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O Event Budget
H
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T Introduction
Costing
Cash Flow
Profit and Loss
Balance Sheet
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O What is an Event Budget
H  An event budget is an estimation of the costs an event will incur

M based on plans made as well as research.

 The event budget shows the financial position of an event. The
T actual or projected income and expenditure is detailed within a
defined structure.
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O Importance of structured budget
H  Helps in monitoring costs and understanding what you can (and can’t) afford
M economic decisions can be made
 Keeps spending decisions under control and focused on priorities, so better

T  Helps to identify areas of savings and expenditures.

 Feasibility of an event and the risks or likely profits.
 Defines measurable and achievable objectives and targets for your event to
keep you on the right path from the start
 Flags warnings if you don’t hit income targets or are over budget compared to
projected expenditure
 Can demonstrate the return generated from the event
 Is crucial when reporting to management.
S What Cost-Saving Tactics are Being
O Implemented?
H Three cost-saving tactics executives are currently
M deploying to make their event budget plan:
T Controlling costs on hotel rooms, meeting rooms, food and beverage,
concessions, and travel.
Consolidating technology into an end-to-end event automation
platform.
Reducing labor hours or shifting labor hours to more valuable work.
To effectively execute each tactic, there are also three
steps that you need to take:
Confirm that the processes underlying the tactics are sound.
Have the technology enable the process, not prevent success.
Ensure that people managing the tactic are prepared and supported
with the help of an event.
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O Fixed and Variable Costs
H  Fixed costs are costs that do not change based on the number of

M attendees.
 These costs are calculated as a total amount.
T  Variable costs are costs that change based on the number of
attendees.
 These costs are calculated on a per-person basis.
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O Expenses for In-Person Events
H  According to a

M Professional Convention Management Association (PCMA) surv

ey,
T 36% of all in-person event expenses are for food and beverages
(F&B) alone.
 This chart shows an overview of the most common expenses for
meetings and events
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O Expenses for Virtual Events
H  The virtual event platform you’ll host your event in
M  Design of your virtual event space

T  Your streaming service

 Fixed costs for virtual events tend to include:
Your virtual event space
Design of virtual event space
Event registration / ticketing
Streaming service cost
Producer cost (if required)
Professional live stream and video production costs (if you prefer to be
hands-off)
 You will also have some variable costs such as speaker fees
and engagement items including swag boxes.
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S Step 1: Determine what you are
O budgeting for
H  While most events have similar expenses such as venue costs or
M guest registration systems, others—such as drone security and other
trendy features—are unique to each event.
T  The benefit of building your own budget is the ability to organize
your unique costs any way you please.
 What expenses should you account for when building your event
budget?
Venue and decorations
Catering
Staffing
Event marketing
Travel costs
Audio/visual equipment
Entertainment
Miscellaneous fees
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O Step 2: Identify your actual costs
H  Venue:  Marketing:
 Social media marketing software
M  Room rental
 Security deposit  Print materials and design work
T  Parking  Registration management software
 A/V:  Entertainment:
 Projectors  Musicians/DJ
 Internet/Wi-Fi  Speaker fees
 Speakers
 Associated housing and
 Microphones
transportation costs
 Cameras
 Miscellaneous:
 Catering:
 Venue decor
 Bartenders
 Seating
 Servers
 Additional event staff
 Food
 Taxes and fees
 Beverages
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O Step 3: Plan out your projected revenue
H  Once you’ve calculated your expenses, it’s time to project your
M revenue.
 Most event management software can track ticket sales, while
T others track additional sources of revenue, such as vendors,
sponsors, and donation income.
When projecting your revenue, look for:
 Cost per attendee versus cost per registration dollars earned
 Trends in attendee costs and cost per registration in relation to each
other (have they gone up or down?)
 Event opportunities, including new technologies that create new
costs while also bringing in new revenues (example:
RFID technology)
 Similar events and their profitability
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O Step 4: Plan for unknown variables
H Unknown Expenditures
M Separate Budget
T Past events
Avoidable and Unavoidable situations
Hidden expenses
Extra requirement of human resource
S How to Budget for Your Event
O Management Costs
H  Scheduling
M 1. Start your planning in advance.
2. Set your time-frame.
T 3. Don’t forget about payment deadlines.
 Backup
4. Find and secure sponsors.
5. Consider your rainy day fund.
6. Prepare different versions of your budget.
7. Learn from your mistakes.
 Predicting
8. Remember that ROI is the base of the planning process.
9. Specify the places where you’ll break-even.
10. Specify the forecasted income.
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O Cont..
H  Precision Tools
11. Break down your event management 21. Consider the tools you will need to run a
M budget into different sections and categories. successful event.
12. Set clear goals and objectives for the 22. Use adequate tools to keep a clean and
T budget.
13. Don’t be afraid to be extremely detailed. 
precise budget planning process.

