Money is the lifeblood of every business and organization. Without funds and finances, it would be impossible for any business to continue or even begin in the first place. But no matter how businesses have an abundant source of finances but there is an absence of a system that manages it, then, always prepare for the worst-case scenario that could happen to your business.
However, once a company would make time in making financial policies, the success and the potential of any business or organization will be determined. Financial policies contain the actions and the regulations that serve as a guideline or a framework in achieving the business’ growth towards its success. Sure, there are other variations of workplace policies like attendance policies, security policies, social media policies, information technology policies, health and safety policies, and privacy policies. But without the financial policies, how will the finances be managed? How will the employees be paid properly and according without the financial policies? Investing in financial policies is also an investment since this would manage the finances and funds of the business that is vital for its growth.
A small business who has a good and effective financial policy has an advantage over a big shot business who has none. While finance can be the source of strength of the company, financial policies will bring this potential to greater heights.
Financial policies serve as a framework of guidelines when making decisions and regulations that are related to the financial systems in the company. Some systems include the payment system, the borrowing system, and the lending system. Every financial policy in the company would help in the stabilizing the finances of the business.
When a company would be able to communicate their financial policies to its clients, they will be able to lose their fear of cost since they would know their payments options and would know what is more feasible for them to comply. It would also ensure the clients, particularly those who have benefits and would like to use it, on how their insurance or other kinds of benefits will work in the financial system of the company.
Additionally, financial analysis policies would help in increasing the satisfaction of the customers and they would less likely to complain about anything that is financially related. We all now that when it comes to financial matters, people would always have something to complain about especially if the cost is too high or if they sense some discrepancies in their bill. Firm financial policies can actually help in increasing the cash flow and this fact is often overlooked.
Financial policies serve simple but large impact purposes. The basic purpose of every financial policy is to ensure that the finances of the business are adequate enough to keep the business running. This financial policy ensures that the utilization of the financial resources is efficient and effective, that it follows accordingly to the accepted accounting inventory principles and business practices, and that it is consistent with the regulations of various financial operations.
There are some people in the workplace might feel that an implementation of financial procedures seems like an insult to those who manage the funds or finances of the business when in reality, it protects them from any liabilities and any financial related risks that would entail.
Financial policies have a wide array of benefits and plan to both large and small businesses. Effective business policies (like IT polices) would ensure that the financial operations of the business are consistent and stable. It also provides guidelines that would help every single employee in the company who deals with the financial responsibilities.
It is a fact that a well-written and good policies would help in resolving any financial related complications and violations in the business. It would also help business owners in feeling good and confident about their business. Good financial policies would help in developing a healthy growth of the business and that it would be able to easily expand its profitability.
Another benefit of financial policies is that it helps in identifying and capitalizing resource allocation decisions. Financial policies would also help in providing a way of managing the finances of the business. However, with all these benefits mentioned, there are also drawbacks. Such drawbacks include the decreased flexibility of options and action when dealing with the financial affairs of the business.
Policies are guidelines and everyone in the workplace must comply which also means that noncompliance would also mean violation. But the flexibility problem can be solved if in writing the policy, it would provide a policy that would allow the actions flexible enough to suit some financial memo examples.
Every single thing and circumstance in this world has a good side and a bad side. And just like everything else, even a good and effective financial policies would have the best of both worlds. Just in case you were tasked to write a financial policy, here are some of the advantages and the disadvantages you might want to consider before making your own:
Financial policies are powerful since it has power over what is considered as a powerful thing in the business: money. But on the downside, we all know that the management has the final say in everything. This might bring a bad light on the end of the employees since there is a possibility that they might think that they might negatively take things personally.
In making financial policies, it would really take time since you would be considering a lot of possibilities and a lot of possible incidents that will need a specific action. Preparing the financial policies do not end in the research phase but you would still have to analyze the data you have gathered into comprehensive categories.
You would also find the need to deliberate with the other members of the management to seek their agreement. But even if it takes time and effort in making financial policies, it would be worth it in the end since you would have a financial policy that is based out of intense research and thinking and that is not something taken for granted.
In the course of writing the financial policies, you might want to seek expertise and pieces of advice from those who are more expert on the field like lawyers for the legal polices part or a financial expert for the procedures part of your financial policy.
We know of the fact that not all people are willing to give services for free and so when seeking experts for their help, expect that there will be costs. But these costs are investments since you will feel protected and confident since you know that your financial policies have been written with a supervision and advice from the experts.
You might think that you’re done writing for the financial policies once it is approved by the management. The bad news is no, you are never done with your financial policies or any workplace policy for that matter.
Why? We already know the saying that goes “Change is the only constant thing in this world” and with that being said, the laws of the land might get change from time to time and we already know that our policies must be based on the local, state, or national laws. Also, in this age where everything is fast paced and everything keeps on changing, our policies should also keep up with the change and must also be revised. But on the brighter side of all the revisions, you might be encountering soon is that your financial policies would suit the current times and will not be left behind.