The goal of creating any enterprise is to maximize profits. To get the planned income, it is necessary to ensure the effectiveness of activities. One of the most important components of the management system of a modern enterprise is financial controlling. In the article we will understand what it is.
General information
The financial controlling system is an element of the enterprise financial resources management. It is necessary for the development of the enterprise, the monetary value of the funds that it has, and the operations that it performs.
For income use assets expressed in the form of financial resources. Finances perform the following functions:
- distribution;
- resource-forming;
- estimated;
- control
The financial management is aimed at:
- Optimization of income and risk.
- Formation of the necessary amount of funds for the effective implementation of plans.
- Increase in asset turnover.
- Optimal distribution of funds between control centers and processes.
- Ensuring sustainability and profitability of the enterprise.
- Information and analytical support for the adoption and implementation of management decisions.
- Improving employee financial literacy.
Content
The financial management system includes:
- Methodological preparation of strategies, methods, standards, policies, means of distribution of funds.
- Getting information about finances.
- Preparation of draft management decisions.
- Prevention of the negative consequences of the execution of decisions and transactions.
- Financing the work of the entire enterprise as a whole and its individual divisions in particular.
- Collection, processing, provision of information on the activities of the company.
- Organization and conduct of analytical (managerial) accounting.
- Analysis of financial results, deviations of indicators, changes in reserves.
- Monitoring the implementation of financial policies, managerial decisions, the formation and use of liabilities and assets, income and expenses, performance indicators.
- Development of proposals for the optimization of activities conducive to increasing its effectiveness.
Each enterprise determines the functions of financial controlling for itself independently, 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 and is based on appropriate methods. The specificity consists in the presence of additional techniques, means and methods of analysis and control.
The main methods of financial controlling include:
- Planning.
- Cost accounting by type of activity.
- Formation of an asset valuation model.
- Development of reporting standards.
- Calculation of cost by the principle of cost absorption.
- Ensuring return on investment.
- Forecasting operating profit.
- The use of financial liquidity ratio.
- Cash flow discounting.
- Use of cash value added.
The company may apply other methods and techniques, depending on industry affiliation, production volume and other factors.
Organization of control
All stages of financial controlling are based on the tasks, the essence, the functions of cash flow management in accordance with the specifics of the activity. Based on them, technical operations are performed, objects, methods, control methods are specified, and resources are determined.
To ensure operational efficiency and optimize costs, the tasks of financial controlling should be integrated into the company's management system. When developing them, managers should be guided by current legislation, corporate standards, and accounting policies of the company.
Kinds of Functions
To effectively achieve the planned management goals, 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 short term. Moreover, their list will again depend on the specifics of the enterprise. Meanwhile, it is possible to determine the general functions implemented within the framework of financial controlling. For example, the current tasks can include:
- Formation of the enterprise budget for the current year. For this, it is necessary to summarize the 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 accounting policies based on accounting data.
- Implementation of internal control over the movement of funds and reporting operations. This includes, among other things, activities that contribute to improving the financial literacy of staff.
- Systematization and consolidation of information on the results of work for the reporting period with the calculation of indicators relevant to the adoption of managerial decisions.
- Development of proposals to improve work efficiency.
- Analysis of deviations from the planned indicators, identifying the causes and factors of their occurrence.
- Reporting based on the results of the reporting period and its subsequent transfer to management.
Operational tasks
As part of financial controlling:
- Decisions are made on the formation and subsequent distribution of liabilities and assets.
- The compliance of the approved decisions with previously adopted plans, budget, corporate standards is monitored.
- Agree transactions and documents on expenses and income.
- The calculations are analyzed, their correctness is checked.
- Executed by management decisions.
- Data is collected and entered into the accounting system.
- The quality of the information received is monitored.
- Data is processed by means, methods and methods, fixed by the management policy of the company.
- Indicators that are relevant to reporting are calculated based on estimates and measurements. For this, special lists and formulas are used.
- The deviations between the planned and achieved indicators are analyzed.
- Operative reporting documentation is generated and provided.
Strategic functions
The key ones are:
- Formation and analysis of the implementation of the approved financial strategy.
- Creation of a control, budgeting, measurement system and its optimization.
- Creation of a management (analytical) accounting system with the development of technical specifications for its design, followed by acceptance and commissioning.
Features at the manufacturing enterprise
The financial controller must know and understand the processes taking place in production, the specifics of their financing by 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 evaluate the effectiveness of investments.
When carrying out activities, a specialist should consider:
- The complexity of the process of creating products and the specifics of calculating costs associated with technological processes, the formation of stocks, storage, transportation of finished products.
- The need to apply complex calculation methods, financial controlling, specific instruments. This, in particular, is about custom and alternate absorption and direct costing.
- The relationship of production, procurement of raw materials and supplies, shipment of goods with financial planning.
- The need to select the most profitable and productive assets in accordance with the developed enterprise development strategy.
- Valuation of investments in long-term assets, attraction of liabilities.
- The need to maintain a balance between liabilities and assets, to maintain the stability of the enterprise, the growth of turnover.
- The specifics of pricing for manufactured products.
To ensure the effectiveness of financial controlling, it is necessary to conduct a comprehensive analysis of production indicators and quality parameters of products, compare the results with the planned values.
Information for a specialist
Given the above information, it becomes apparent that the financial controller manages the entire controlling system. At the same time, it cannot be considered a finally formed mechanism. Changes constantly occur in the controlling system due to market instability, changes in 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
Its importance in management is difficult to overestimate. The company's information system ensures the adoption of sound, economically feasible management decisions, the implementation of actions for their implementation, an adequate assessment of business performance. In addition, it contributes to:
- The collection of information from both external and internal sources.
- Analysis, measurement and evaluation of actions, work results.
- Compilation of relevant and complete reporting on the activities of the enterprise, its financial, property status.
- Understanding information by company personnel.
- Comparison of information.
- Prevention of the negative consequences of executed management decisions to maintain the financial stability of the company in the market.
- The proper organization of workflow.
- Automation of the processes of collecting, processing, summarizing and publishing information.
- Timely provision of data to interested users.
Management and accounting provide accurate information for analysis, planning, forecasting, assessment and control.
Management basics
To improve the efficiency of the enterprise, financial controlling should be based on a number of principles. Among them:
- Integration of control and enterprise management systems.
- Consistency.
- The ability to make alternative decisions.
- Development of such a strategy, in which managers could calculate the consequences of the implementation of management decisions.
The objects of financial management are:
- Management decisions and actions committed for their implementation.
- Risks
- Assets and liabilities.
- Costs and profits.
- Cash resources.
- Data on financial condition.
- 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 the enterprise with the state, competitors, contractors, consumers.
Improving the efficiency of the company is carried out through regular monitoring of the internal production environment: the implementation of management decisions is monitored, compliance with legislation, corporate and industry standards, and the management of financial flows. 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.