Financial control and planning: why are they important? - Moz Tendências

Financial control and planning: why are they important?

The lack of financial control and planning  is the main reason why many companies close their doors before they even reach the first years of operation.

IBGE data indicate that 6 out of 10 businesses close their doors before they are 5 years old, and the reason, for many experts, is linked to finance.

The absence or even the insufficiency of a  financial plan  makes it impossible for many organizations  to direct, control and coordinate  actions for the execution of their objectives.

It is important to highlight that short-term financial plans fund long-term financial plans, helping to guide the best growth alternatives, prioritize objectives and give the company a more assertive direction.

Managers who use long-term financial planning as a guide in repairing operational plans can carry out cash planning, profit planning or even sales forecast for a period of 2 to 10 years, which means forecasting the market and establishing strategies that can bar obstacles that impede growth .

Among the decisive elements for the operation of small and medium-sized companies ,  financial control and planning stand out , both indispensable tools for organizing , controlling and conducting a business. But what is the importance of having them in the company's routine ? Keep following our post and find out. Come on!

What is financial control, after all?

Financial  control  is, basically, a  set of actions  used to verify if what was established in the planning is being executed and what measures are necessary to correct possible failures and errors.

In general, companies seek to implement simple financial control processes even before they have good planning and budgeting structures , basically functioning as a “test” period.

Managers who use financial reports generated from asset information and the  cash flow situation  can assess the real financial condition of the company and know, precisely, when to make investments or not to  eliminate deficiencies  in cash, working capital and others. problems that may compromise operational activities.

Among the main methods of Financial Control , the following stand out:

  • cash flow;
  • Budget management;
  • Break- even and Profitability Analysis ;
  • Income Statement for the Year;
  • Balance Sheet;
  • Cost management .

Planning means predicting the actions to be carried out, in addition to estimating resources and  defining strategies for achieving objectives.

The big mistake made by many managers is not keeping track of all their financial transactions , be it the ability to pay , financial commitments , purchase and sales projections , expenses and costs in the execution of operations , working capital , available resources and so much other information. Without this control, it is impossible to reduce costs without losing efficiency , thus making it impossible to increase profit.

How important is it to unite financial control with planning?

It is through financial control that a company remains active and operating in the market in a sustainable way; after all, it is difficult to execute any type of operation with zero cash or even without good working capital.

Financial control and planning are inseparable tools, that is, it is necessary to plan finances and control each step of its execution, so that one can have full control of the capital employed and, thus, be able to analyze the  real financial health  of the business. . Here's the rule: it's not enough to just record every financial movement of the company , it's necessary to monitor and follow up each launch — and this is one of the functions of financial control.

We are therefore talking about a cyclical process . After all, to carry out good planning , we always need to rely on concrete data, which will be used to define goals , objectives and action plans . All this data is collected during the analysis of performance indicators , which takes place during the control phase of the business.

What are the benefits of financial control?

First, it is important to point out the benefits of financial control . Thus, in addition to realizing the advantages of carrying out this type of operation , we also check each of its details — such as its relationship with the important planning phase . Let's get to know some of these benefits?

Integration with business data

Financial control is the first step towards effective integration of company data and preventing chaos between management and different departments. For this, in addition to organizing all the information on cash flows and the income statement for the year ( DRE ), we must also rely on the support of technology, after all, with it, we can make the entire process faster.

Speed ​​up decision making

Another great advantage of having an effective control over finances is that, with data organized, we can quickly consult them to make decisions at opportune times. This avoids reactive management , which only puts out fires, giving way to proactive management .

Provide accurate feedback

Finally, another great benefit of the control activity is the fact that the manager can provide accurate feedback to managers and other employees . After all, he will have the information he needs in real time, and he will be able to correct the course whenever he deems it necessary. Thus, employees are kept informed and management is more active.

What are the benefits of planning?

Planning can also bring a number of advantages to the management of the organization . By the way, many experts point out the lack of planning as one of the main causes of early closing of national companies — after all, without data, many end up conducting the business only based on intuition. Shall we check out its benefits?

Drawing a north for management

Progress is much easier when we know exactly where we want to go. With the information collected in previous years in the control activity , we can know exactly what to expect for the next periods and follow a safer path.

Assess the internal and external environment

As we have seen, the control activity can provide us with a lot of information about the internal environment , which is excellent for decision making. However, it is in planning that we also make an assessment of the external environment. Economic indices, research by renowned institutions, in short, all information is welcome to draw up our internal plans.

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