The term sounds classic and may even cause you to panic when you hear it. Control linked to finances: endless databases, invoices, expenses, balance sheets... However, both in the conventional business world and in the new paradigm that is now opening up for many companies with the digital age, financial controls are much easier to use, understand, apply, and automate than one might imagine.
Definition of financial controls: What are the most common ones and how are they applied?
To understand what financial controls are, let's start by defining the concept. They can be described as the analysis and study of an organization's actual results, taking into account the circumstances of the company and its projects, as well as its financial objectives, programs, and short-, medium-, and long-term plans. In other words, they are the tools used to evaluate the development and impact of the strategies implemented and their influence on the overall finances of a project.
The financial indicators or KPIs (as they are now called), which are used to measure the different financial statements, will vary depending on the objectives of each plan. In other words, these financial reviews are a fundamental pillar for any business, as financial reports provide an overview of the company's economic health.
What are the most common controls?
However, as the concept is very broad, it is worth asking, "What are the most common financial controls?" It all depends on the projects to be evaluated and the stage each one is at. Even so, there are three types that appear in every strategy:
- Balance sheet. Essential at the start of each project to assess the overall financial position and financial statements of the organization at the start of the control or audit.
- Income statement. Summary of business operations carried out over a given period of time. It includes several different statements and, as its name suggests, is the result of subtracting the various financial expenses incurred from the income. This financial control is used to analyze the profitability of an operation or the overall activity of the company. It also uses data to check whether the financial objectives set are being met.
- Cash flow, also known as cash flow statement. This financial review evaluates changes in cash and cash equivalents, determining whether more liquidity is needed or not.
Obviously, for the different projects and operations carried out in any organization, these and other financial control processes are established. However, these three have been and continue to be the most common.
The importance of financial controls in any company
We say that they have been and continue to be essential because the advent of the online world has not diminished the importance of financial controls. Currently, due to their relevance for planning or when organizing cost accounting, these economic reviews continue to be used, but in a digitized and automated form. And why are they so important, for example, in the process of invoicing customers and suppliers? :
- They measure different financial processes and economic flows, helping us to understand the financial health of our projects.
- They are ideal for controlling invoice delivery: invoice workflow, receipt, and acknowledgment of invoices issued to customers, which are essential for controlling financial income and expenses.
- They are used to measure invoice issuance processes, the financial risks involved, and the subsequent optimization of these processes.
- They offer transparency of information, both internally and to customers.
- Early detection of incidents, such as on the easyap supplier portal, where the appropriate information is presented to each supplier.
What has changed with the online world is the application of these financial processes. Little by little, the notebook and traditional pen used to write financial reports are giving way to technology and its advances.
Financial Controls | Automation
Advantages of implementing and automating financial controls in billing processes
These technological advances result in significant savings in terms of materials and time. The cost calculator shows the savings that companies can achieve by automating their billing processes to carry out financial controls more efficiently. A clear reflection of the positive impact of implementing and automating financial service controls is that now, with companies such as Easyap, electronic invoices are issued and processed almost instantly, whereas before these operations involved multiple procedures and, above all, time.
Another new feature in the implementation and automation of these financial processes is that events can be recorded much more quickly. Events are simply recorded with a time stamp on each invoice, and the project's financial auditors will monitor their progress on site. It is even possible to measure the traceability of financial statements by checking each and every step taken and the financial instruments used.
Therefore, and by way of conclusion, it is absurd to ignore the importance of these financial processes and their automation. But in this new digital age, in which the implementation of automated financial processes is key and is something that most companies already do, it is even more so. That is why, whether you work with companies specializing in financial controls such as Easyap or doing it internally, you should highly value the savings they bring in two fundamental aspects of life: time and money.
