Financial Management Advice for Grants and Investor Funding
There is a famous saying that money makes the world go round. That is the case for many business enterprises because you need money to fund your operations before generating any revenue. Sadly, capital isn't always available for many proprietors. You can try getting a few investors on board to bankroll your before your business grows and stands on its feet. It's also advisable to look to well-wishers with lots of money for grants to help you run your business. Either way, you can only benefit from such an arrangement by doing some housekeeping. This will help you look after the money that is coming in so you can make the most of it. Here is some expert accounting advice to help you.
Internal Controls and Processes
Proper financial management of grants and capital investment starts with comprehensive internal controls. You need to develop a set of standard operating procedures to create a protocol that guides how you spend money, receive money and record financial transactions. The objective is to have safeguards for all grants, whether in cash or revenue-generating assets for the business. Some of the best practices for internal controls include:
- Recording cash receipts immediately and depositing cash daily to eliminate unnecessary accruals.
- Reconciling bank accounts at the end of every month to tie bank balances to actual money movement. Ideally, this should not be in the hands of the person signing or approving payment cheques. Any differences require a follow-up.
- Vendor cheques must be issued only for invoices approved by relevant department heads and the supporting documents should be cancelled after all successful transactions.
- The custodian of an asset should be responsible for the records related to the asset. Examples here include servicing, repairs and maintenance records.
Financial Reporting Controls
Financial reporting helps you keep a closer look at the way you are using your grant funds or investor capital. In this category, some of the best practices include a detailed review of your accounts. Check the movements in revenue, significant changes in expense accounts and employee compensation accounts. All these should be supported with appropriate supporting documents to justify the need for spending. Reporting reviews should be done by a relevant finance professional other than the one preparing the monthly accounts.
Handling Employee Compensation
Employee compensation can be a huge cost for many businesses. Therefore, it helps to have tight controls. First, ensure that the party tasked with putting employees on payroll is not in charge of approving payroll checks. Secondly, all secondary compensation such as overtime should be accompanied by relevant employee activity logs and supervisor approvals.
Contact a company that offers financial management services to learn more.