The foundation for good financial management is a sound business plan with credible forecasts and realistic assumptions. This financial planning will identify profitability and the cash incomings and outgoings over the short term and the medium term, ensuring that sufficient funding exists to meet the business objectives and obligations.
Financial control is the management of an organisation’s revenue, costs and expenses. This involves the application of policies and procedures to safeguard the monetary assets of the organisation and ensure that revenue and expenditure is in line with budgeted and expected amounts.
Financial reporting is the recording and presentation of financial statements that show the organisation’s financial position, operating performance and cash flow over a period of time. A good finance manager or financial director will ensure that management receives reports on a regular basis that are relevant to the decision making process.
Skills required for good financial management are:
- Ability to make clear and decisive decisions
- Hands-on approach to risk management
- Understands operational performance and what contributes to bettAer results
- Reviews performance measures and ensures they are appropriate and timely
- Good understanding of compliance requirements
- Understands organisation structure and human resources issues
- Manages the operational planning and produces reliable forecasts
- Is aware of the benefits of appropriate tax planning