14. Create completely separate budgets for Researching

different events.
15. Plan digital marketing and traditional 23. Continue to keep up with your budget.
marketing separately. 24. Consider the company’s budgets for
16. Go for the financial framework when previous events.
forecasting incomes. 25. Be realistic throughout the entire
 Saving budgeting process.
https://info.6connex.com/blog/how-to-budget
17. Consider spaces where you can save. -in-event-management
18. Bear in mind that there are costs that
can’t be cut.
19. Don’t go with the first offer you get;
think about event budget savings.
20. Don’t underprice your planning to make
your event budget savings look better.
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H Break-Even Point
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H http://www.leoisaac.com/budget/bud034.htm
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O What Is a Break-Even Analysis?
H  Break-even analysis entails calculating and examining the margin of safety for an
entity based on the revenues collected and associated costs.
M  The analysis shows how many sales it takes to pay for the cost of doing business.

T  Analyzing different price levels relating to various levels of demand, the break-even
analysis determines what level of sales are necessary to cover the company's total
fixed costs.
 A demand-side analysis would give a seller significant insight into selling
capabilities.
 Break-even analysis tells you how many units of a product must be sold to cover the
fixed and variable costs of production.
 The break-even point is considered a measure of the margin of safety.
 Break-even analysis is used broadly, from stock and options trading to corporate
budgeting for various projects.
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O Break-Even Point
H  The break-even point is calculated by dividing the total fixed costs of
production by the price per individual unit less the variable costs of
M production. Fixed costs are costs that remain the same regardless of
T how many units are sold.
 The breakeven point (break-even price) for a trade or investment is
determined by comparing the market price of an asset to the original
cost; the breakeven point is reached when the two prices are equal.
 In corporate accounting, the breakeven point formula is determined by
dividing the total fixed costs associated with production by the
revenue per individual unit minus the variable costs per unit.
 In this case, fixed costs refer to those which do not change depending
upon the number of units sold. Put differently, the breakeven point is
the production level at which total revenues for a product equal total
expenses.
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O KEY TAKEAWAYS
H In accounting, the breakeven point is calculated by
M dividing the fixed costs of production by the price per
T unit minus the variable costs of production.
The breakeven point is the level of production at
which the costs of production equal the revenues for a
product.
In investing, the breakeven point is said to be achieved
when the market price of an asset is the same as its
original cost.
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O Break Even Point Concept
H  The classification of costs incurred in a company must be in

M fixed costs and variable costs;

 Variable costs change in total according to changes in volume,
T while fixed costs do not change in total;
 The amount of the cost remains unchanged despite the change in
activity, while the fixed cost of the company will change;
 While analyzing the period, the selling price per unit is constant;
 The concept of assuming the product is always sold out of every
production;
 The company sells and makes one type of product. If the
company makes or sells more than one type of product, then
each product’s balance of sales results remains.
S Purpose and Function of Break Even
O Point Analysis (BEP)
H  Knowing the value of BEP allows employers to estimate the volume of
production capacity that will remain once the BEP is reached. By determining
M the value of the BEP, you can select the maximum profit projection that may
T  occur.
The BEP value makes it possible to determine the efficiency measures that
the company can take. When manufacturing runs automatically, fixed and
variable costs change. This is because the variable costs associated with labor
are replaced by fixed costs related to machines.
 The BEP value helps entrepreneurs know the change in profit value in case of
changes in product prices. The relationship between BEP value, product cost,
and profit is parallel, so if one element’s value increases, the other element
will also increase, and vice versa.
 Because BEP serves to determine the change in profit, BEP can also
determine losses. For entrepreneurs, by knowing the value of BEP,
entrepreneurs can anticipate the value of losses when there is a decrease in
sales.
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H As a guideline for business owners to provide
M appropriate investment value to offset initial
T production costs;
Utilize the results of these calculations to analyze the
company’s purchase and sale of shares, budget
planning, and financial projections;
BEP is a benchmark for determining margins so that
the business gains profit, not loss.
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O Advantages
H One of the most critical and primary benefits of Break-
M Even Point in accounting is its simplicity of calculation
T and helping the business determine the number of units
to be sold to breakeven, i.e., no profit, no loss.
It helps understand the cost structure, i.e., the proportion
of Fixed Costs and Variable Costs.
Since Fixed Cost doesn’t change easily, it helps
business owners to take measures to control the Variable
cost without focusing on the total cost.
It is vital in forecasting, long-term planning, growth,
and business stability.
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O Disadvantages
H The biggest shortcoming of the Break-Even Point in
M accounting analysis is the assumption, which holds
T that fixed cost remains constant and Variable cost
varies proportionately with the level of sales, which
may not be the case in the real-world scenario.
It assumes costs are either fixed or variable; however,
some expenses are semi-fixed in reality.
Example Telephone expenses comprise a fixed
monthly charge and a variable charge based on the
number of calls made.
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H Factors That Increase a Company’s Break Even
M Point
T Increased revenue from customers
Costs of production are increasing
Equipment repairment
How to Minimize Break Even Point?
Raising the price of the product
Outsourcing
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O Cash Flow
H  Cash flow analysis helps you understand how much cash a

