A financial director is responsible for keeping the company financially afloat while helping to plan for the future. He or she takes on a vast responsibility, as poor cash flow or debt management can ruin a company’s chance of survival. Here are 10 points to help you determine whether your company’s finances are on track.

1. Is your bookkeeping up to date?

Letting your records slip will jeopardise all other financial processes, so make sure you’ve invested in high-quality financial software that can reduce as much human error as possible.

2. Do you have a comprehensive cash-flow forecast?

You should have a cash-flow forecast for at least the next 12 months, so that you can determine how your company is likely to grow. This will also make it easier to identify weak areas that may be losing money. You can do a comprehensive cash-flow forecast with nearly any good accounting software package.

3. Have you prepared an annual budget?

Having a clear budget shows the direction the company should be moving towards. By contrasting the budget with the cash flow forecast, you have a solid metric for how well the organisation is expected to perform over the next year. Most financial software on the market can assist with comprehensive variance analysis.

4. Are you following regulatory compliance requirements?

This means having a clear idea of the tax regulations in all of the countries your company operates, as well as how often you need to be audited. Tax laws can change frequently, so make sure you’re always one step ahead.

5. Is your payroll in order?

Making sure that all of your employees receive their salaries on time is key to maintaining a productive workforce. Using financial software to automate this process can minimise risk and keep things moving.

6. Do you communicate with your accountant regularly?

Financial stability means spotting and resolving potential problems as soon as possible. Your accountant can help with this and give valuable advice.

7. Do you know all your payables?

Knowing where you need to make payments can help you make them on time and avoid unnecessarily falling into debt. With effective accounting software it’s easy to keep track of unpaid invoices and unpaid bills.

8. Are you pricing appropriately?

It’s important for your company’s pricing to be flexible, increasing or decreasing over time depending on factors like your gross profit and profit margin.

9. Are you on top of invoicing and collections?

Waiting to invoice customers is a bad practice. Billing them straightaway indicates that you expect prompt payment; slow billing communicates that you’re okay with waiting for your money. Also, ensure that you’re invoicing correctly the first time to avoid delays in payment. Financial software can help in this regard.

Once you’ve issued a bill, stay on top of collections. If your terms are 30 days, get in touch with the client if you haven’t been paid by day 31.

10. Are you depositing cheques and cash promptly?

If you still receive cash and cheque payments, deposit them as quickly as possible to keep cash flowing. In South Africa, sitting on cash is also a security risk.

Daryl Blundell is the Managing Director for Sage SSB (Start-up and small businesses) Accounting South & Southern Africa.