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“Your financials are more private than your blood test, they reveal where the bodies are buried”.
This wild statement highlights why you need to understand your company’s finances. You don’t want to be caught off guard if things start going wrong.
So, what do you need for effective financial management?
Here are four key components:
- A competent and reliable accountant
- Proper internal controls
- Financial Planning and forecasting
- Regular financial reviews
A competent and reliable accountant
A competent and reliable accountant is essential for managing your compliance and tax affairs. Choosing the right accountant will save you from financial and emotional stress.
When hiring, make sure your accountant has qualifications from a reputable regulatory body, such as SAICA, and has strong references.
Keep in mind that not all Chartered Accountants are equal; be sure to check references to protect yourself.
Proper internal controls.
Proper internal controls are crucial to prevent financial losses.
As a former financial manager and auditor, I’ve seen the consequences of poor internal controls.
One example is a case where the Managing Director and financial manager had the authority to release payments. The MD was too busy, so he gave his password to the FM, who helped herself to a substantial amount of money. Don’t trust anyone with your money, not even your closest friends or family. Implement controls to avoid financial headaches and ruin.
Financial planning and forecasting
Financial planning and forecasting are crucial steps for businesses.
It’s surprising how many businesses don’t prepare budgets and forecasts.
Having a budget and business plan will support growth and cost management.
A cash forecast will also help you prepare for times of low cash.
Regular financial review
Regular financial reviews are necessary to identify problem areas.
By regularly reviewing your financials for variances, ratios, and KPIs, you can identify areas that need improvement.
This allows you to take action and get back on track.
In conclusion, good financial management requires a competent accountant, proper internal controls, financial planning and forecasting, and regular financial reviews. By following these steps, you can protect your business from financial difficulties and ensure its growth and success.
The month of SARS
This month is the tax year-end.
And for all you creative entrepreneurs who want to claim your December holiday through the business, I’m sorry but you won’t be able to , unless you can prove it was in the production of income. These are deductions that are allowed under s11(a) of the Income Tax Act.
For everyone trying to get creative with your deductions, I’ll let Johnny Rose from Schitt’s Creek explain what a Write-off (what American’s call deductions) is.
There are a few ways I can help:
- Grow a financially strong business by partnering with me as a Virtual CFO or Business Coach
- Learn the basics of business finance in the 7-week Finance Bootcamp
- Set up a free 1:1 initial consultation here
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