from potential losses and fraud.
What does financial control involve?
Good financial control requires accurate, reliable bookkeeping and accounting supported by robust processes around things such as:
- Separating personal from business expenses,
- Implementing appropriate approval processes for checking expenses and purchases,
- Carrying out regular bank reconciliations,
- Ensuring payroll is operated correctly,
- Issuing invoices on time,
- Avoiding cashflow problems,
- Making sure costs don’t run out of control,
- Monitoring and managing stock,
- Monitoring debtors and implementing effective and consistent credit control processes,
- Preparing and reviewing budgets,
- Managing cashflow,
- Keeping track of assets,
- Identifying and managing risks.
How financial control improves business forecasts
The purpose of business forecasts is to monitor progress, anticipate what will happen in the coming months and check that your business is on track to achieve its goals.
Good financial control supports this by giving you a realistic view of your business. It enables you to monitor performance and revise plans and forecasts each time new or developing problems and/or opportunities emerge.
When underpinned by strong bookkeeping and accounting processes, good financial control helps you adapt to changing circumstances and ensures that your decisions are always based on accurate, reliable, up-to-date information.
Other ways in which financial control protects your business
Mistakes happen in every business from time to time. One of the key benefits of good financial control is that it makes it easier to spot potential problems and track down mistakes caused by duplication, error or gaps in records. Good financial control can also highlight suspicious transactions that could indicate fraud.
A word about payroll
If you have employees, their wages and salaries are likely to be your biggest cost so financial control around payroll is also very important. At the most basic level, this should include making sure that:
- Your list of employees is up to date and correct,
- Pay rates and hours are recorded correctly,
- Pay is calculated correctly,
- Leavers and joiners are processed on time,
- The number of pay runs is correct,
- You are complying with your obligations under tax, employment and data protection legislation (making the appropriate deductions, issuing payslips and informing Revenue each time you pay your employees, etc)
Need help with financial control?
We understand that it is difficult to keep on top of everything when you are running a business. Not everyone has the resources to employ a full time bookkeeper or accountant so this is where we can help. GroForth specialises in bookkeeping and payroll for small businesses. Our local team supports all of the main accounting and payroll systems and we tailor our services to each client’s individual requirements. If you would like to find out more about how we can help your business stay on track and achieve your full potential, do get in touch. We’d love to hear from you!