2024-10-16 08:27:00
What is financial management?
Financial management is an activity carried out in the majority of cases by the finance and accounting department of a company. The activity consists first of all in collecting internal data relating to the company or the project (for example, company balance sheets, profit and loss accounts, invoices, budget documents, Excel spreadsheets, etc…) and to derive useful information to carry out a financial evaluation. This financial assessment then makes it possible to analyze the situation at a given date.
What are the circumstances conducive to the implementation of financial management?
The conditions conducive to the implementation of financial management for a project are as follows:
- The size of the project: The project requires a strong financial commitment from the company or needs a significant sum of money. This commitment may be identified as a significant amount to be invested or such that there is a financial risk for the company.
- The presence of a person with the necessary knowledge to set up financial management for the project. If such a person is present, this person must have the means to make time to accomplish these new tasks.
- The fact that the project stakeholders do not have financial sensitivity allowing a certain diligence regarding the use of financial resources.
To image these circumstances, I was able to set up financial management for a project of the Directorate General of Health in Geneva (DGS). As the project is common to several entities, the financial commitment was sufficiently substantial for the implementation of financial management to be relevant. The project manager and the other different partners (apart from the people from the DGS) did not necessarily have financial sensitivity or reasonably enough time to devote to this management, it was then agreed that I would be the contact person for the financial issues of the project.
Advantages & challenges to face
As the financial indicators are controlled, the advantage is that not only will there be no big surprises regarding the results, but also that it is possible to have an almost real-time analysis if necessary.
In addition, project stakeholders will be able to have a more global vision and an idea of the repercussions that certain decisions can have on the financial level.
Finally, management allows corrective measures to be taken, in order to avoid certain situations or to accelerate the making of strategic decisions on the continuity or termination of the project with the support of this financial data.
The challenge lies in the need to appoint a qualified person to carry out these tasks, either by making them available or by committing to this. When a commitment is made, it is important to pay attention to assessing the workload to ensure optimal use of the resource. By adopting a balanced approach, we can ensure that this resource is exploited appropriately, thus avoiding situations of underuse or overuse. Judicious resource allocation will effectively support the finances of the business or project. Furthermore, it is desirable to verify the existence of similar functions within the company in order to coordinate efforts and maximize the efficiency of processes.
Another challenge not to be forgotten is that the analyzes carried out are relevant. It is therefore imperative that the working tool be discussed and evolved in order to always better understand and identify points of interest.
Conclusion
Ultimately, we can conclude that the implementation of such a measure requires a lot of work to evaluate the workload upstream and especially the potential financial size of the project implemented.
To return to my experience with the DGS, my hierarchy gave me carte blanche to develop this management by constructing different tools allowing the control of invoices, the control of budget monitoring and the establishment of several scenarios depending on the evolution of the size of the customer pool. The different tables were presented to the project leader and refined according to their needs. The purpose turned out to be very positive, because in the end the budget was able to be re-evaluated and updated and was thus able to be more in line with the reality of the activity by moving from a margin of error of the order from 20% to around 4-5%.
Financial management will therefore allow a better overall vision as well as substantial assistance in decision-making when the management tool is developed in conjunction with the people concerned and can also monitor the progress of the project.
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