In order to make strategic decisions, it is vital to have indicators and data that allow you to choose the most appropriate option for your company. Good financial management is crucial to survive the competition and a volatile economy, so the financial control of a company is one of the most important activities for startups and SMEs.
WHAT IS THE FINANCIAL CONTROL OF A COMPANY AND WHY IS IT IMPORTANT?
Financial control is an instrument for monitoring the company’s finances. It serves to control the accounts, and to know the expenses and where the income comes from. Therefore, it is an analysis and study of the actual results in order to prevent unforeseen events and irregularities and , if found, to know how to take the most appropriate decisions to correct them.
Hence the importance of good cash management: it is a key element that will allow us to define the survival of the company.
OBJECTIVES OF FINANCIAL CONTROL
- Check that everything is going well: Simply put, sometimes financial control simply serves to confirm that everything is going well and that the objectives are being met if there are hardly any significant alterations and in the line that had been set.
- Detection: Even if no errors are being made, serious deviations may occur. Therefore, it is important to have control of all areas or production processes of our company to detect these possible errors.
- Prevention: Financial control facilitates the early diagnosis of possible misalignments of the overall financial plan. Therefore, corrective measures can be implemented to avoid these situations of misalignment.
- Corrective Utility: Thanks to all the information we have gathered, the monitoring of the main KPIs and the projection of cash flow behavior, it will be possible to detect deviations or unforeseen situations, as well as to establish specific corrective measures.
WHO IS IN CHARGE OF THE FINANCIAL CONTROL OF A COMPANY
In general, CFOs (Chief Financial Officers) are responsible for designing and controlling financial strategies, as well as coordinating everything related to accounting, maintenance and optimization of economic resources.
They are responsible for knowing how to reduce, manage and optimize expenses through rigorous control.
In short, it is important to have a good financial control, since a misalignment in the company’s finances can jeopardize the general purposes of the organization, lose an advantage over the competition and, in some cases, even jeopardize its own survival.
If you want to know how to implement a financial control strategy, you can read our post on How to make a treasury plan in 5 steps?