When we talk about companies, it's important to adopt a neat and organized approach to deal with finances because it’s one of the key factors for keeping the lights on and ensuring that operations happen in a healthy and strategic way - regardless of the phase or the business' industry.
The finance team’s tasks, as simple as they might seem, can lead to improvements in the economic situation as well as in the organization of the business and its relationship with clients and suppliers. But how is it possible to achieve this?
Creating and mapping processes within the sector to have better control over cash flow is a valuable task, because it allows for increased visibility into what is being spent for teams and employees who need access to information in a clear and concise manner.
At first, this might seem challenging but, in reality, it’s even more complex to deal with the consequences of lacking processes, which can lead to financial mismanagement, debt, and difficulties in your relationship with clients or suppliers.
In this article, we will better understand how to map processes in the financial department of a business, what other benefits this activity brings, and, of course, how to apply theory to daily operations to enhance the performance of the entire company. Let's get started!
What are financial processes?
Regardless of their size, every company relies on their financial department to ensure the smooth operation of their business. This crucial area is responsible for managing cash flow, tracking incoming and outgoing funds, and maintaining a balance that guarantees the company's long-term success.
We're listing some of the key processes that exist within a company's financial department. Depending on the size and industry of the institution, these processes can be executed by one or more teams, but they all play an essential role in the development and maintenance of the business.
Accounts payable and accounts receivable
Accounts payable and accounts receivable are two of the various processes integrated into the financial department, and they deal with the payment of expenses and the receipt of funds, respectively.
Capital raising and resource allocation
While capital raising involves seeking investment capital, whether it’s to expand the business, enhance existing results, or obtain working capital, resource allocation involves the opportunity to invest these funds to generate income for the business.
Invoicing
Invoicing is also crucial for many companies, because it requires issuing invoices to customers or suppliers. Depending on the industry, this sector might need to manage product or input inventory to place new orders.
Collection management
When customers owe money that has not been paid within the agreed period, it falls upon this team to reach out and retrieve the outstanding amounts.
Budget management
In order to ensure the smooth and sustainable operation of a company, it's important to align its expenses with the available budget. This may involve adapting expenses, changing suppliers, or making other adjustments. The goal is to avoid jeopardizing long-term operations and maintain financial stability.
Why is it important to map financial processes?
When it comes to financial processes, every step must be taken with the highest care and precision. From managing numbers and spreadsheets to analyzing reports, everything must be done with a high level of organization to ensure smooth functioning.
After all, financial processes aren’t just about dealing with figures - they’re about honoring existing expenses and exploring opportunities to grow the business. To achieve this, it’s important to understand the bigger picture and have a macro view of the sector. Using the right work tools can help amplify the expected outcomes, providing increased visibility and organization.
But mapping processes in the financial sector can offer even more advantages. By mapping processes, businesses can ensure that every aspect is taken into account and functioning as it should. This can lead to increased efficiency, reduced costs, and better decision-making. Ultimately, mapping financial processes is a critical step in achieving success and growth for any business.
Check out other advantages of mapping financial processes:
Strategic decision-making
Making strategic decisions is crucial for any company to succeed. Having a comprehensive understanding of the business process helps in determining the next steps. By utilizing data as a support system for decision-making, the likelihood of achieving success increases.
Enhanced relationships with clients and suppliers
With increased visibility for all stakeholders involved, it becomes possible to build a relationship of trust that can lead to securing new contracts and partnerships in the future.
Sustainable company growth
The efficient functioning of the financial sector plays an essential role in driving sustainable growth of companies. It achieves this by minimizing errors and streamlining processes, which in turn helps to enhance productivity and profitability.
How do you map financial processes?
Now that we understand what these processes are and the importance of mapping them, let's delve into the step-by-step process of how to structure them for more effective execution, which leaves less room for errors and obstacles.
1. Assess the current scenario
To improve any process, it's crucial to have a clear understanding of the current state of the company. This includes analyzing the financial procedures that are being followed, the number of individuals involved, and their level of importance in achieving the desired results. By obtaining this insight, we can better assess the areas that require improvement and take the necessary steps to enhance the overall performance of the company.
2. Identify opportunities for improvement
During the initial mapping stage, it's possible to identify process steps with bottlenecks or improvement opportunities, such as repetitive tasks that take more time than necessary. Regardless of how minor these blocks may seem, their impact can make a significant difference in the team's long-term outcomes.
3. Use an automation software
Digital tools, when used correctly, can enhance process execution. With software like Qntrl, you can obtain more control, visibility, and automate processes, saving your team time and allowing people to focus on complex tasks that require greater attention. The possibility of being able to design workflows tailored to your company's demands is another advantage of this tool, ensuring the software adapts precisely to existing needs.
4. Test the new processes
After creating new workflows with implemented improvements, you must test them to confirm if the new strategy is truly effective and meets the demands of the teams involved.
5. Analyze the results
After conducting process testing, it’s crucial to validate their functionality. This is where technology comes in handy, because financial management software can produce automated reports, making the team's efforts more efficient, and conserving valuable time and financial resources.
6. Embrace continuous improvement
Companies must be flexible and adaptable to new realities in today's constantly changing business landscape. This means that financial processes are never truly complete and require continuous improvement to keep up with the ever-evolving job market.
In conclusion, mapping financial processes is a valuable tool for anyone looking to improve their financial management skills. By breaking down your financial activities into a series of steps, you can identify areas for improvement, reduce waste and inefficiencies, and achieve your financial goals more effectively.
GUEST AUTHOR: Marina Meireles
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