|Sound financial management reaches into every organization in the company through
accounting, internal controls, planning, and budgeting.
1. Accounting - the foundation for all control business financial transactions;
includes practices, processes, and accounting software
2. Internal Controls – “...a process...designed to provide reasonable assurance
regarding the achievement of objectives for:
a. Effective and efficient operations
b. Reliability of financial reporting
c. Compliance with applicable laws and regulations” (Internal Control -
Integrated Framework, Committee of Sponsoring Organizations of the Treadway
Internal controls point to two major components of a business: 1) performance and 2)
safeguards. The absence of these two components threatens a company's existence.
3. Planning - An essential element of a business that covers the three time frames
of the business: 1) past, 2) present, and 3) future. The old adage is as important now as
it was when it was first spoken: proper planning prevents poor performance. Add to that:
Plan today for better performance and profits tomorrow.
4. Budgeting – The keystone for improved performance and profits. Many
companies fail or suffer financial loses because of a lack of budgeting. Budgets set
targets, managerial controls, accountability, responsibility, and benchmarks.
1. The challenge of customer retention - By placing customers in the center of
the financial management process, the company will not take them for granted and
be prepared to address them.
2. The challenge of fading profits - Strengthens to company's bottom line.
3. The challenge of tax liabilities - Anticipates taxes and prepares for them.
4. The challenge of money management - Plans and allocates funds according
to stated strategic objectives.
5. The challenge of theft, embezzlement, and fraud - Instills safeguards for
closing gaps lending to losses.
6. The challenge of planning discipline - Reduces fire-fighting, tension, and
7. The challenge of setting priorities - Reduces and eliminates activities and
costs not contributing to stated objectives.
8. The challenge of communication and expectation - Provides clear direction
for bringing about desired results.
9. The challenge of engaging the market - Allocates funds for crystallizes a
plan to address markets and competition.
10. The challenge of measuring performance - Provides a framework for
performance measurement and business execution.