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2017-10-06
Benefits of good financial management and accounting


Good financial management and accounting covers a broad spectrum including considering commercial law implications whilst concluding transactions and contracts. In some instances good financial management will imply to obtain qualified legal advice before important contracts are signed. Good financial management therefore implies knowing the limits of your knowledge and fields of speciality.

In the smaller to medium business environment financial managers or senior accountants are often expected to be more than just number crunchers but to oversee the whole admin process, from procurement to quoting. Often the financial manager doubles as the part-time HR Manager.

The design of the accounting system in an environment of branches and subsidiaries with inter -company transactions and transfer of inventory is important so that all transactions are captured accurately and on time so that financial reports are available.

But what differentiates a financial manager from an accountant or a good financial manager from an average financial manager? And what are the benefits of implementing good financial management?

Benefits

  • Workers are paid correct amounts every month / week leading to a happier and more productive workforce
  • Having correct info on hand to enable correct informed decision making
  • Less stress involved in planning cash flow as facts are known
  • Provisional tax can be calculated accurately reducing chances of penalties for under estimates
  • A good costing system will enable management to better quote to ensure competitive prices are offered whilst a sufficient margin is attained
  • Good implemented systems of internal control will reduce the occurrence of theft and fraud or assist in the early detection and prevention thereof
  • Less penalties on Value Added Tax because it’s done correctly
  • Actual revenue and expenses can be measured against budgets / standards and variances can be investigated
  • Reduced annual audit fees.
  • Optimum inventory level management
  • Improved credit management  and cash flow / less bad debts

A good financial manager or accountant is proactive in his approach. Having accurate management accounts and budgets and forecasts on hand makes it much easier arranging for all types of finances without too many hassles.



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