Financial control allows the company to evaluate, in a continually objective and systematic manner, the variances that are generated on previously established strategic and operational lines.
By doing so, this kind of control provides Management, or others holding a high level of responsibility in the business or organisation, with enough useful arguments and insights allowing them to take decisions that guarantee the follow-up of any corporate objectives proposed.
The value of this type of control reaches various levels within the structure, both financial and organisational, of the company:
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Strategic level.
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Investment policies.
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Business and operational policies.
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Operational perspective.
Financial control at a strategic level
When we talk about financial control at a strategic level, we are referring to the process of evaluation of concurrence and coherence regarding the financial plan and the strategic plan of the organisation, ensuring the achievement of objectives of the latter.
With financial control, you avoid last minute surprises at the end of the fiscal year. It is the best way of detecting deviations in budgets and strategic lines and taking appropiate action to compensate, balance and amend.
Investment policies
Investments are absolutely essential for the development, growth and also the viability of a business, but if they are not strictly controlled they can be the primary focus of important budget imbalances in a company.
For this reason, the importance of financial control multiplies concerning the investment chapter, which allows you to:
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Evaluate policies related to investment decisions
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Differentiate between investments in immediate and short-term assets and mid- to long-term ones
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Manage debt related to such investments
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Business and operational strategies
Company policies related to business and operational strategies have as much to do with the generation of income as well as the reduction of costs. Financial control provides detailed and concrete information about these two aspects, in matters such as:
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Price fixing
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Consistence and viability of marketing strategies
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Cost structuring
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Cost reduction measures
Operational perspective
From an operational perspective, through an optimal financial control methodology it is possible to control each of the accounts within the overall balance. Therefore, its importance is paramount, and it is probably the financial control phase where the most controls should be deployed, recording and evaluating all operations and transactions.
The major assets of financial control
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Once problems have been detected, it is possible to take corrective action in time, thereby avoiding surprises and irreparable situations
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It provides an overview of both the business as a whole as well as by departments, and even for very specific actions or items. This permits full awareness of the financial situation of the business and enables action to be taken on the particular focus of the problem
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It allows financial control at all levels of the organisation: strategic, operational, investment, etc.