M business generated or used during a specific accounting period.

 Understanding cash sources and where your cash is going is
T essential for maintaining a financially sustainable business.
 A business may be profitable and still experience negative cash
flow or lose money and experience positive cash flow.
 Complementary measurements, such as free cash flow and
unlevered free cash flow, offer unique insights into a company’s
financial health
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O Sources of Revenue
H  Advertising revenues (event program, internet web site)

M  Concession (food and beverage and merchandise sales)

 Donations / Philanthropy
T
 Exhibit or exposition booth rental fees
 Gifts in kind (actual fair market financial value)
 Grants and contracts
 Management fees
 Merchandise sales
 Registration fees
 Sponsorship fees
 Technology income (from advertising)
 Vendor commissions (hotels)
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O Understand Cash Flow
H  The ultimate purpose is to have a simple and reasonable income statement,
balance sheet and a cash statement that includes all the forecast information
M related to the event
T  Delays in obtaining money and paying suppliers can create a shortage of
liquidity.
 Purpose of Cash Flow:
#1 – The Explanation for the Changes in Cash
#2 – Information about Non-Cash Investing and Financing Activities
#3 – Financial Condition of the Firm
#4 – Provides a View of Management Strategy
#5 – Legal Requirements
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S Bulletproof Tactics To Improve Your
O Cash Flow Today:
H  Open bookings as soon as you can to start some revenue rolling in
M transfer, check or on the door
 Require card payments at the time of booking and eliminate payments by bank

T  Select a ticketing provider that pays out revenues on a daily or weekly basis
 sAgree a payment schedule with sponsors so that there is money coming in at
regular intervals before the event
 Set short payment terms for payments due to you and extend payment terms for
your outgoings. Always negotiate the payment terms if they don’t work for
your cash flow
 Go through a credit check with suppliers so that they are happy to accept
payment after the event instead of in advance
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O Why Is Cash Flow Analysis Important?
H  A cash flow analysis determines a company’s working capital —
M the amount of money available to run business operations and
complete transactions.
T  That is calculated as current assets (cash or near-cash assets, like
notes receivable) minus current liabilities (liabilities due during
the upcoming accounting period).
 Cash flow analysis helps you understand if your business is able
to pay its bills and generate enough cash to continue operating
indefinitely.
 Long-term negative cash flow situations can indicate a potential
bankruptcy while continual positive cash flow is often a sign of
good things to come.
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O Cash Flow Analysis Basics
H  Cash flow analysis first requires that a company
generate cash statements about operating cash flow, investing cash flow
M and financing cash flow.
T  Cash from operating activities represents cash received from
customers less the amount spent on operating expenses.
 In this bucket are annual, recurring expenses such as salaries, utilities,
supplies and rent.
 Investing activities reflect funds spent on fixed assets and financial
instruments.
 These are long-term, or capital investments, and include property,
assets in a plant or the purchase of stock or securities of another
company.
 Financing cash flow is funding that comes from a company’s owners,
investors and creditors.
 It is classified as debt, equity and dividend transactions on the cash
flow statement.
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O Five Steps to Cash Flow Analysis
H  Aim for positive cash flow

When operating income exceeds net income, it’s a strong indicator of a company’s ability to
M remain solvent and sustainably grow its operations.

