Category Archives: Management accounting

How to regain control of your financial systems

financial systems control

When your business grows quickly, it’s very easy to lose control.

Businesses never grow in job sized chunks. This means that you and your team are forced to cover the expanding duties until they reach a stage when it makes economic sense to recruit or outsource.

This often results in temporary, bolt on solutions, that can become permanent over time. This is fine during slow growth, but once the pace quickens, you can easily find yourself disconnected from your finances.

So how can you regain the control?

Look beyond basic data entry.

Having lots of people maintaining your financial records isn’t always ideal, but don’t rush to dismiss the work that is currently being undertaken by your team.

If your receptionist has a fantastic rapport with clients and is highly effective at credit control, you may not want to take that duty away. Likewise, your General manager may be a whizz at handling staff expenses and petty cash. In these instances, bringing in a bookkeeper and reallocating these tasks may not be the answer.

Rather than handing over all the data entry to a bookkeeper, we recommend that you review your current systems. If items are already being recorded in an accurate and timely fashion, this initial stage may not be the root of the problem.

Systemise and streamline your current systems.

Whoever undertakes the data entry, whether it is one or multiple members of your team, you want every system to talk to each other.

We recommend using Xero to bring these financial systems together. So, the petty cash, staff expenses and credit control are all linked to the same software – creating one financial hub.

Having a credit control book in reception and a pile of receipts in your manager’s office, will add to the confusion as it will make it impossible to see the whole picture. You may also want to consider bringing in expense capturing software like Receipt Bank as this will add a layer of transparency. Meaning you can view any receipt for any purchase wherever you are.

Take the time to review your current systems and software choices before you begin to streamline your work flow. You may have a booking system for example, that works well and is very close to your heart, so a strip back and start from scratch approach isn’t always necessary.

Keep an eye on your figures.

Once you have accurate and up to date financial information all in one place, the next stage is to continually review it.

Depending on your industry and your interest levels, this could be a simple case of checking the profit and loss every month.

However, this may be the stage when you decide to outsource the preparation of your management reports to an external Finance Director such as Inspira UK or an accountant.

Having someone cast an external eye over your finances, bringing that additional financial expertise, will give you the confidence to really understand where your business is and where it is heading. They can help you to identify key ratios to monitor and highlight the areas that may require improvement.

Management reports will tie together the information that your team has been entering into Xero, enabling you to see the whole picture. We found that our clients felt the most out of control when they were unsure of their finances. Knowing that money was coming in but being uncertain of what was about to go out, created unease. Having up to date management reports can cure that.

Know where you want to go – and how you’ll get there.

Knowing that your business can cope with today may bring you a lot of comfort. Not knowing whether there are the resources in place to handle tomorrow might keep you awake at night.

Building on your management reports and KPI’s, an external Finance Director can help you to produce cash flow forecasts and realistic budgets. This will help you to identify areas for profit improvement and keep your financial systems in check.

If your goal is to continue to grow and expand your business, scenario planning will be beneficial. You will want to be certain that you can confidently afford the additional salaries, refurbishment costs or loan repayments before you make any lasting long term decisions.

It is during this stage that it’s important to review your systems, so they continue to meet your needs. Additional software, advances in automation and changes in staff can all have an impact on the quality and speed of the information available to you.

Focus on creating a team.

For your financial systems to work to your advantage, you need to build a team that you can trust. Everyone needs to work together to ensure that all financial systems are working and that work is completed to schedule.

We believe that your team are your businesses biggest asset, so our goal is to make sure you always get the best from them. This can range from coaching through to team development.

Now might be the time to invest in some Xero training. A confident and motivated team are more likely to provide feedback on your current financial systems. This will help you to identify bottlenecks and areas for improvement from the ground up.

It’s easy to think that your financial system as simply Xero. In reality, it’s the people, the flow of work and the outputs as well as the software.

You need to ensure that everything flows seamlessly and consistently, from the moment a purchase or sale is made, through to the meetings with your external Finance Director.

If you feel that now is the time that you would like to solidify your financial systems and begin to create reports that will put you back in control, please do get in touch for a chat.