Financial control is vital for all types of business, from the smallest to the largest. Fundamentally controls are there to help you reach your business Northern star, your business goals.
Effective financial control systems can ensure that your business operates efficiently and effectively. Furthermore it helps protect your business from any risks or problems associated with money management and misuse. In this post, I will outline five key aspects of a successful financial control system, which can be remembered using the mnemonic PAWAD.
- Firstly, P is for Plan. You need to have an effective Financial Story Plan in place. This means having a clear framework for how you want your finances to be managed; a set of policies and procedures that everyone involved in handling finances must adhere to; as well as having a budget that outlines where revenue should come from and where money should be spent.
- Secondly, A is for Actuals, financial reality in terms of what is going on. This means keeping tabs on the money coming in and out of your business. Paper records won’t cut it I’m afraid.
- Thirdly, W is for Why. Knowing why your financial reality and expectations are different is where the power and magic of Financial controls lies.
- Fourthly, A is for action, do something. Action needs to be taken for any financial controls system to succeed. Once you know the why, then you can figure out what you need to next.
- Finally, D is for doing it, inertia is not an option comes Doing it. This may not come easy to you. Action beats inaction any day of the week. If you want an effective financial control system then you need discipline, from planning right through until execution stage itself.
Having a powerful and effective financial control system requires careful consideration upfront. From the planning stage to ongoing monitoring & action. If done correctly, there is no doubt that this type of system brings positive results, financially and non-financially, both short term and long-term.
Having a positive outlook on having Financial Controls in your business is positive, rewarding and helps you get to your Northern Star. By embracing Financial Controls, you are taking one-step closer to making your dream a reality.
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