Financial control

by which an organization monitors and controls the direction, allocation, and usage of its financial resources. Financial controls are at the very core of resource management and operational efficiency in any organization.

after a thorough analysis of the existing policies and future outlook of a company. In addition, it is important to ensure the following four processes are completed before implementing financial control in a business:

scenarios
4. Forecasting and making projections

statements, balance sheets, etc. present the overall performance and/or operational picture of a business. Hence, while formulating financial control policies, it is very important to detect any overlaps and/or anomalies arising out of the data available. It helps in detecting any existing loopholes in the current management framework and eliminating them.

hence, the overall operational efficiency and profitability of a business. Timely updates of all available data are very important. In addition, updating all management practices and policies concerning the existing financial control methods is also equally important.

strategy in an organization, it is important to thoroughly evaluate all possible operational scenarios. Viewing the policies from the perspectives of different operational scenarios – such as profitability, expenditures, safety, and scale of production or volume – can provide the necessary information. Also, it helps establish an effective financial control policy that covers all operational aspects of the organization.

making projections are very important steps. They provide an insight into the future goals and objectives of the business. In addition, they can help establish a financial control policy in accordance with the business objectives and act as a catalyst in achieving such goals.

significantly to the cash flow maintenance of an organization. When an effective control mechanism is in place, the overall cash inflows and outflows are monitored and planned, which results in efficient operations.
2. Resource management
The financial resources of an organization are at the very core of any organization’s operational efficiency. Financial resources make available all other resources needed for operating a business. Hence, financial resource management crucial in order to manage all other resources. Effective financial control measures hence are crucial to ensure resource management in an organization.
3. Operational efficiency
An effective financial control mechanism ensures overall operational efficiency in an organization.
4. Profitability
Ensuring an organization’s overall operational efficiency leads to the smooth functioning of every organizational department. It, in turn, increases productivity. which comes with a direct, positive relationship with profitability. Hence, establishing effective financial control measures ensures improved profitability of any business.
5. Fraud prevention
Financial control serves as a preventative measure against fraudulent activities in an organization. It can help prevent any undesirable activities such as employee fraud, online theft, and many others by monitoring the inflow and outflow of financial resources.

only certified, qualified financial managers and staff working with the formulation and implementation of financial management policies
Establishing an efficient, direct chain of communication among the accounting staff, financial managers, and senior-level managers, including the CFO
Periodic training sessions and information sessions among accounting staff, etc. to ensure being updated with the changing laws and evolving business environment concerning business finance
Periodic, thorough financial analysis and evaluation of financial ratios and statements wherever fluctuations are significant
Delegation of financial duties in a segregated and hierarchical fashion in order to establish a chain of operation and efficiency via specialization

into a creditor-debtor relationship with them
Periodic reconciliation of bank statements to the general ledger in addition to annual reporting for more efficient financial control
Establishing a periodic review policy with all existing customers that the business establishes a creditor-debtor relationship with. It ensures the ongoing creditworthiness of customers and eliminates the probability of bad debts
Support files and backups for all financial data in a separate secured database with access only permitted to senior management staff

in order to control extravagant business expenditure
Maintaining a vendor database with detailed purchase records with restricted access in order to monitor cash outflow efficiently
Periodic reconciliation of bank statements to the general ledger
Clear and precise expense reimbursement policy to be maintained, including detailed expense reports and receipt verifications in order to curb extravagant business expenses and employee fraud