How To Streamline Financial Control in Your Growing Business

Are you a UK business owner with dreams of expansion? As your business grows, so does the complexity of your financial operations. Creating financial control processes helps to streamline and ensure consistency and best practice that will benefit your team but also your customers and suppliers.

It’s useful to look at these financial controls through the lens of expenditure cycles: the Sales Cycle, Purchase Cycle, Payroll Cycle, Fixed Asset Cycle, and Stock Cycle. We’ll not only explain some of the distinct processes and actions involved but also provide practical examples for each. Moreover, we will highlight the target audiences and underscore why adopting and optimising these cycles is essential for your growing business.

The Five Financial Cycles To Support Your Growing Business

Create these processes to support the scalability of your business so it can adapt to increased demand and headcount.

They will support your efficiency as well as your peace of mind as your business grows in a sustainable way.

1. Sales Cycle

A well-structured Sales Cycle is critical for scaling because it ensures efficient lead conversion, maximizes revenue, and builds strong customer relationships.

Potential processes

• Lead Generation: Use marketing strategies, like content marketing or email campaigns, to generate leads.
• Prospecting: Qualify leads to determine their potential value. Prioritize leads based on factors such as budget and fit.
• Quoting: Prepare and send quotes or proposals to prospects, highlighting the value of your products or services. Think about how you will make sure that you are meeting the desired profit margins for each proposal.
• Closing Deals: Engage with prospects, address objections, and negotiate terms. (Don’t forget to consider credit terms and the impact they will have on cashflow) Secure signed contracts or purchase orders. Consider an internal review / approval process which will kick in depending on the size of the deal.
• Post-Sales Support: Provide exceptional customer support and address inquiries or concerns after the sale.

Who will use?

Sales and marketing teams, customer support staff, and business development managers will all make use of a sales cycle. I would also include your FD too to make sure you are making a profit on each deal. Credit management also starts with setting expectations for payment terms when negotiating the sale.

Example

Lead Generation Automation: As your business grows, manually managing leads becomes challenging. Consider implementing a Customer Relationship Management (CRM) system. It helps automate lead tracking, nurture leads, keep on top of your diary actions and provides valuable insights into lead behaviour.

2. Purchase Cycle

Setting up efficient supplier management and purchase control processes are crucial as your business grows. This ensures a stable supply chain, cost control, and the ability to maximise strategic sourcing opportunities. It also ensures that the right people are approving the right spend so you know where your money is going.

Potential processes

• Vendor Selection: Begin by evaluating potential suppliers based on factors like cost, reliability, and quality. Conduct due diligence and consider supplier reviews.
• Supplier Onboarding: Set up new suppliers in your procurement system. Collect necessary information, including contact details, payment terms, and tax documentation.
• Contract Negotiation: Negotiate favourable terms and conditions, such as payment schedules, discounts, and delivery agreements.
• Purchase Requisition: Create and approve purchase requisitions for items or services needed. Ensure proper authorization and budget alignment.
• Order Placement: Generate purchase orders with detailed specifications and quantities. Send them to suppliers.
• Invoice Processing: Verify received goods or services against the purchase order and reconcile with invoices, thereby approving payment. This will ensure accuracy and prompt payment.

Who will use?

The purchase cycle is important to anyone with purchase control responsibilities in your business such as senior managers, procurement team, operations managers, and of course finance staff.

Example

Setting up New Suppliers: When expanding, you may need to onboard multiple new suppliers. To streamline this, consider implementing a Supplier Relationship Management (SRM) system. It allows you to centralize supplier information, automate communication, and maintain a comprehensive supplier database. You can also create supplier onboarding checklists to ensure you collect all necessary documents and data.

3. Payroll Cycle

Managing payroll efficiently ensures employee satisfaction, compliance with Employment Laws, and time savings, which are crucial when your workforce expands.

Potential processes

• Time Tracking: Implement a time-tracking system to record employee hours accurately.
• Payroll Processing: Calculate salaries, deduct taxes, and process payments to employees.
• Tax Reporting: Comply with HMRC regulations by accurately reporting and remitting payroll taxes.
• Record-Keeping: Maintain records of all payroll-related transactions, including payslips and tax filings.

Who will use?

HR managers, finance teams, team managers, and business owners.

Example

Payroll Software Implementation: To streamline payroll, invest in reliable payroll software that can handle the complexities of a growing workforce. These tools calculate deductions, generate payslips, and facilitate tax filings, reducing the risk of errors and saving time. We use the payroll function on systems such as Xero for our clients, which is a useful integration.

4. Fixed Asset Cycle

Efficient Fixed Asset Cycle management is essential as your business invests in more assets. It ensures optimal asset utilisation, accurate financial reporting, and cost control.

Potential processes

• Asset Acquisition: Properly document and record the approval and acquisition of new assets, including purchase details and depreciation schedules.
• Asset Maintenance: Establish regular maintenance schedules to prolong asset lifespan and prevent breakdowns.
• Asset Auditing: Conduct periodic asset audits to verify the accuracy of asset records.
• Asset Disposal: Dispose of obsolete or non-functioning assets following proper procedures and accounting for any gains or losses.

Who will use?

A fixed asset cycle could be of particular benefit to asset managers, operations teams, and financial controllers.

Example

Asset Tracking System: Implementing an asset tracking system with barcodes or RFID tags can help streamline asset management. It enables real-time asset location tracking, reduces the risk of asset loss, and simplifies auditing processes.

5. Stock Cycle

A well-executed Stock Cycle ensures smooth operations, minimizes storage costs, prevents stockouts, and enhances customer satisfaction as your business grows.

Potential processes

• Demand Forecasting: Use historical data and market trends to forecast demand for your products.
• Reorder Point Planning: Set reorder points to trigger new orders when stock reaches a certain level.
• Inventory Turnover Analysis: Calculate inventory turnover rates to optimize stock levels.
• Order Fulfilment: Efficiently pick, pack, and ship orders to meet customer expectations.

Who will use?

Inventory managers, warehouse managers, supply chain professionals, finance leaders and business owners.

Example

Inventory Management Software: Invest in inventory management software that integrates with your sales and procurement systems. This software can automate reorder processes, track stock levels, and provide real-time inventory visibility, allowing for efficient stock management.

How To Implement These Cycles For An Efficient Business

Working with scale-up businesses we understand the balance of creating processes only when they will improve efficiencies, support financial stability and protect your business. Not forgetting that having written procedures shows your professionalism to the outside world such as potential partners.

If you’re ready to explore expenditure cycles tailored to your business’s unique needs, we invite you to arrange a call with Tracy Smart, our founder and Virtual CFO. 

We can help identify the right expenditure cycles for your business and design an appropriate set of procedures, forms, and integrated controls for each of these transaction cycles, to reduce the opportunities for fraud and ensure that transactions are processed efficiently and consistently as possible.