However, doubts may still arise about the process. Often, the lack of financial control leads an organization to face several challenges that compromise its growth. So, to get around them, it is important to know how to track finances correctly.
In this article, you will learn 8 practices to have good financial control in your company. Check out!
What is corporate financial control?
First, it is worth clarifying the meaning of financial control. It is the set of actions that allows the manager or entrepreneur to manage the resources of a micro, small or medium-sized company in an efficient way.
With financial control, it is possible to identify the current situation of the business and make better decisions. From this information, it is easier to understand if there are enough resources to cover the organization’s expenses and balance its finances.
In addition, the manager will know if there is the possibility of making investments for its growth. Financial control also makes it possible to identify if there is money to build a reserve for contingencies, for example. These factors are essential to ensure the continuity of the company.
8 Practices to have good financial control in your company
Now that you know the importance of having good financial control, you need to learn how to do it in your company. So see 8 practices that can help you handle finances correctly.
1. Establish a cash flow control review period
The first practice to maintain good financial control is to establish a period to track cash flow. This is a financial management tool that describes in detail all the cash inflows and outflows of a company.
In this way, the manager is able to have a broad view of the business’ finances in the medium or long term. This allows him to anticipate decisions regarding the lack or surplus of cash on hand in a given period.
So that no information is lost, you should choose a period to control cash flow. It can be daily, weekly, biweekly or monthly. The frequency will vary according to each type of business.
2. Categorize cash inflows and outflows
After establishing a cash flow control analysis period, it is necessary to categorize cash inflows and outflows. The measure helps to identify the most relevant sources of resources to design more efficient marketing and sales strategies .
In addition, it is possible to understand which expenses have a significant weight in the business budget. Then it is possible to eliminate or reduce those that are not essential to the functioning of the organization to ensure money savings and optimize cash flow.
In this sense, entries can be classified according to the origin of receipt — cash sales, credit and debit cards or Pix and income from financial investments, for example. Outputs can be organized according to type: expenses and costs.
Expenses are expenses not involved in production. They can be fixed, which tend to be constant, like the salary of employees. Expenses can also be variable, as they fluctuate with sales—for example, commissions.
The costs, in turn, are the expenses resulting from the production process. They can be classified into:
- direct costs : are the values that are directly related to production, such as the raw materials used in the manufacture of a certain item;
- Indirect costs : these are expenses that are not necessarily associated with the manufacture of a product, but are related to this process. For example, electricity.
- Fixed costs : these are values that practically remain the same, regardless of monthly production — such as the rental of machines involved in the production process.
- Variable costs : these are expenses that fluctuate according to production. This is the case, for example, with temporary labor.
3. Have an efficient inventory control
To develop good financial control, you also need to monitor your company’s physical inventory. The reason lies in the fact that inaccuracy about the quantity of items stocked can lead to excess purchases, resulting in possible losses.
Therefore, it is essential to maintain the organization of your business’s inventory. For this purpose, it is recommended to list all stocked items with their respective quantity, as this allows you to easily follow the movements in the warehouse.
In addition, the ideal is to update the data whenever there are entries and exits of goods. This practice helps the manager to place orders more safely and improve the company’s financial control.
4. Reconcile receivables
Another practice to have good financial control is to reconcile receivables. This procedure allows you to verify that the balance of future entries corresponds to what was expected. Thus, it is possible to identify errors, pending issues and possible fraud in the payment of accounts receivable.
In this case, it is necessary to compare the information projected in the card operators’ sales statement with the company’s internal control. When carrying out the process, you should be aware of cancellations, duplicate sales, unrecorded sales and fees to be charged.
This process makes it possible to identify any discrepancies in the amounts owed and to take the appropriate measures in advance. An example of inconsistency is when the company has sales on the flyer that are not included in the card system.
It is the proof of sales made in a given period and is printed on the machine itself. In this case, the problem could be a failure in the machine’s communication mechanism with the matching software — which can be resolved with the supplier.
5. Separate personal accounts from business accounts
Good financial control also involves separating personal accounts from business accounts . This is a challenge especially in smaller companies. After all, the lack of separation between accounts prevents you from knowing what the real situation of the business is.
Ignorance can lead to undue withdrawals from the company’s cash to cover personal expenses, for example. As a result, there is a possibility that the business may experience financial difficulties that could hamper its development.
In addition to making financial control difficult, uniting personal and business finances will make you unable to project the business’s revenue. Thus, it becomes difficult to devise strategies that allow its growth.
Therefore, the division of accounts becomes fundamental for the financial control of your company. For this, the first step is to have separate bank accounts. For example, the partner must define a pro-labore to avoid withdrawals that could harm the financial health of the organization.
6. Create a financial plan
After knowing how to separate personal accounts from business accounts, it is worth learning how to set up a financial plan . It serves as a guide to the proper use of company money.
The initial effort to plan a business’s finances should be knowing your current financial situation—as you’ve already learned. In this way, it is possible to set goals that are achievable.
After knowing the reality of the company, it will be time to evaluate what you want to achieve with the help of financial planning. In this sense, the objectives can be diverse, such as: leveraging sales of a particular product, expanding the area of operation or increasing profitability.
The next step is to think about the actions needed to achieve each of the proposed goals. For example, if the purpose of your business is to be more profitable, then study strategies that allow you to expand revenue and reduce costs.
7. Determine the working capital requirement
One more essential practice to have good financial control is to determine the need for working capital . This amount ensures the operation of the company in the interval between payments and receipts.
In this way, it ensures that an organization has the money to cover expenses until new revenue comes in, without facing financial challenges. Therefore, knowing how to calculate the working capital requirement is indispensable for any business.
8. Create a business reserve fund
In addition to determining the need for working capital, it is essential to create a business reserve fund. This is an amount that every micro, small and medium-sized company should have saved to cover emergency expenses and have greater freedom in relation to the budget.
The amount of the reservation must be enough to cover expenses and costs for a certain period — for example, 6 months. This range is considered reasonable for reorganizing business finances.