Good business managers spend a significant portion of their time solving business problems. We both know that if something can go wrong, it usually will and it will happen when you least expect it. You cannot solve a problem if you don’t know about it in the first place. There is no place in a management team for a manager who is not adept at problem resolution.

In summary, every business manager has to have good financial controls. A good set of financial controls will sound the alarm and get the managers attention when financial problems begin to happen in the business. A good place to start designing financial controls is around the reports you can run from small business accounting software. For example good small business accounting software should be able to report actual costs compared with budgeted costs in a given period or versus the last period. Begin by identifying a minimal group of numbers and relationships that you need to monitor and then design your accounting or financial reports to present these critical factors in the right format.

Be vigilant particularly when it comes to tracking and immediately understanding any deviations from the norm in your margins. If you sell products in volume any sudden change in margins can multiply into losses very quickly and therefore it follows that any decreases in volumes should be immediate cause for concern and therefore having up to date information available is critical. Monitor your fixed costs like a hawk and make particularly sure they follow your plan or budget especially in the early months of the financial year. Tracking the average number of days it takes to collect payment on invoices is key to accurate cash flow forecasting and most small business accounting software reporting systems will help you easily do this.

Experience is the way to learn and over time you will learn which financial controls should be highlighted in your accounting reports, just make sure you have the right small business accounting software that can generate these.