T
 Be circumspect about positive cash flow

On the other hand, positive investing cash flow and negative operating cash flow could signal
problems. For example, it could indicate a company is selling off assets to pay its operating
expenses, which is not always sustainable.
 Analyze your negative cash flow

When it comes to investing cash flow analysis, negative cash flow isn’t necessarily a bad thing. It
could mean the business is making investments in property and equipment to make more products.
A positive operating cash flow and a negative investing cash flow could mean the company is
making money and spending it to grow.
 Calculate your free cash flow

What you have left after you pay for operating expenditures and capital expenditures is free cash
flow. This can be used to pay down principal, interest, buy back stock or acquire another company.
 Operating cash flow margin builds trust

The operating cash flow margin ratio measures cash from operating activities as a percentage of
sales revenue in a given period. A positive margin demonstrates profitability, efficiency and
earnings quality.
You can delete it after understanding
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O Preparing a Cash Flow Statement
H  Cash received from sales of goods or services
M  The purchase of inventory or supplies
T  Employees’ wages and cash bonuses
 Payments to contractors
 Utility bills, rent or lease payments
 Interest paid on loans and other long-term debt and interest
received on loans
 Fines or cash settlements from lawsuits
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O Cash Flow Methods
H  The Cash Flow Statement Direct Method takes all cash

