Optimising your financial processes
Seasoned business executives will tell you they spend a great deal of their time dealing with problems. Problems that you know might occur, usually raise their head at the worst possible time. Being able to identify all of the problems in a business is really difficult. Good business managers are by their very nature good at solving problems.
Good financial controls are critical to the successful management of any business. Financial controls bring financial problems to the attention of the manager. Best practise is to design financial controls into the reports derived from small business accounting software. For example actual costs versus budgeted costs, differences in the performance in current and previous periods of revenue and expenses, behaviour of cash flows and profits are all things you have to be able to comprehensively report and therefore should be easy to generate from small business accounting software packages. The best way to start is to identify a core group of the operating ratios you want to track and monitor and then craft the reports you need to highlight these key numbers in a coherent and easy to read format.
You should constantly be monitoring the behaviour of your margins on all products and services you sell and any changes should immediately receive your focused attention. If you sell products in volume any sudden change in margins can multiply into losses very quickly and therefore it follows that any decreases in volumes should be immediate cause for concern and therefore having up to date information available is critical. Do not under any circumstances let fixed costs deviate from the plan, especially in the early stages of the financial year. Good small business accounting software should let you easily create debtors reports (people who owe you money) and the results in these reports should be monitored closely.
Experience is the way to learn and over time you will learn which financial controls should be highlighted in your accounting reports, just make sure you have the right small business accounting software that can generate these.
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