Financial control: definition and objectives

Financial controlling is one of the most important activities of a company's finance department, as it serves to to control the accounts and to be able to know where the expenditure is and where the income is coming from. This, in addition to providing information on the company itself, also forms the basis for any financial action or change to be made, and is therefore a key reference point for maintaining a balanced budget. 

What is financial control?

Financial control is an activity carried out by the department of finance of companies. This activity consists of supervise and monitor the state of the company's finances, This is particularly important to ensure that there is no shortfall between expenditure and income. This is a fundamental activity, as it is what will determine the balance of the accounts, and it is what makes it possible to know the state of the accounts and to locate possible financial holes, which is a prior and fundamental step in order to be able to solve 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 of the company's budgets, as well as of each of the expenditure and revenue items making up those budgets. 

On the other hand, financial control also has the decision-making function The financial control function will also assess which expenditure items are harmful to the accounts as a whole, as well as those revenues which are not. In other words, once the specific and detailed information on the state of the accounts is available, financial control will also assess which expenditure items are harmful to the accounts as a whole, as well as those revenues that are not being as effective as they should be. On the basis of this assessment, concrete actions can be taken, such as eliminate certain costs or strengthen certain revenues, for example. 

«Controls all employee expenses on a daily basis and in real time».»

Implementation of financial control

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

• Budget executionBudgeting: This is the main tool used by finance departments for financial control. From the execution of budgets, the company is able to know its income and expenditure balance sheet, This provides you with an objective document on which to find the concrete information on which to base any subsequent financial strategy. 
• Execution of auditsThey provide in-depth knowledge of the company's financial situation in a specific aspect or investment. In addition, they have the advantage that they can be carried out either by the company itself or by an external agent, which usually provides a more objective and real vision of the company's financial situation. 
• Financial analysisThey are carried out to determine the success or otherwise of a possible financial action. They provide information on the company's financial situation in the short and long term, as well as the profitability of certain actions or projects that the company is carrying out or plans to carry out. 
• Using tools such as CorporateThere are certain tools that help to make financial control easier to execute. A good example of this is Corporate, a comprehensive solution that allows, among many other things, to digitise receipts and invoices, recover VAT on meals quickly and easily, unify expense notes, as well as limit and adjust each expense incurred.