The goal of creating any enterprise is to extract maximum profit. To get the planned income, it is necessary to ensure the efficiency of the activity. One of the most important components of the management system of a modern enterprise is financial controlling. In the article we will figure out what it is.
General information
The financial controlling system is an element of managing the company's cash resources. It is necessary for the development of the enterprise, the monetary value of the funds it has, and the operations it performs.
Assets expressed in the form of financial resources are used to generate income. Finance performs the following functions:
- distribution;
- resource-generating;
- evaluative;
- control.
Financial management aims at:
- Optimization of income and risks.
- Formation of the necessary amount of funds for the effective implementation of plans.
- Increase in asset turnover.
- Optimal distribution of funds betweencontrol centers and processes.
- Ensuring the sustainability and profitability of the enterprise.
- Information and analytical support for the adoption and execution of management decisions.
- Improving the financial literacy of employees.
Contents
The financial management system includes:
- Methodological preparation of strategies, methods, standards, policies, possibilities for distributing funds.
- Get financial information.
- Preparation of draft management decisions.
- Prevention of negative consequences of execution of decisions and transactions.
- Financing the work of the entire enterprise as a whole and its individual divisions in particular.
- Collecting, processing, providing information about the company's activities.
- Organization and maintenance of analytical (managerial) accounting.
- Analysis of financial results, deviations of indicators, changes in reserves.
- Monitoring the implementation of financial policy, decisions of the head, the formation and use of liabilities and assets, income and expenses, performance indicators.
- Developing proposals for optimizing activities that increase its efficiency.
The functions of financial controlling each company determines for itself, taking into account the specifics and scope of its work.
Methodology
It must be said that financial controlling in an enterprise is an element of economic control andbased on appropriate methods. The specificity consists in the presence of additional techniques, means and methods of analysis and management.
The main methods of financial controlling include:
- Planning.
- Accounting for expenses by type of activity.
- Formation of the asset valuation model.
- Developing reporting standards.
- Calculation of cost based on cost absorption principle.
- Ensuring return on investment.
- Forecast operating profit.
- Using the financial liquidity ratio.
- Discount cash flow.
- Applying monetary value added.
An enterprise may apply other methods and techniques depending on the industry, production volume and other factors.
Organization of control
All stages of financial controlling are based on the tasks, essence, functions of cash flow management in accordance with the specifics of the activity. Based on them, technical operations are performed, objects, methods, methods of control are specified, resources are determined.
To ensure efficiency and optimize costs, financial controlling tasks must be integrated into the company's management system. When developing them, managers should be guided by applicable law, corporate standards, and the company's accounting policies.
Types of functions
To effectively achieve the planned managementgoals, it is necessary to introduce modern models of financial controlling. Their key functions are divided into several groups:
- Current.
- Strategic.
- Operational.
Let's consider them separately.
Current functions
They are aimed at implementing plans in the near future. Moreover, their list will again depend on the specifics of the enterprise. Meanwhile, it is possible to define the general functions implemented within the framework of financial controlling. For example, current tasks can include:
- Formation of the company's budget for the current year. To do this, it is necessary to summarize data on the work of the enterprise as a whole and its individual divisions.
- Participation in the creation of funds for investment and other financial activities.
- Formation of management policy, adjustment of the accounting structure for the current year.
- Development of an accounting policy based on accounting data.
- Implementation of internal control of the movement of funds and the reflection of operations in the reporting. This includes activities that help improve the financial literacy of staff.
- Systematization and consolidation of information on the results of work for the reporting period with the calculation of indicators that are important for making management decisions.
- Develop proposals to improve work efficiency.
- Analysis of deviations from planned indicators, identification of the causes and factors of their occurrence.
- Formation of reporting based on the results of the reporting period and its subsequent transmissionleadership.
Operational tasks
Within financial controlling:
- Decisions are made on the formation and subsequent distribution of liabilities and assets.
- The compliance of approved decisions with previously adopted plans, budget, corporate standards is controlled.
- Deals and documents on expenses and incomes are being coordinated.
- Calculations are analyzed and their correctness is checked.
