Pianificare e controllare per la crescita aziendale

The role of Financial Planning and Management Control in Adequate organisational, administrative and accounting structures

The governance of a company can adopt two attitudes:

• reactive i.e. waiting for events to occur before making any decisions;
• proactive i.e. trying to predict events so as to anticipate decisions.

In the face of an increasingly complex competitive context, it is ineffective to operate according to a "day by day" approach and the legislator asks the entrepreneur to adopt a logic of strategic planning and financial economic programming by choosing a rational and anticipatory management style.

Future-oriented vision

It is necessary to move from management control oriented towards the past towards a system mainly oriented towards the future.

Traditional accounting systems provide information on events that are now in the past and therefore lag behind the opportunity to implement corrective actions. The company needs to use predictive control systems of events so as to prepare suitable measures for the growth of value and with the utmost attention to potential scenarios.

The entrepreneur should apply a forward-looking vision by integrating the management control system composed of budget analysis, indices and past data, with periodic economic and financial budgets (monthly, quarterly, etc.) and the use of forecast techniques, i.e. continuous and updated projections and simulations, aimed at evaluating the impact on business continuity of possible different scenarios (what-if analysis) and the real feasibility of investments programmed.

The adoption of adequate structures is functional in preventing the crisis and represents an opportunity for the development of the company, managerial skills and organizational factors. Furthermore, considering the issues of sustainability, the presence of a solid and efficient governance structure is fundamental for the development of a corporate path capable of integrating economic, social and environmental considerations in its decision-making choices and which aims to develop constructive and lasting relationships with stakeholders.

Management control and financial planning

Careful planning of financial needs and actions to limit risks is fundamental for good business management.

According to the provisions of the Crisis Code, the administrative, organizational and accounting structures are considered adequate if the entrepreneur has implemented an efficient and effective management control system which is divided into the following phases:

1. Activity planning: a credible, real and implementable short-medium term strategic plan is developed;
2. Operational: company resources and skills are identified and mobilized to bring the strategic plan to life;
3. Reporting: it is an activity that involves all company areas and has the aim of verifying whether the company plans are aligned with the operational;
4. Evaluation: review of business plans, from the increase or decrease in the resources originally used to the correction of any errors committed in the strategic and operational phase.

The operational tools to support management control are identified in the first place in the drafting of the flexible budget. It is the tool for planning and programming the company's activity as a whole which includes a set of budgets drawn up by the specific functional areas (for example the cost budget and the sales budget). The concept of flexibility is linked to the possibility of intervening following the periodic monitoring of the objectives achieved and analyzing the deviations to delve deeper into the underlying reasons.

Other tools are:

• Drafting of a medium-term industrial-financial plan (or treasury budget) for estimating revenues, costs, credit collection and debt payment times;
• Budget analysis by indices and financial flows;
• Drafting of a free cash flow plan for any new initiatives;
• Control and monitoring of warehouse;
• Cost analysis and margin analysis;
• Role of the controller;
• Application of indicators that summarize the performance of management in a given figure compared in space and time.

The monitoring activity is based on specific performance indicators KPIs (key performance indicators) which allow the analysis of any deviations from the set objectives and are identified, for example, in indicators of solvency, indebtedness, profitability, capital solidity, liquidity.

It is appropriate to measure company performance not only from an economic and financial point of view, but also according to qualitative aspects such as, for example, training and the company climate, to establish the company's ability to evolve because even the worsening of some of these elements can lead to crisis.

The tools available to companies allow them to develop adequate awareness of the importance of healthy and efficient business management which in the long term transforms into value for itself and for all its stakeholders.