Assess your Financial Management Capability
The financial management capability of Irish SMEs varies significantly.
I have been working with many Irish SMEs over the past 20 years helping them to improve their financial management capability. Over time, I have observed a number of different stages that businesses go through as they develop their skill levels.
I have set out in the table below the characteristics of the various stages that I have identified.
Not every business goes through all these stages nor does they spend the same amount of time in each stage.
A high potential business with external professional funding will usually put a high level of financial management capability in place from the start. A start up that is growing organically will usually develop their financial management capability as the business grows.
Use the table to identify where you are and what you have to do to improve.
Levels of Financial Management Capability
Level | Activities | Internal Outputs | External Outputs | Resources |
| Minimum | Business run from bank statementss Records sent to external accountant who does VAT, PAYE and prepares accounts at year end | None | VAT Returns, PAYE Returns, Annual Accounts at year end | Clerical Staff |
| Book-keeping Basic | Record sales, purchases, payments and receipts. Payroll Calculations using payroll software. All files to the accountant at the year end | VAT Returns, PAYE Returns Reasonably reliable customer, supplier and bank records
| Annual Accounts at year end | Book-keeper, not necessarily qualified |
| Bookkeeping Plus | As Bookkeeping Basic with Checks and Verifications on bank, supplier and customer balances All files to the accountant at the year end | VAT Returns, PAYE Returns Highly reliable customer, supplier and bank records
| Annual Accounts at year end | Usually qualified book-keeper with some experience, could be a trainee accountant |
| Accounting Basic | As Bookkeeping Plus with Management Accounts prepared at least quarterly incorporating accounting adjustments for stock, accruals and prepayments, depreciation | VAT Returns, PAYE Returns Highly reliable customer, supplier and bank records
| Management Accounts (at least quarterly) P&L, Balance Sheet, Customer Balances, Supplier Balances | Usually qualified book-keeper with some experience, could be a trainee accountant
Part time controller for management accounts |
| Financial Control | As Accounting Basic with Management Accounts reviewed with Senior Management Short term cash flow projections Annual Budgets prepared
| VAT Returns, PAYE Returns Highly reliable customer, supplier and bank records
| Reliable Budgets Highly reliable management accounts Including Actual v Budget P&L
| Internal accounting staff with experience and some qualifications
Part time controller for management accounts, budgets and projections
|
| Financial Control Plus | As Financial Control with Product costings from budget data Short term cash flow projections Financial Projections updated quarterly | VAT Returns, PAYE Returns Highly reliable customer, supplier and bank records Short term cash flow projections | Highly reliable management accounts Reliable Budgets and product costings Reliable projections Basic analysis of variances Financial inputs to decision making
| Internal accounting staff with experience and some qualifications
Part time controller for management accounts, budgets and decision inputs
|
| Strategic Control | As Financial Control Plus With multi year-long range planning Full Financial Evaluation of all key business decisions Robust financial model that can quickly support what if evaluation of various options
| VAT Returns, PAYE Returns Highly reliable customer, supplier and bank records Short term cash flow projections | Highly reliable management accounts Reliable Budgets and product costings Reliable projections Basic analysis of variances Financial inputs to decision making Long term funding requirements identified with plans to address them | Internal accounting staff with experience and some qualifications
Usually fulltime (but possibly Part-time) controller for management accounts, budgets and long range plans and for decision inputs
|
What does this mean for you?
You should use the characteristics in the table to identify where you are now.
Then you should ask if this is sufficient for you and for your business.
Ask yourself if you have the appropriate skill levels to do what you need to do.
Whereever you have gaps, then you need to put a plan in place to close the gap.
This plan should identify what must be done, who will do it and when will it be completed.
How I can help?
With many years’ experience working with SMEs I can help you complete your diagnosis and put improvement plans in place.
I can help you by coaching your financial staff to grow in to their roles or, where necessary, by hiring appropriate staff.
We can work together to create a practical plan to address the needs of your business.
Offer
I am offering a two hour assessment of your financial management capability with no obligations on your part.
This assessment will be restricted in that I can only offer one per week.
If you want to have your financial function assessed, feel free to send me an email with subject “Assessment of Financial Management Capability”.
