Control

Control is more than trying to make every penny work for you.  Control is about measurement and accountability.  It is the method for evaluating how well you are doing and how you might be able to improve.

Every position in an organization has some semblance of a control tool available.  If you are running a manufacturing process, your line employee should be able to stop the process if the work starts to creep out of tolerance.  Setting the limits, the upper control limits and lower control limits, provides the guides through which your employees can exert control.

Control is all about flowcharts and Business Process Management with Notation (BPMn).  It is about documenting who does what, with what, and in what order.  Checks should not be prepared until the invoice has been matched up with the receiving document and goods have been tested for quality.  Control.

Perhaps you already have good controls.  If you do, then chances are some are not working well at the moment.  Why?  Because you are facing a financial problem.  Somehow money is being spent and there is no mechanism which has stopped it so far.

The CFO and controller’s responsibility is to build financial controls and see that they work.  But, right now, what you need to do is stop the bleeding which means putting on the breaks.  Spending needs to be tightened up and strong budget controls put in place.

While budgeting is actually a planning tool, it is also a great control tool.  Variance analysis, which compares the actual spending to budget, is a great way to ensure that the plan is being met and, if it isn’t, someone is explaining why.  But more importantly, if actual continues to exceed the budget, then someone is ignoring the plan and the control.  At this moment, spending must be reined in which means more controls likely need to be put in place.

• Strategic and operation budgets
• Purchase orders
• Service orders
• Capital expenditure plans
• Project Profitability models
• ERP
• MRP
• Overhead factor analysis

These tools help control the organization’s spending.  Where the problem isn’t spending but perhaps quality, things like

• Fishbone diagrams
• House of quality
• Spaghetti diagrams
• Current and future state models

Can be effective tools to help control and ensure that the plan is being carried out effectively.

Financial controls is where I excel and these can be employed in almost any setting.  Your business is, after all, a money making machine.  Control the inflow of money and plan the expected outflow so you know that things are working right.