5 Pillars of Financial Control – #2 – Controls and Performance

07th July 2022

Written by Stewart Hayward

When it comes to controls and performance, it’s important to be able to monitor and track how the company is performing. Everybody understands the importance of performance tracking because it’s so ingrained now into business.

Constructing the right policies is very important but often a challenge. Once again, we sat down with the three experts, Caroline Adams, Former Senior Finance Manager, Debenhams, Sam Ryan, Global Process Owner P2P, ITV and Paul Sutton, Head of Financial Compliance, UCLH NHS Foundation Trust, and asked them what they think about controls and performance, so let’s share their wisdom.

The Right Policies For the Job

Ultimately, it boils down to having the right policies for the job.

As Samantha Ryan correctly points out, it’s all about having “the right policies for the right job, giving P2P freedom to challenge those policies and enforce them is key for having the right measures in place”.

In addition to talking about policies, Samantha rightly points out that when it comes to KPIs, less is often more. Her policy looks like this:

“You don’t need 80 different KPIs to evaluate a business effectively. What you want to do is split it down into three key areas. You’ve got the process performance measures for tracking spending and order purchases, the business user performance measures for tracking training opportunities and areas of improvement, and then finally the team performance measurements, which point to how fast internal paperwork like invoicing gets done”.

Identifying Key Areas

Caroline has a lot to say about identifying the areas when it comes to control and performance.

Caroline’s belief is grounded in the very simple understanding that it’s necessary to educate people on how performance and control are prevalent at all levels in a business. It’s not just about the higher-ups. She talks at length about situations where the average employees were using external contracting staff and spending a lot of money. In her own words, it “became a case of going to talk directly to them, and getting them to talk to their leaders, and encouraging communication from the bottom up to the top.”

It’s very obvious that education is an important part of control and performance for Caroline, as she has many examples during her time with us where she talks about situations where even a basic understanding of receipting and keeping a tally of what’s going on just wasn’t present at the lower levels, which made it very difficult for a company to track performance.

System Driven Controls 

Paul, on the other hand, takes a very seasoned approach based on the principles that he’s been operating with for the last 30 years. He talks about the importance of system driven controls rather than person-to-person driven controls.

He also warns about the danger of being over-relying on certain operating systems, saying that:

“I’ve come across a lot of financial directors who have an overreliance on three-way marching. So we put millions of dollars into three-way matching, and they were operating at 100% capacity for three-way matching, and then discovered later on that we’ve actually allowed a lot of big things to slip through the gap.”

Paul seems to take the approach that it’s necessary to have a flexible control system, something which has many different avenues to make sure that nothing gets missed out. The overreliance upon one system is where a lot of businesses tend to fall apart because every system has its failings, and if you don’t have a backup in place to deal with that, you very quickly start to see the problems.

Final Thoughts

So, essentially, when it comes to getting the best results for your control and performance systems, it’s important to remember that an overreliance on methods can be a problem. You need to have a diverse set of control measures in place and use system-driven controls rather than manual controls. We have modern technology available, so it makes sense to use it.

It’s also important to remember that you don’t need hundreds of KPIs to gauge how well the company is doing. Less often more, and being able to track performance is quite simple when you have a few key performance indicators that target the areas that are important. Everything else is often just fluff; it doesn’t contribute meaningfully to the running of the company, just provides people with confusing numbers.

Above all else, it’s important to have targeted control measures that do a specific thing. You need to match the purpose of what you’re doing to the controls that you develop because this guarantee is the most effective way of doing things.

You can watch the three legends in action in their webinars here.

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