ACS

financial controls

Financial controls should not be seen as something only involving the accounts department. Nor should they be considered to relate merely to the narrow aspect of sales and credit control.

To some extent everyone in the business has a role to play. For example, all should respect the property, fixtures and fittings, products and other assets of the business to ensure that money is not spent on unnecessary replacement or other wastage. This helps to maximise profits and ensure that everyone obtains the maximum benefit from their efforts.

This objective should be constantly drawn to the attention of staff and fully justifies a "whistleblowers clause" in every contract of employment. It is not a case of "them and us" but very much a case of all being in the business together so that when someone misuses or misappropriates assets or products their replacement and consequent loss of profit, has an affect on everyone.

Obviously a good credit control system is important where you are dealing with transactions other than cash at point of sale. Any such system should be rigorously pursued and for example, should include the threat of interest being charged where the account is overdue. (Late Payment of Commercial Debts (Interest) Act 1998)

Where payment is made at point of sale all staff should be properly trained in procedures relating to acceptance of credit or debit cards, cheques and cash. (e.g. appropriate checking procedures and awareness of potential for fraud are vital - see Security)

Also very important in financial controls are stock turns, work in progress, speed of delivery and order completion where these are relevant to your particular business. Those members of staff involved in these particular areas should be made aware of the specific part they play in Financial Controls and the overall success of the business.

Another aspect of financial control is the purchasing process to obtain the best possible products at the most competitive market prices. Try to establish "approval criteria" so that those responsible for your buying have a framework within which to operate.

We now turn to stock control and again it is very clear that a good system plays a very important part in the profitability of the business. There are many excellent computerised systems, with appropriate advice and back up service, on the market. See if your Trade Association has any recommendations.

Obviously it is important for management to regularly assess the strategic goals of the business and the financial strategies to achieve those goals. It is equally important, however, to involve employee representatives in some such meetings. You cannot say on the one hand that all are part of a team and yet on the other not allow staff to be involved in "team planning"

All PBS information sheets are designed to provide the detail you need to implement best business and employment practices. They are not a detailed commentary on the current law and where advice is needed in a specific case you should contact PBS for expert consultation.