M collections from operating activities and subtracts all of the cash

disbursements from the operating activities to get the net income.
T  The Cash Flow Statement Indirect Method starts with net
income and adds or deducts from that amount for non-cash
revenue and expense items.
S How to Calculate Cash Flow For Your
O Meeting or Event
H  Cash Flow Calculation
 All Revenues – Uncollected Accounts Receivable = Cash on Hand Before
M Expenses
T  Cash on Hand Before Expenses – Accounts Payable = Cash on Hand
 Starting cash is the amount of money you have readily available at the start of
any given period. Below is a simplified cash flow example.
 Example
 You are planning a city festival and have starting cash of $1,000. You want to
rent a tent that can hold up to 500 people. In addition, you want to bring 4
musicians to perform. Your event takes place on August 15, and tickets will go
on sale one month before. You have to book the tent as well as the musicians by
June 1 which costs you $1,500 in total.
 This means, by June 1, you already have expenses of $1,500. Once you start
selling tickets on July 15, you start making income from pre-selling tickets at
$20 which continues throughout the event (tickets, merchandise, food and
beverages, etc.).
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H https://www.eventmobi.com/blog/event-budget-basics/
M https://
T www.aventri.com/strategy/event-budget-strategy
https://www.eventmobi.com/blog/how-to-develop-an-e
vent-budget-for-your-meeting
/
https://meetings.skift.com/event-budget/
https://blog.capterra.com/7-event-budget-templates-to-
plan-your-finances
/
https://www.netsuite.com/portal/resource/articles/finan
cial-management/cash-flow-analysis.shtml
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H https://
M ec.europa.eu/programmes/erasmus-plus/project-result-
T content/48ffc243-9135-4b94-a3d4-636ad50b7c43/Bud
geting%20and%20Financial%20Control%20Presentati
on.pdf
Budget ppt with cash flow , balanace sheet and
finacial contro overalsl.
https://www.bplans.com/personal-event-planning-busi
ness-plan/financial-plan
/
https://edwardlowe.org/how-to-prepare-a-profit-and-lo
ss-income-statement-2/
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O Event Profit& Loss Statements
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O What is an Event Profit & Loss Budget?
H  Event profit & Loss (P&L) budgets are considered financial planning tools and
are used by event- and budgeting managers to create revenue and expense
M budgets at the general ledger (GL) level.
T  Some of the main functionality in this type of input form is that it allows for
full P&L budgets by event.
 Using automated drivers as well as user input, the template enables input with
full security and from anywhere with only a web browser required on the user’s
computer.
S WHAT YOU SHOULD KNOW
O BEFORE GETTING STARTED
H  A Profit and Loss (P & L) statement measures a company's sales and
expenses during a specified period of time.
M  The function of a P & L statement is to total all sources of revenue and
T subtract all expenses related to the revenue.
 It shows a company's financial progress during the time period being
examined.
 The P & L statement contains uniform categories of sales and expenses.
 The categories include net sales, costs of goods sold, gross margin, selling
and administrative expense (or operating expense), and net profit.
 These are categories that you, too, will use when constructing a P & L
statement.
 Since it is a rendering of sales and expenses, the P & L statement will give
you a feel for the flows of cash into (and out of) your business.
 The P & L statement is also known as the income statement and the earnings
statement.
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O Purpose of Event P&L Budgets
H  Enable managers to plan financial outcomes per event and to see such budgets
consolidated across all events..
M  When used as part of good business practices in Budgeting and Accounting
T departments, a company can improve its planning accuracy
 Maximize profitability through well-informed strategic decisions,
 Reduce the chances that costly mistakes, such as overstaffing or understaffing,
takes place.
S Who Uses This Type of Input
O form?
H The typical users of this type of input form are: CFOs,
M budget managers, event managers, staffing managers.
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 A P & L statement and a completed P & L statement for the fictional ABC Company.
 Shell of a P & L statement:
 Net Sales − Cost of Goods Sold = Gross Margin Gross
 Margin − Selling and Administrative Expense =Net Operating Profit
 Net Operating Profit + Other Income −Other Expense = Net Profit before Taxes
 Net Profit before Taxes − Income Taxes = Net Profit (or Net Loss)
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O Sample of a P & L statement:
H  NET SALES $200,000
 Cost of goods sold:
M  Beginning inventory− $ 45,000
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Merchandise purchases− $120,000
Freight− $ Co15,000
 Cost of goods available for sale $180,000
 Less ending inventory− $ 50,000
 COST OF GOODS SOLD − $130,000
 GROSS MARGIN $ 70,000Selling,
 Administrative, and General
Expenses: Salaries and Wages− $ 22,000 Rent− $ 6,000 Light, heat, and
power− $ 1,000 Other Expenses− $ 4,000 State and local taxes and licenses−
$ 1,000 Depreciation and Amortization
on leasehold improvements− $ 500 Repairs− $ 1,500
 Total selling, administrative, and general expenses − $ 36,000
 Profit From Operations $ 34,000 Other income+ $ 2,500 Other expense− $
500
 Net Profit Before Taxes $ 36,000 Provision for income tax− $ 14,400
 NET PROFIT AFTER INCOME TAX $ 21,600
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O Step 1:
H  Fill in the heading of your worksheet with your company's name and the
period the P & L statement will reflect.
M  The heading of the P & L statement should always tell the rea der what period
T of time is being examined.
 Unlike a balance sheet, which is a snapshot of a company during a particular
date in time, the P & L statement shows a listing of what has transpired or
happened during a time period.
 As such, the heading should contain wording that describes the time period
being examined, such as: for the month ending-month/day/year; for the quarter
ending — month/day/year; for the year ending — month/day/year.
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O Step 2:
H  Fill in total sales, and any allowances on the worksheet. Calculate net
sales.
M  A cost of goods sold could also be derived indirectly by deflating sales
T figures.
 Deflating Sales Figures
 For example, if a retail store has a storewide gross margin (or mark-up) of
40 percent and sales of $100,000 are recorded during the accounting
period, the cost of goods sold would be $60,000.
See the following calculation for how this works:
 Total Sales x Gross Margin (%) = Gross Margin ($)
 $100,000 x 40% = $40,000
 Total Sales ($) − Gross Margin ($) = Cost of Goods Sold ($)
 $100,000 − $40,000 = $60,000
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O Step 3:
H  Fill in the cost of sales for your company on the worksheet.

M  Complete the separate Cost of Goods Manufactured Worksheet to make sure all
applicable costs are accounted for.
T  Gross Margin
 Once net sales and cost of goods sold are entered on the P & L statement, it is
possible to compute the gross margin for the accounting period.
 Gross margin is also referred to as gross profit.
 Net Sales − Cost of Goods Sold = Gross Margin
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O Step 4:
H  Fill in selling, general, and administrative expenses for your business on
the worksheet.
M  Selling expenses are expenses incurred directly and indirectly in making sales.
T  They include salespeople's salaries, sales office costs, commissions,
advertising, warehousing and shipping.
 In general, selling expenses are the expenses of order taking and o rder
fulfilling.
 General and administrative expenses are operating expenses not directly
associated with the sale of goods.
 They include nonsales personnel salaries, supplies, and other operating costs
necessary to the overall administration of the business.
 General and administrative expenses are commonly considered "overhead"
expenses, and include rent, utilities, telephone, travel and supplies.
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O Step 5:
H  On the worksheet, compute the net operating profit for your business.

