What are the general goals & objectives for a Finance Department?

Small businesses might not have multi-employee finance departments, but the goals and objectives for the accounting function of any entrepreneur should go beyond just accurate record keeping. Even if you’re not a CPA, using a variety of basic finance techniques can help you avoid money problems, spot opportunities and manage your cash flow to maximize your productivity.

Strategic Budgeting

One of the main goals for your finance department should be to create and monitor not only your overall company budget, but a variety of functional or departmental budgets, as well. Budgeting requires research to estimate accurate revenue levels based on demand forecasting. Using annual budget projections, your accounting staff can help you set targets for profit goals and for overhead and production spending levels. Overhead includes costs such as phones, rent and marketing, while production costs are those related to making your product. Create monthly or quarterly budget variance analyses to see if you’re on track with your revenues and spending or if you need to make changes before expenses get out of hand.

Cost Containment

To ensure you get the best quality at the lowest price for materials, supplies and services, make purchasing management one of the duties of your finance department. Require that employees get multiple bids or present some justification for large purchases, and have your vendors, suppliers and contractors rebid their contracts each year. Look for trends in spending levels to determine where you can cut costs without sacrificing quality.

Cash Flow Management

Knowing when your bills are due and when you can expect payment from customers you’ve billed or other sales revenues is critical for any small business. It’s not enough to show a profit on paper, and your finance function should help you manage your working capital and credit to ensure you have enough to pay your bills at all times. Make receivables management a key role for your finance department.

Debt Service

Letting your debt get out of control can have serious long-term impacts on your business. Keep an eye on your credit use, including interest amounts you’re generating, the scheduling of your payments and the status of your credit report and scores.

Tax Planning

Don’t wait until the end of the year to find out what your income tax liability is. Use proactive strategies to lower your tax burden, such as depreciating assets and offering voluntary benefits to employees that help you lower payroll taxes.

Accurate Record Keeping

The most important objective of any finance department is to keep accurate financial records. This includes helping you meet your legal requirements and ensuring you don’t spend more than you have by accident. Consider external audits to prevent fraud, and institute policies and procedures for controlling contracts and payments.