Every entrepreneur needs to be aware that having good financial control over their business will help their business develop and grow. Therefore, by putting financial control into practice, it is possible to organize and evaluate the entire economic and financial situation of the company.
In this article we bring you a little about what corporate financial control is and how to do it in practice.
What is corporate financial control?
A company’s financial control is nothing more than analyzing its complete financial condition through processes such as evaluating reports, cash flow movements, bank balances, among others.
Therefore, the objective is to ensure that financial planning is followed correctly, to always maintain a positive balance and to obtain financial profit to obtain more investments, both short and long term.
Why is it important to do this business management?
Ensuring efficient planning and execution of corporate financial management is the first step to boosting business. After all, controlling a company’s finances is what sustains the business.
In this way, by correctly surveying accounts payable, accounts receivable, expenses and costs, it is possible to identify where the main opportunities are and understand what could be a waste of resources and investments that are not providing a good return for the company.
Furthermore, lack of observation and carelessness with such an important task can lead to financial crises for the company in the long term, not only having problems with cash flow, but also harming strategies to maintain business progress.
How to carry out business financial control in practice
As we have discussed so far, organizing a company’s financial sector is important to avoid unnecessary expenses and ensure efficient business growth. In practice, to carry out corporate financial control, it is necessary to understand and follow some basic concepts:
Cash flow
The main task within your financial management is to frequently record and analyze all cash inflows and outflows. In other words, to write down all daily financial transactions, whether they are purchases or sales, payments and receipts.
This is an essential task for any company that wants to maintain correct cash flow and efficient financial control.
Separation of expenses
Within an organization, it is important to identify the costs, expenses or investments within the expenditure, so that it is possible to reduce them, if necessary.
Costs are all expenses directly linked to the company’s activity, they are those related to the acquisition or production of services/products, and can be fixed or variable.
Expenses are expenses with products and services related to maintaining the company’s activity, and also with efforts to obtain revenue through the sale of products or services.
Now, investment is any expenditure or application of resources that aims to produce a future return, such as the purchase of new equipment, for example.
Accounts payable and receivable
To ensure effective corporate financial control, it is essential to have a record of everything the company has to receive and, most importantly, to pay. This practice helps to control defaults and ensures that bills are paid on time.
Working capital
After separating expenses, it is possible to predict how much money is needed to keep the business running for a certain period. Working capital is calculated by adding together the value of accounts receivable and inventory, subtracting the total by the value of accounts payable and other costs.
Use technology as an ally in financial control
Although it is not such a complicated task, the amount of numbers and calculations involved in corporate financial control can be a huge challenge in the life of an entrepreneur.
Even more so if all processes are done manually or using spreadsheets. In addition to being complicated and time-consuming, financial management can also be flawed.
In this sense, corporate financial management software is a great ally for business growth. With a simple and intuitive system that helps managers to carry out all financial demands in an uncomplicated way.
In practice, with the control system it is possible to:
- Make cash flow simple;
- Generate management reports in one click;
- Categorize expenses;
- Full control over accounts payable and receivable;
- Allows access to financial data via cell phone;
- Reduces working time with financial demands;
- Increases productivity;
- And much more.
Conclusion
Finally, taking control of your company’s finances and understanding the basic principles of good financial management are the first steps towards the success of your business.
As important as financial control is having the help of technology to make this task even faster, simpler and more efficient.