M  Net operating profit is the difference between the gross margin and selling and
administrative expenses.
T  Gross Margin − Selling and Administrative Expenses = Net Operating Profit
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O Step 6:
H  Enter any Other Income or Other Expense for your business on the
worksheet and calculate Net Profit Before Income Taxes.
M  Net Profit
T  Net Profit is calculated by subtracting what you estimate is owed for state and
federal income taxes from Net Profit Before Income Taxes.
 Net Operating Profit + (Other Income − Other Expenses) = Net Profit Before
Income Taxes
 Net Profit Before Income Taxes − Income Taxes = Net Profit
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H https://
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https://alum.mit.edu/sites/default/files/2017-12/EVEN
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O EVENT
H BALANCE SHEET
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O WHAT IS A BALANCE SHEET?
H  A financial statement that communicates the so-called “book value” of an
organization,
M  Calculated by subtracting all of the company’s liabilities and shareholder
T equity from its total assets.
 Offers internal and external analysts a snapshot of how a company is
performing in the current period, how it performed during the previous period,
and how it expects to perform in the immediate future.
 An essential tool for
individual and institutional investors
key stakeholders within an organization and
any outside regulators
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H  An asset is anything a company owns which holds some amount of quantifiable
value, meaning that it could be liquidated and turned to cash.
M  They're the goods and resources owned by the company.
T  Current assets, or short-term assets, are typically what a company expects to
convert into cash within a year’s time, such as cash and cash equivalents,
prepaid expenses, inventory, marketable securities, and accounts receivable.
 Non-current assets—fixed or long-term assets—are investments that a
company does not expect to convert into cash in the short term, such as land,
equipment, patents, trademarks, and intellectual property.
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H  Current Assets:  Non-current Assets:
 Cash and cash equivalents  Long-term marketable securities
M  Short-term marketable securities  Property
T  Accounts receivable  Goodwill
 Inventory  Intangible assets
 Other current assets  Other non-current assets
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O Liabilities
H  A liability is anything a company or organization owes to a debtor. This may
refer to payroll expenses, rent and utility payments, debt payments, money
M owed to suppliers, taxes, or bonds payable.
T  Current or short-term liabilities are typically those due within one year,
which may include accounts payable and other accrued expenses.
 Non-current or long term liabilities are typically those that a company
doesn’t expect to repay within one year. They are usually long-term
obligations, such as leases, bonds payable, or loans.
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H  Current Liabilities:  Non-Current Liabilities:
 Accounts payable  Deferred revenue (non-current)
M  Accrued expenses  Long-term lease obligations
T  Deferred revenue  Long-term debt
 Current portion of long-term  Other non-current liabilities
debt
 Other current liabilities
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O Shareholders’ Equity
H  Shareholders’ equity refers generally to the net worth of a company, and
reflects the amount of money that would be left over if all assets were sold and
M liabilities paid. Shareholders’ equity belongs to the shareholders, whether they
T  be private or public owners.
For a company or organization is privately held by a single owner, then
shareholders’ equity will generally be pretty straightforward.
 If it’s publicly held, this calculation may become more complicated depending
on the various types of stock issued.
 Common line items found in this section of the balance sheet include:
Common stock
Preferred stock
Treasury stock
Retained earnings
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O BALANCE?
H  A balance sheet should always balance.
M  The name itself comes from the fact that a company’s
T assets will equal its liabilities plus any shareholders’ equity
that has been issued.
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H  Determine the Reporting Date and Period
M 
 Identify Your Assets

