Maintaining good financial control
In any new business, retaining good financial control is vital.
Achieving it involves:
- Deciding which areas you need to monitor and how frequently
- Generating the numbers quickly and accurately
- Sharing the results with everyone who needs to know them
- Interpreting the numbers correctly
- Taking appropriate and timely action based on your interpretations
The starting point is to set up a system that enables you to generate accurate reports as quickly as possible. We can help you to set up an appropriate computer or manual accounts system.
Weekly and daily updates
In key areas, such as sales, debtors, cash position, trade creditors, and employment figures, you could consider setting up a system of weekly or even daily updates. These 'flash reports' will give you better control in the short term.
Make sure managers receive the flash reports as well as the monthly reports quickly, and encourage them to share the results with the relevant employees.
Compare forecasts with actual results
One of the most valuable instruments of financial control is drawing regular comparisons between projections and results. Not only does this keep you up-to-date on how your business is doing, it also reveals how realistic your expectations are and how in touch you are with the essentials of your business.
For best results, you could draw up projections for a six-week period and then set new projections at the four-week point.
The key to good financial control is to have an effective system for collecting data and generating accurate and timely reports that is tailored to your specific needs. Such a system can make a considerable difference to your bottom line results.