The question
What is due in the coming weeks? How do costs and margins affect profit? Where did actual figures diverge from the budget?
Cash
Cash Management forecasts receipts, payments and balances over 13 weeks, with weekly updates. Monitoring identifies mismatches between inflows and outflows and working capital needs.
The forecast brings together known commitments and operational expectations. Monitoring requires updated data and a review of financial priorities.
Forecasting and execution are different deliverables. Financial BPO organises payables and receivables and reconciles transactions. Cash Management monitors projected commitments within the contracted scope.
Profit
Management analysis examines economic and financial performance. Finance and management accounting may assess profitability, costs, prices and margins by product, service, customer or channel.
The project defines the units of analysis and required data. This view helps investigate how the company’s activities contribute to its profit.
Under Estratégico, the management dashboard brings together results, costs, expenses and indicators. The monthly meeting addresses results and action plan priorities, with owners and deadlines.
Budget
Gestão Integrada includes preparation of the financial budget and comparison of planned and actual figures.
Monitoring examines the differences between forecasts and actual operations. This view has its own purpose and does not replace reconciliation or cash forecasting.
Finance and management accounting projects may also develop budgets, indicators and reports. The proposal distinguishes implementation, review and monitoring.
Frequency
Estratégico includes a monthly results meeting. Gestão Integrada retains that deliverable and adds a weekly cash meeting.
The monthly meeting follows management analysis and action plan priorities. The weekly meeting addresses cash commitments, priorities and financial decisions.
Frequency should relate to the deliverable. Each meeting needs a defined subject, responsible people and the information required to decide.
Responsibilities
When engaging a service, define the analysis required, who prepares the information, who monitors the work and who authorises decisions.
Financial BPO, Cash Management and other financial services can be engaged separately. Controls implementation has a specific scope and is included in another contract only when expressly stated.
Payment preparation follows the company’s approval limits. Authorisation remains with the client’s designated people.
The service name, purpose, scope and terms should be set out together in the proposal.
What to assess in your company
Identify what the company currently monitors, which data is missing and who is responsible for each view. To examine an initial scenario, use Income statement and scenarios. To view short-term commitments, use 13-week cash flow.