Financial controls: what they are, why they matter and how to get started

Financial Controls

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Success in business is measured in the language of finance. Profit and loss. A healthy balance sheet. Turnover, assets, liquidity.

It might be stating the obvious, but looking after the financial side of things is integral to any business strategy and operational methodology. Putting appropriate financial controls in place is about laying the foundations for success, and then preserving the conditions for success over time.

But what counts as ‘financial controls’, and how do you implement them? In this article, we’ll outline what financial controls are, why they matter to your business – and why the best way to put them in place is to outsource to a specialist.

What is meant by financial controls?

Financial controls refer to the processes, policies, and procedures put in place to manage an organisation’s financial resources effectively and efficiently. This covers a range of objectives, from ensuring financial records and reporting are accurate and appropriate, to compliance, and protection against theft, fraud, and misuse.

Financial controls can include various measures, such as auditing and reporting, segregation of duties (so a single person doesn’t end up with too much control over financial affairs), authorization and approval processes, budgeting and forecasting, risk management, access controls, issue detection and more. 

Why are financial controls important?

The ultimate goal of financial controls is to ensure that a business operates within its means and achieves its financial objectives, all while complying with applicable laws and regulations.

Without effective financial controls in place, a business can leave itself vulnerable in a number of ways. For example, keeping up with statutory tax and financial reporting regulations requires a fair amount of diligence, at the risk of fines and other penalties for noncompliance.

Robust financial controls also play a key role in avoiding and detecting fraud and theft, including by internal parties. And another key role financial controls play is ensuring a business operates within its means, avoiding risks such as overspending, cash flow problems or becoming saddled with unaffordable debt.

On the other hand, financial controls provide the intelligence businesses need to make sound decisions and hold a course for growth. Reliable financial insights help to identify where efficiency gains can be made and spot new opportunities.

How to get started with putting financial controls in place

The implementation and management of financial controls is a sub-discipline of accountancy. The same arguments for hiring an external accountant therefore apply to outsourcing responsibility for your organisation’s financial controls. 

By outsourcing your financial controls, you get an expert with a ready-made skill set who can set the wheels in motion straight away. As a starting point, you will need a full audit of existing financial protocols, operational processes and data, to provide a benchmark for implementing controls going forward. This is a sizeable task. 

Outsourcing takes the burden off your in-house finance team, and working with a specialist will help to up-skill your own people to ensure more robust and consistent application of the controls put in place. 

A specialist is also more likely to spot opportunities that will add value to your financial management. The combination of greater efficiency from a standing start, not swallowing up too much of your internal resource and more effective use of financial insights will ensure that, over time, you will get better returns from what you put into establishing your financial controls.

To find out more about outsourced financial control services, contact us today.

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