Did you ever wonder what strategy companies use for their financial benefit? As part of their strategic management plan, organizations implement various strategies to allocate resources more efficiently and reduce unnecessary expenses.
They also review their financial statements regularly to identify losses and find new opportunities for growth and expansion. Financial control has a key role and an important function in these processes.
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Every business, regardless of its size and industry, needs to have a financial controls policy. Its role is to provide guidance on the maintenance of accounts and financial records, payments, income and procedures that are implemented to manage the finances of the company.
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This policy not only guarantees the reporting accuracyIt also helps prevent and eliminate fraud and protects the physical and intangible resources of the organization. In the long run, can contribute to the growth of a business and improve your results.
Likewise, financial controls are the procedures, policies and means by which an organization monitors and controls the direction, allocation and use of its financial resources. Financial controls
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In this article you will find:
Importance of Financial Control
The main reasons why financial control is important are the following:
Maintaining cash flow
Efficient financial control measures contribute significantly to maintaining an organization's cash flow. When an effective control mechanism exists, cash inflows and outflows are generally monitored and planned, resulting in efficient operations.
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Resource management
The financial resources of an organization are at the core of the operational efficiency of any organization. Financial resources make available all other resources necessary to operate a business.
Therefore, managing financial resources is crucial to managing all other resources. Therefore, effective financial control measures are crucial to ensure resource management in an organization.
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Operational efficiency
An effective financial control mechanism ensures the overall operational efficiency in an organization.
Cost effectiveness
Ensuring the overall operational efficiency of an organization leads to the proper functioning of each organizational department. In turn, it increases productivity that comes with a direct and positive relationship with profitability.
Therefore, the establishment of effective financial control measures guarantees a better profitability of any business.
Fraud prevention
Financial control serves as a preventive measure against fraudulent activities in an organization. You can help prevent any unwanted activity such as employee fraud, online theft and many others by monitoring the inflow and outflow of financial resources.
Duties of the financial controller
To make a controller's job more lucid, a list of the responsibilities of the financial controller Includes the following:
- Maintain all necessary reports for banks and backup system reports.
- Maintain the company's bank balance and be aware of pending checks.
- Approve invoices to be paid.
- Read and review any documentation attached to the verifications for approval and accuracy.
- Follow-up with clients that are older than 45 days.
- Make sure all financial statements and tables are correct and accurate.
- Make sure the business owner receives the unopened business bank statement.
- Reconcile all bank statements and monthly financial reports.
- Prepare monthly sales and use tax returns.
- Prepare projections annually and update them monthly with actual figures.
- The controller should coordinate with the auditors and be prepared to deliver documentation if requested.
- Coordinate with the company's tax division and prepare the necessary schedules for tax returns.
- Maintain renewals of company insurance.
Other types of control for companies
There are different types of control that organizations can use to ensure business growth and optimal performance. Yes OK financial control focuses on finances and the accounting procedures of a company.
On the other hand, the strategic control It involves setting performance standards, evaluating and improving a company's current performance, and setting goals for long-term business growth.
Your company can also implement operational control policies and procedures. The main difference between strategic control and operational control is that the former helps track the strategy as it is implemented, while the second focuses on the execution.
A strategic management plan It can include different types of organizational controls depending on the short and long term objectives of a company.
Financial controls, for example, can help detect potential book problems and budget deviations. They also ensure that the relevant accounting standards are implemented throughout the organization and that the business runs efficiently. Strategic controls, on the other hand, can help determine whether specific processes or strategies are working.
