To determine how your business could benefit from a financial control policy, you must first understand how financial controls are defined. In business, financial controls are the policies and procedures by which your company monitors and controls the use of financial resources. Considering your business success the core goal, financial control is critical to operational efficiency.
Putting a financial control policy in place allows you and your team to effectively monitor and direct your finances by making projections, maintaining cash flow, enhancing profitability, and detecting and taking steps to protect against fraud. To implement a financial control policy, first, perform an analysis of your company and all possible operational scenarios, such as how you control and monitor your bank accounts, who monitors your books, do you train employees on the dangers of wire fraud, and how do you monitor your company credit or debit cards usage.
By reviewing financial budgets and reports, balance sheets, and profit & loss statements, you will gain insight into your company’s profitability, risks and liabilities, and scale or volume of production, all of which are integral to creating a financial control policy. This policy can provide your business with effective financial management while allowing you to mitigate risk and align your financial operations with your overall mission.
Benefits of a Financial Control Policy
With a well-drafted financial control policy, benefits to your business include:
- Timely updates of data, management practices, and financial policies.
- Analysis of various operational scenarios.
- The ability to make accurate projections about future goals and objectives.
- Efficient cash flow maintenance.
- Effective management of resources.
- Enhanced profitability.
- Asset protection.
- Consistency in record keeping.
- Accurate reporting.
- Maintaining compliance.
- Prevention of fraud, theft, and other serious issues.
Your financial control policy essentially governs the financial activities of your business according to your overall business goals. To be effective, a financial control policy must be clearly written so that it can be understood by those following it. The financial control policy must outline how tasks should be completed and how policies will be enforced. This sometimes involves identifying which roles are involved in certain procedures and how and when a specific procedure should be applied.
Your financial control policy can be used to assign responsibilities and establish expectations, and it should be regularly reviewed and updated as your organization changes and evolves.
Contact Kreis Enderle Today
Having a business and corporate attorney review your financial control policy before implementation is always in your best interest. Contact Kreis Enderle today to learn more about financial control policies and how your business could benefit from having one.