Financial control is defined as the point where someone is in charge of maintaining a central system that is devised, formulated, and approved to be the guidance regarding the accounting methods and procedures of a company. It is the one thing that can make or break the success of a business. It is the skill that every business owner should possess right underneath the skill to provide whatever product or service they offer.
There is so much that goes into the financials of a business. The face statements are a part of it but if you don’t understand them then they are worthless. In order to gain true financial control you must follow a four step process – evaluation, identification, design & implementation and monitoring & improvement.
- Evaluation
Evaluation is the first step to gaining financial control. You need to look at your financial situation at a given point in time and make an unbiased assessment. From this assessment you will be able to recognize what problems your business is facing. This assessment will be the foundation from which you begin to gain control. With a proper eye, you will be able to look at the financials of your business and see exactly where you are making money and where you are spending much money.
- Identification
Once your assessment is completed, the next step is to identify the causes of those problems. Again you should look at your financials and identify those area where you are spending money and earning money, and pin-point the exact root or cause of each one. You should the map out the processes being utilized and identify any process break downs. Determine what processes are being abused and why. Identify what can and should be done differently.
- Design & Implementation
After you have mapped out the processes and identified the breakdowns, design a plan for upgrading you business procedures and implement them. A well structured improvement process will enable you to understand how each aspects of your business is feeding into other aspects of your business. Take the necessary steps to fix everything that is broken. Stay focused and be committed to the changes. Embrace them.
- Monitoring & Improvement
Now it’s time to see if you newly oiled machine is functioning properly. Monitor your updated processes for a three month period then re-assess whether or not they are working for your business. If not, look for areas of improvement and start over again. And again until you see positive improvement.
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