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How to Get Greater Financial Control in Your Business

Gaining financial control in your business is not as hard as you might imagine.

By Willie van Dyk on Sept 15, 2021

How to Get Greater Financial Control in Your Business

Gaining Financial Control in your business is not as hard as you might imagine. Do you control your business finances, or does it feel like they control you? What would it take to tighten security, plug leaks and enjoy better cash flow? The answer is surprisingly simple. We’re looking at easy internal controls that you can apply today to fix common financial problems.

Take Control of Your Business Cash Flow

To be in control, you need to enforce control—accounting controls, that is.

What are Financial Controls?

Accounting controls (also known as financial controls and, more commonly, internal controls) are policies and procedures that set perimeters for enhanced final management. These controls enable you to better monitor, allocate, analyse, and direct your financial resources.

Where Do Controls Fit into My Financial Management?

If you were to consider business accounting as a “lifecycle” (so to speak), it would start with a budget that sets the tone and much-needed goals. Then, you would implement systems as tools to realise what is set out by the budget. Controls follow to optimise the systems and enforce safety—keeping everything in check.

How Will Accounting Controls Benefit My Business?

Financial controls provide a wealth of advantages:

  • Prevents fraud 

  • Detect errors, anomalies or theft early 

  • Monitor and control cash flow 

  • Enables agile response to problems 

  • Streamline operations 

  • Enhance resource management 

  • Creates accountability 

  • Improves profitability 

Those are the highlights. Controls can eliminate many more business headaches like easing the preparation of management accounts and audit files. Not to mention, they ensure that financial statements are accurate and always up-to-date. That’s a HUGE help when you need to assess affordability before an investment or apply for funding. 

Seven Easy Internal Controls That You Can Implement Today

If not today—it’s a tall ask—then at least priorities these items in your to-do list.

1. Separate Duties

  • When the person responsible for accounts receivables is different from the person responsible for accounts payable, you mitigate the risk of misdirection. What’s that? It’s the clever cover-up of editing banking details on an invoice to channel funds into a personal account. 

    You should separate functions such as payroll, collections, payments, general ledger maintenance, and monthly recons. 

2. Add Access Control

  • Password protection or biometric access control to enter accounting systems lets you see who logged in, performed a change and what changes they made—improving accountability.

3. Restrict Authorisations (or Approvals)

  • While junior to midweight personnel may create or review certain documents, keep approvals and authorisations a single senior manager.  The authorising party should perform quality control and be accountable for errors and omissions. They should also monitor the requests and use discernment to avoid lofty spending or identity suspicious activity.

4. Reconcile Regularly

  • Balancing internal records against independent records, like bank statements, is a fast and effective way to spot irregularities or errors.

5. Run Trial Balances

  • Make it a rule to run a trial balance and the end of specific reporting periods. You can choose a month, quarter, or year (we recommend quarterly). Trial balances pin-point mathematical errors and maintain the overall health of the double-entry accounting system.

6. Do Stocktakes and Spot-Checks

  • There’s no better way to make sure everything is accounted for than counting everything! Yes, stocktakes are laborious, but fortunately, you don’t need to do them too frequently. Depending on the nature of the stock you carry, once a quarter or every six months can cut it. 

    You can also perform random spot checks on inventory in between. This is a great way to avoid the disruption of a complete stocktake while “keeping things honest.”

7. Schedule Periodic Training

  • Ooh, don’t roll your eyes like that! There’s an undeniable value to refresher training! Much like some people’s driving, bad habits kick in over time. Training ensures that everyone knows what they need to do and how to do it. If you’ve moved or promoted resources, the chances are that they might have picked some incorrect instruction during handover.

The Easiest Way to Enforce Controls in your Organisation

You don’t have to take this on all by yourself. ValueSmart runs at the hands of Willie van Dyk , a Financial Optimisation Specialist with a distinguished record

in business process outsourcing from working at some of SA’s premier accounting, auditing and consultancy firms.

Book a one-on-one zoom consult with Willie van Dyk!