Rajes Govender:FD Vedanta - Investing In Managing The Business Finances
Rajes Govender:FD Vedanta - Investing In Managing The Business Finances



more share options...

RSS

‹ Back

Rajes Govender:FD Vedanta - Investing In Managing The Business Finances

2018-02-23

Many businesses fall prey to the situation where there is so much focus on growing top-line that bottom-line suffers. Eventually, management looks at the bottom-line results and cannot explain them. Such a situation
often creeps up on management over a period of time and once revealed needs to be resolved almost overnight to calm down stakeholders. Results that cannot be explained are man-made problems, which, with the right resources on board, can be unraveled and explained. But it takes time and costs money to do so. A proactive strategy to prevent such incidences is advised as a long-term investment for sustainability.

So, what are some of the building blocks necessary to ensure the sustained integrity of financial results numbers and information for decision making?

Invest in getting on board the right calibre professionals within the finance team. Finance resources do not come cheap. You get what you pay for. If you do not invest in recruiting appropriately qualified and experienced people for your finance team then you are very likely to incur significant costs to undo the damage caused to your business by having brought on board the misfits.

Equally important is assessing the business needs as it grows; these needs may outgrow your current head of finance, requiring a more senior person to be added on top with the overall oversight function of the finances.

Implement key controls and business policies to ensure integrity of the numbers. Often, depending on the size of the business, not all key controls can be put in place. In such instances, monthly independent review and analysis of numbers by a finance professional plays a critical role as a key control in identifying any anomalies in the numbers.

Cash forecasting is critical to keep cash flow under control with minimal business disruption and distractions. Cash flow is a reality that can close the doors of a business if not managed properly.

Invest in a suitable enterprise risk planning (ERP) system to support your business needs. As your business grows and outgrows your current ERP system, invest in having professional project management of an upgrade or change in the ERP system with an in-house steering committee overseeing the project.  urdening existing management who may already be overworked with little or no time to spare for such critical projects will only lead to throwing more money at rectifying problems associated with a poorly managed ERP project.

Directors must invest in their own learning and development to be able to interpret the annual financial statements and ask the head of finance questions on the results with confidence to fulfil their duties in terms of the South African Companies Act.

Accepting the results just because the auditors have completed their duties and are ready to issue an unqualified external audit report is not good enough reason for directors to approve the annual financial statements.

In conclusion, ensure that the right building blocks are in place within the finance department to support sustainable growth. Growing at a rapid rate is just vanity if the business is not sustainable in the long term.

As a mentor and financial governance expert, I often find business owners caught up in the present operations, with very little time invested on the long term (3 to 5 year) planning of the business. If no time is
made for good governance, then the day will arrive when you are forced to make time. This day arrives once things have gone wrong. This is a very reactive approach and costly too. Rather, it is best to be proactive and create the investment in good governance today before you are forced to do so.

Cell: 065 859 5048
info@fdvedanta.co.za
www.fdvedanta.co.za




Rajes Govender:FD Vedanta - Investing In Managing The Business Finances

Copyright © 2024 KwaZulu-Natal Top Business
x

Get the Flash Player to see this player.