Keeping an eye on your finances is an important process to provide accurate and timely information. This will allow management to make informed business decisions. What helps in efficient financial management? Financial controlling is a modern solution, recommended for enterprises of all sizes. Its most important goal is to monitor, analyze and control the financial activities of the company. What are the benefits of financial controlling?
What is financial controlling?
Financial controlling is a financial management system. It provides valuable data and information for the management board. It covers a wide range of activities (budgeting, reporting, cost analysis, forecasting). It is worth implementing it in areas of activity that are key to the company’s operation, depending on the type of goals pursued.
The size of the company does not matter – financial controlling can be present not only in large, but also in medium and small enterprises. The freedom results from the fact that each company has set goals that can be achieved with the help of this tool. Financial controlling is also used in non-profit organizations (the difference between them and companies that are supposed to bring profit is only the results and results of individual entities).
There is a difference between management accounting and financial controlling. In order for the decisions to be made to be accurate, it is necessary to provide appropriate information, which is the responsibility of management accounting. Controlling, on the other hand, as a management tool, is supposed to keep the company on the path to achieving its goals.
The function of financial controlling?
Financial controlling is based on setting standards or goals, measuring deviations in their implementation and recommending corrective actions. It introduces systematic analysis, monitoring and control of financial indicators such as revenues, costs, profits, financial liquidity, profitability and investment effectiveness. Thanks to it, the company can effectively assess its financial situation, forecast future results and take appropriate corrective actions. It is a system supporting managers, providing access to the most important data and key information.
Keeping an eye on your finances is an important process to provide accurate and timely information. This will allow management to make informed business decisions. What helps in efficient financial management? Financial controlling is a modern solution, recommended for enterprises of all sizes. Its most important goal is to monitor, analyze and control the financial activities of the company. What are the benefits of financial controlling?
What are the individual stages of financial controlling?
It is based on the financial management cycle, which consists of the following stages:
- Planning. This activity involves setting financial goals, budgeting, preparing operational plans, and identifying indicators and metrics to monitor.
- Monitoring. A very important stage. During it, financial results are monitored on an ongoing basis – compared to the assumptions and budget.
- Analysis. Then, a detailed analysis of financial results takes place, the effectiveness of the company’s activities is assessed, and the causes of deviations are identified. Based on the above-mentioned analyses, corrective decisions are made.
- Reporting, i.e. preparing financial reports and presenting results to management. Reports cannot have any form – they should be clear, concise and full of important information.
- Corrective actions – the last stage. They are made on the basis of analyzes and reports in order to achieve the assumed financial goals.
What are the advantages of financial controlling?
Financial controlling has many advantages – they all contribute to effective financial management in the organization. First of all: it ensures accurate monitoring and control over the company’s financial results. Business owners often praise this solution for significant time savings, better cost optimization, improved financial liquidity, and a significant increase in margins and organizational results. It has been proven that entrepreneurs who come into contact with financial controlling in their activities have a greater sense of security and make decisions regarding employment, investments and company development more easily.
But that’s not all. Financial controlling helps manage financial risk and avoid unforeseen situations. It contributes to more effective and efficient planning and forecasting of future financial results. Thanks to extensive financial analyses, entrepreneurs know what practices in their business need to be eliminated, and they focus only on those activities that generate the best results.
Financial controlling enables accurate tracking of operational expenses, while identifying areas from which savings can be generated – it ensures high-level monitoring of costs, financial flows and budgets. It helps detect problems more often and prevent potential financial crises. Employees who draw on financial data and analyzes better understand market trends and are able to take advantage of new market opportunities. The solution makes it possible to make any adjustments to the organization’s strategy. Supports the budgeting process and allocation of resources for appropriate purposes. It allows you to quickly identify problems and deviations from the assumed goals.
Financial controlling is a revolution in every company. Thanks to accurate analyzes and reliable data, management can make more informed business choices and minimize management risks.
Moreover, financial controlling is necessary to build organizational culture in the company. It promotes a data-driven approach, which encourages analysis of results and continuous search for ways to improve the effectiveness of the organization.
Does financial controlling have any disadvantages?
Financial controlling has several disadvantages. Its implementation and operation may be time-consuming and expensive (requires access to current and reliable financial data). In addition, it may cause a greater burden on the company – this is related to the need to monitor and report financial results. The introduction of this solution will not be painless – employee training and adaptation of existing business processes to the new system are required.
Tools used in controlling
Financial controlling uses many tools to help effective management and decision-making in the organization – especially for controllers and managers. Talking about:
- Management information systems (MIS) – integrated platforms that process data from various sources to provide synthetic reports and analyses. They manage key information.
- ERP systems (Enterprise Resource Planning) – comprehensive IT systems that are responsible for the integration of all business processes – from production and customer service to accounting.
- Corporate Performance Management (CPM) systems based on Business Intelligence (BI) – platforms that provide advanced analytical tools, data visualization and reports. They enable quick and efficient processing of financial information.
- Data analysis tools, e.g. spreadsheets, data analysis software – allow you to create financial reports, generate graphics and charts, and perform analyses.
- Budgeting and planning software – supports the process of creating and monitoring budgets, enabling precise financial management.
- Summary
Summary
Financial controlling is a key element of effective company accounting management. It helps entrepreneurs achieve their goals. It supports companies in preparing for possible problems or prevents problems altogether. This solution has incomparably more advantages than disadvantages. The use of appropriate tools contributes to achieving profitability, stability and development of the company in a dynamic business environment.