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BUSio BHORilIo

The document outlines the procedures set by financial managers for processing and distributing financial data, emphasizing security and accuracy. It details the functions of financial management, including planning, cash flow management, and revenue recognition, while also providing tips to improve accounts receivable turnover ratios. Recommendations include timely invoicing, clear payment terms, offering multiple payment options, proactive follow-ups, and discounts for early payments.

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5 views2 pages

BUSio BHORilIo

The document outlines the procedures set by financial managers for processing and distributing financial data, emphasizing security and accuracy. It details the functions of financial management, including planning, cash flow management, and revenue recognition, while also providing tips to improve accounts receivable turnover ratios. Recommendations include timely invoicing, clear payment terms, offering multiple payment options, proactive follow-ups, and discounts for early payments.

Uploaded by

kazeluwesa
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Procedures

The financial manager sets procedures regarding how the finance team will process and distribute
financial data, like invoices, payments and reports, with security and accuracy. These written
procedures also outline who is responsible for making financial decisions at the company — and
who signs off on those decisions.

Companies don’t need to start from scratch; there are policy and procedure templates available
for a variety of organization types, such as this one for nonprofits.

Functions of Financial Management

More practically, a financial manager’s activities in the above areas revolve around planning and
forecasting and controlling expenditures.

The FP&A function includes issuing P&L statements, analyzing which product lines or services have
the highest profit margin or contribute the most to net profitability, maintaining the budget and
forecasting the company’s future financial performance and scenario planning.

Managing cash flow is also key. The financial manager must make sure there’s enough cash on
hand for day-to-day operations, like paying workers and purchasing raw materials for production.
This involves overseeing cash as it flows both in and out of the business, a practice called cash
management.

Along with cash management, financial management includes revenue recognition, or reporting
the company’s revenue according to standard accounting principles. Balancing accounts receivable
turnover ratios is a key part of strategic cash conservation and management. This may sound
simple, but it isn’t always: At some companies, customers might pay months after receiving your
service. At what point do you consider that money “yours” — and report the good news to
investors?

5 Tips to Improve Your Accounts Receivable Turnover Ratio

Invoice regularly and accurately. If invoices don’t go out on time, money will not come in on time.

Always state payment terms. You can’t enforce policies that you haven’t communicated to clients.
If you make changes, call them out.

Offer multiple ways to pay. New B2B options are coming online. Have you considered a payment
gateway?
Set follow-up reminders. Don’t wait until customers are in arrears to start collection procedures.
Be proactive, but not annoying, with reminders.

Consider offering discounts for cash and prepayments. Cash(less) is king in retail, and you can
reduce AR costs by encouraging customers to pay ahead rather than on your normal customer
credit terms.

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