- Management decisions being implemented.
- Data is collected and entered into the accounting system.
- The quality of the information received is controlled.
- Data is processed by the means, methods and methods fixed by the company's management policy.
- Calculates reporting-relevant metrics based on evaluation and measurements. For this, special lists and formulas are used.
- Deviations between planned and achieved indicators are analyzed.
- Prompt reporting documentation is being generated and provided.
Strategic functions
The key ones are:
- Formation and analysis of the implementation of the approved financial strategy.
- Creation of a system of control, budgeting, measurements and its optimization.
- Creation of a management (analytical) accounting system with the development of terms of reference for its design, followed by acceptance and commissioning.
Features in a manufacturing plant
The financial controller needs to knowand understand the processes taking place in production, the specifics of their financing for individual links, the supply of components, raw materials, and cycles. It is also important to master the methods of network planning, to be able to correctly assess the effectiveness of investments.
When carrying out activities, a specialist must take into account:
- The complexity of the process of creating products and the specifics of calculating the cost associated with technological processes, the formation of stocks, storage, transportation of finished products.
- The need to apply complex calculation methods, financial controlling tools, specific tools. We are talking, in particular, about custom and side by side absorption and direct costing.
- Communication of production, procurement of raw materials and materials, shipment of goods with financial planning.
- The need to select the most profitable and productive assets in accordance with the developed enterprise development strategy.
- Assessment of investments in long-term assets, attraction of liabilities.
- The need to maintain a balance between liabilities and assets, maintain the stability of the enterprise, increase turnover.
- Specific pricing for manufactured products.
To ensure the effectiveness of financial controlling, it is necessary to conduct a comprehensive analysis of production performance indicators and product quality parameters, and compare the results with the planned values.
Information for the specialist
Consideringthe above information, it becomes clear that the financial controller manages the entire controlling system. However, it cannot be considered a fully formed mechanism. The controlling system is constantly undergoing changes due to market instability, changes in the technologies used in production, seasonal changes, etc. Therefore, it itself requires constant monitoring and optimization. If you do not analyze the effectiveness of financial controlling, then it will not contribute to the development of the enterprise.
Information system
It is difficult to overestimate its importance in management activities. The information system of the company ensures the adoption of reasonable, economically feasible management decisions, the performance of actions for their implementation, an adequate assessment of business performance. In addition, she contributes:
- Collecting information from both external and internal sources.
- Analysis, measurement and evaluation of actions, results of work.
- Preparation of up-to-date and complete reporting on the activities of the enterprise, its financial and property condition.
- Understanding information by company personnel.
- Comparison of information.
- Prevention of negative consequences of executed management decisions to maintain the financial stability of the company in the market.
- Proper organization of workflow.
- Automate the processes of collecting, processing, summarizing and publishing information.
- Providing data to interested users in a timely manner.
Managerialand accounting provide accurate information for analysis, planning, forecasting, evaluation and control.
Basics of Management
To improve the efficiency of the enterprise, financial controlling should be carried out on the basis of a number of principles. Among them:
- Integration of enterprise control and management systems.
- Systematicity.
- The ability to make alternative decisions.
- Developing a strategy within which managers could calculate the consequences of the implementation of managerial decisions.
The objects of financial management are:
- Management decisions and actions taken to implement them.
- Risks.
- Assets and liabilities.
- Costs and profits.
- Money resources.
- Financial data.
- Financial relations (including transactions with counterparties, customers, etc.).
- Investment processes.
- Financial stability, liquidity.
- Tax optimization.
Conclusion
Financial controlling is an effective mechanism for optimizing business processes. It includes many tools and methods to streamline the interaction of an enterprise with the state, competitors, counterparties, consumers.
Increasing the efficiency of the company is carried out through regular monitoringinternal production environment: the progress of execution of management decisions, compliance with legal norms, corporate and industry standards, and the procedure for managing financial flows are monitored. At the same time, the controlling system itself needs constant monitoring. With any changes in market conditions, production technologies, other internal and external factors, it must be adjusted. Only in this case the functioning of the controlling system will give the expected results.
