Financial control: definition and objectives

What is financial control

Financial control is an activity carried out by the department of finance of companies. This activity consists of To supervise and monitor the company's financial status, especially when it comes to ensuring there is no deficit between expenditure and income. This is a fundamental activity, as the health of the accounts will depend on it, and it is what allows us to know the state of the accounts and locate potential financial shortfalls, a prior and fundamental step in order to resolve them. 

What are its objectives?

The objective of financial control is twofold. On the one hand, it fulfils a information function regarding the importance of to know the real state of the accounts and the company's budgets, as well as each of the expense and income items that make up these budgets. 

On the other hand, financial control also has the decision-making function most appropriate in each case based on the previous informational function. That is, once the concrete and detailed information on the state of the accounts is available, financial control will also assess which expenditure items are proving detrimental to the overall accounts, as well as those income streams that are not proving as effective as they should be. Based on this assessment, concrete actions can be taken, such as eliminate certain costs or strengthen certain revenues, for example. 

«You control all employee expenses daily and in real-time»

Financial Control Implementation

The implementation of financial control in a company can be carried out in different ways. Nevertheless, there are some measures that should form part of the usual routine of this activity within the finance department:

• Budget executionThis is the main tool used by finance departments to carry out financial control. Based on budget execution, the company can know its income and expenditure balance sheet, allowing you to have an objective document where you can find the specific information on which to base any subsequent financial strategy. 
• Execution of auditsThey allow for an in-depth understanding of the company's financial situation in a specific aspect or investment. Furthermore, they have the advantage that they can be carried out by the company itself or by an external agent, which often provides a more objective and realistic view of the company's financial situation. 
• Financial analysisThey are carried out to determine the success or failure of a potential financial action. They allow us to understand the company's financial situation in the short and long term, as well as the profitability of specific actions or projects that the company is undertaking or considering implementing. 
• Using tools such as CorporateThere are certain tools that help to carry out financial control with greater ease. A good example of this is Corporate, an all-in-one solution that allows, among many other things, for the digitalisation of tickets and invoices, easy and quick VAT recovery on meals, the unification of expense notes, as well as limiting and adjusting each expense incurred.