What kinds of financial procedures and systems are used by a firm?

Financial processes pdf

Any financial execution process loses its meaning if a control strategy is not defined and implemented, based on objectives in accordance with the current situation and the company’s future projects.

Nowadays, financial control has become a fundamental part of any company’s finances. For this reason, it is very important to understand what it means, what its objectives and utilities are and what steps must be followed for its correct implementation.

Financial control can be understood as the study and analysis of a company’s actual results, approached from different perspectives and moments, compared with the company’s objectives, plans and programs, both in the short and in the medium and long term.

These analyses require control and adjustment processes to check and ensure that the business plans are being followed. In this way, it will be possible to modify them in the right way in case of deviations, irregularities or unforeseen changes.

What are the financial processes?

Financial planning is a set of processes that facilitate the objective of adapting the company to a changing business environment and the continuous need to improve its current and future competitiveness. It also allows the company to project, in monetary terms, the result of its decisions and to check whether or not the objectives are achieved, and whether or not it creates value for all the groups involved in the company.

Fourth. To develop the budgetary process, integrating the strategic objectives of the company with its functional areas (information-accounting, production, marketing, personnel and particularly with finances as an integrating area of the previous ones).

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Fifth. To implement a financial control system that integrates the projected budget with the indicators of the balanced scorecard, which will make it possible to verify whether the strategy and the decisions that are being adopted in the different departments of the company achieve the established financial objectives.

Financial process example

There is a broad consensus that high-value payment systems should be settled on the same day, and the general practice is that payments should be settled as soon as possible. Originally, these systems were developed to settle financial markets, to settle obligations arising in other payment systems and for financial intermediaries to settle their obligations, so the average payment amount was very high. However, technological and financial advances have made it possible for financial intermediaries to offer the services of these systems to their clients for smaller payments.

The Law for the Transparency and Regulation of Financial Services assists the Central Institute in this purpose by empowering it to regulate the services and means of payment provided by banks to their customers and the fees charged by banks to each other.

Phases of financial control

A transaction processing system is a computerized system that performs and records the daily routine transactions necessary for the operation of the business. They are at the lowest level of the organizational hierarchy and support the day-to-day activities of the business.

For example, in an oil refinery, electronic sensors connected to computers are used to continuously monitor chemical processes and make real-time adjustments that control the refining process. A process control system comprises a range of equipment, computer programs and operating procedures.

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Enterprise resource planning (ERP) systems are one of the most widely used types of information systems. They help company managers to control the flow of information in their organizations.

Management information systems (MIS) are a type of information systems that collect and process information from different sources to assist in decision making regarding the organization’s management.