Diagnostic of the financial management system
Timely diagnosis of the financial management system will take into account peculiarities of the company at this stage of its development within the chosen development strategy.
The purpose of the financial management system diagnostics is to identify the problems in the financial management system, identifying their causes, definition of the concept of improvement, ensuring the implementation of strategic business objectives.
Companies go through several stages in its development. The initial stages of business development are usually associated with a profit and business expansion. At this stage, there is usually no well-built high-quality financial management system. Business development, competitive market, reducing market yield, increase internal operations, and other factors require the creation of an effectively functioning system.
Understanding of a problem of need to reform the system or creation of a system must be timely. The system will help to predict possible difficulties and will give time in advance to be prepared for them.
Of particular importance in today’s formation becomes effective crisis management system. In crisis management diagnostics company’s financial condition is paramount. Need to put the right “diagnosis”, as in the earliest stages to provide timely opportunities neutralization problems, and in the process of crisis management, identify weaknesses, problem areas in the financial condition of the company.
Before reforming of the company financial management system, it is necessary to estimate feasibility of this type of activity. And if the return from the system reforming higher than alternatives, it is necessary to invest in its development.
Average time for conducting diagnostics, is 3-4 weeks. For each company it is determined individually.
- Industry documents describing business;
- Offers of the entity on an order and structure of the forthcoming works;
- List of responsible persons;
- Company requirements to reporting documents;
- The organizational and financial structure;
- The reports of internal and external auditors;
- Regulations and other documents on system of the budget management and KPI;
- Financial statements for past periods;
- Documentation describing the methodology and the degree of automation of accounting processes;
- Documents relating to the process of formation, approval and analysis of management reporting;
- Description and documentation of business processes;
- Other documents.
Stage 1. Diagnosis of the company financial management system.
At this stage the provision of financial management system is analyzed, revealed problems are studied and schemes for their solutions are proposed. The result of this stage is a report on the results of diagnostic systems and the developed concept for improving the financial management system.
Stage 2. Preparation of the plan for further works on optimization of financial management system.
At this stage the sequence of steps on implementation of the improvement concept of financial management system is developed. Following the results of consultation with representatives of the company the final work plan is created. The result is a work plan on improvement of financial management system.
- The concept of financial management system improvement, including offers on liquidation of the revealed problems and estimating effectiveness of these offers;
- The work plan on correction of the revealed problems, change in business processes and the organization of effectively working financial management system;
- The report on diagnostics of financial management system which includes description of a company financial condition and established problems of systemic nature with the analysis of probable causes of their emergence and an assessment of possible consequences.