Identify Your Liabilities

T  Calculate Shareholders’ Equity
 Add Total Liabilities to Total Shareholders’ Equity and Compare to Assets
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S PREPARATION OF BUDGET
O SHEET
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H
M College Reunion
T Prepare an event budget sheet
Practice with examples and discussion
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O Financial Controls System
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O Financial Controls
H  Financial controls refer to the development of policies and procedures by an
organization to manage its financial resources and operate efficiently.
M  It also includes a set of rules for documenting, analyzing, and reporting transactions.
T  This strategy involves reviewing the company’s actual performance concerning its
business plans and adjusting policies and procedures in response to any differences,
irregularities, or unanticipated changes.
 It is essential for cash flow management, budgeting, and the prevention of any fraud or
theft.
 It enables the business to track and oversee its financial activities to grow and prosper.
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O Objectives Of Financial Controls
H  Boost productivity and profitability by streamlining processes across all areas and
departments of the business.
M  Conduct frequent audits and report accurate financial data to guarantee the balance
T  sheet, cash flow statement, and income statement are all free of errors.
Direct, allocate, manage, and employ financial resources per needs, resulting in
increased performance and income.
 Improve operational efficiency by evaluating financial data, distributing resources more
efficiently, and controlling cash flow.
 Maintain financial accountability and communication at all levels, ensuring all
stakeholders comply with fiduciary responsibility, corporate governance, and due
diligence obligations.
 Meet production targets, cut costs, and prevent fraud through on-budget, on-target
expenditure.
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O Importance Of Financial Controls
H 1. Comply with fiduciary duties, corporate governance, and due diligence
requirements
M 2. Examine budgets, balance sheets, and financial statements for
T irregularities
3. Improve the process efficiency and profitability
4. Manage financial resources and activities
5. Meet financial objectives
6. Mitigate financial risks and prevent fraud or theft
7. Monitor and control total cash inflow and outflow
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H  #1 – Immediate (Directional) Financial Control
 It involves taking quick actions in response to discrepancies in financial reports, which if
M ignored can result in significant losses or undermine a company’s goals and operations.
T  #2 – Selective Financial Control
It concentrates on particular aspects of a company, such as management and
production. It evaluates how a process operates, how it adheres to guidelines, and
whether it contains flaws or margins of error. Then it employs all available metrics or
makes amendments to improve performance by maximizing resource utilization.
 #3 – Postdate Financial Control
 It usually takes place after operations have occurred and identifies flaws in current
policies and regulations. A corporation evaluates its existing strategy and performance
compared to its anticipated objectives and then makes necessary changes or
improvements based on the existing outcomes.
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S step-by-step approach for implementing a financial
O controls checklist in a business:
H  Step 1: Assess the company’s current performance
M Step 2: Detect anomalies in budgets, financial reports, and balance sheets
T Step 3: Correct deviations in financial accounts
Step 4: Regularly update financial documents
Step 5: Examine the organization’s operational policies
Step 6: Improve operating standards and decision-making processes
Step 7: Make forecasts and set goals for different scenarios
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O Strategies of Financial Controls
H 1. Overall financial management and implementation:
 Placing certain qualification restrictions and employing only certified, qualified
M financial managers and staff working with the formulation and implementation of
T  financial management policies
Establishing an efficient, direct chain of communication among the accounting staff,
financial managers, and senior-level managers, including the CFO
 Periodic training sessions and information sessions among accounting staff, etc. to
ensure being updated with the changing laws and evolving business environment
concerning business finance
 Periodic, thorough financial analysis and evaluation of financial ratios and statements
wherever fluctuations are significant
 Delegation of financial duties in a segregated and hierarchical fashion in order to
establish a chain of operation and efficiency via specialization
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O 2. Cash inflows:
 Strict credit reporting policy for all customers before entering into a creditor-debtor
H relationship with them

M  Periodic reconciliation of bank statements to the general-ledger in addition to annual

reporting for more efficient financial control
T  Establishing a periodic review policy with all existing customers that the business
establishes a creditor-debtor relationship with. It ensures the ongoing creditworthiness
of customers and eliminates the probability of bad debts
 Support files and backups for all financial data in a separate secured database with
access only permitted to senior management staff
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3. Cash outflows:
O  Automatic/subscription payments to be monitored and requiring proper authorization

H in order to control extravagant business expenditure

 Maintaining a vendor database with detailed purchase records with restricted access in

M order to monitor cash outflow efficiently

 Periodic reconciliation of bank statements to the general ledger
T  Clear and precise expense reimbursement policy to be maintained, including detailed
expense reports and receipt verifications in order to curb extravagant business
expenses and employee fraud
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H https://www.wallstreetmojo.com/financial-control/
M https://corporatefinanceinstitute.com/resources/risk-ma
T nagement/financial-controls
/
https://ec.europa.eu/programmes/erasmus-plus/project-
result-content/4d828916-38fa-4fb8-83d0-28f27ccb71b
e/budgeting%20and%20financial%20planning%20boo
klet.pdf