As your business grows and takes on more customers, employees and suppliers, maintaining core financial controls should keep you travelling up the success curve. Put your financial head on and hear from the experts at Moore Stephens, who take you through all you need to know on this important topic…
Financial controls allow your directors and key people to focus on the actions that underpin business success – the important and creative tasks that drive growth and profitability. Having proper processes and routines will enable you to monitor performance and, ultimately, do things the right way.
Create a budget – and review performance against that budget
Many companies have a budget but, when things get busy, it’s easy to stop reviewing performance against that budget on a monthly or quarterly basis. Establishing the discipline of reviewing your management accounts against your budget is important. Try to highlight where things are going well and where they are going badly, then you can take corrective action to deal with any problems.
Report on and review critical measures for your business
The current and future health of your business isn’t just revealed by conventional financial performance measures. What are the factors that make your business successful? These could be levels of website traffic, sales conversion data or helpdesk calls and issue resolution. Work out what matters in your business, then capture that data and monitor it.
Keep track of your expenses
It’s important to identify the key costs in your business and then monitor expenditure against budget month on month. For example, payroll could be a major cost. So could cost of sales. If you don’t have the time to do a detailed review yourself, identify an appropriate person (perhaps in payroll or accounts) to prepare a ‘payroll bridge’ or a ‘cost of sales bridge’ showing the movements from the previous month to identify significant changes. This way you don’t need to review all the data, but can easily see any unusual or unexpected increases.
Doing things right
Make use of the user permissions in your accounts software
Every accounting package has restricted access user permissions designed to prevent people from doing things they shouldn’t do. Unfortunately, many start-ups forget to activate them or fail to enforce them properly – e.g. passwords should not be shared! However, establishing user permissions is an easy control to set up and particularly powerful for preventing fraud.
Get your contracts in place, signed and keep them securely
When starting a business, the need to formalise relationships (including employment and leasing relationships) can be overlooked. As the business grows, making sure contracts are in place and correctly documented is increasingly important for protecting the business and its employees. Getting these formalities right early on can avoid onerous legal situations in the future.
Keep Companies House filings up to date
Filing documents with Companies House might seem a boring and unimportant task, but it is part of running a successful business. Online filing via Companies House can also make it a relatively simple to do.
You should review your filings at least annually to make sure you’re up-to-date. Key documents you need to file include your annual accounts, annual confirmation statement and other documents relating to events such as a change of directors or share capital.
Controlling cash is another vital step for helping your business grow successfully. We’ll suggest how to do this in a follow-up blog – so stay tuned for that, coming later this month.
To find out more about the issues raised, you can get in touch with Ross Northall, who will be able to answer all your burning questions.
Tech start-up looking to grow?
Click here to find out more about Hatched, Moore Stephens’ two-year programme designed to support tech start-ups throughout the rapid growth phase.
Applications to join Hatched are now open. To register your interest click here.
This blog post was sponsored by Moore Stephens.