Neil Robertson Jan 16, 2017 4:43:00 PM 10 min read

What is “good financial management”?

The finance department

From the finance department perspective, “good financial management” is having robust processes that ensure all sales and purchasing transactions are accurately captured, processed and paid in a timely manner, the management accounts and statutory returns meet the legal requirements and auditor’s approval, payroll is always run on time and the resulting cash flow information is diligently managed.

This financial information is communicated once a month with the Board and senior management, through the management reports pack, usually between 5 – 15 days after the month-end. It confirms where the business was and predicts the probable future.

From a purely financial management perspective, this is “good financial management”.

However, a broader perspective is that good financial management is the ability to ensure that the business maximizes the value of every penny it spends, not just its capabilities of accurately accounting for it.

The budget holders

From a budget holder’s perspective (the people who spend the money), good financial management is much more about understanding where they are today against budgets and based on their decisions, where they are going to be in the foreseeable future and that determines what they can achieve within the limitations of their available money and resources.

But the only information they receive to make the best use of their budget is the monthly historic management accounts from finance and whatever spreadsheets they have devised for themselves to track spend against their current and planned projects and the corporate budget.

The result is every budget holder has totally different set of spreadsheets and the analysis of their spend is radically different as it reflects their particular departmental role. Their analysis also rarely correlates to the management chart of account analysis, making any form of reconciliation painful at best, but in most cases impossible as the management accounts include accruals, amortization of capital costs, interdepartmental spend, etc.

To summarise, the corporate-wide financial management of spend is being conducted through multiple disparate spreadsheets and applications that each create unique silos of financial information that are not shared and rarely reconcile with the management accounts.

Whilst every business has great budget holders with strong financial skills and good disciplines to manage their spend well (which is very time-consuming), they also have a spectrum of less able budget holders, right down to those that rely purely on experience and the back of a fag packet.

Next-generation financial management

Our vision of corporate-wide “good financial management” is when an organization provides the entire business with a single application to automate the entire process, addressing the needs of both the finance function AND the budget holders and their staff.

Budget holders need to easily capture their spend as it takes place. Each requisition (request to buy) is captured and automatically validated against the budget available. Every order has had the correct level of approval and the exact requirements and agreed costs are formally notified to the relevant supplier, with the appropriate T&C’s of supply attached.

There is no possible argument about every purchase.

Budget holder spend analysis

Every budget holder has the ability to analyze their purchasing using their own spend analysis criteria that reflect their specific role, but also addresses the standard chart of accounts analysis for financial reporting purposes. For example, marketing and IT will analyze and track spend in a totally different way from each other and a brief review of their spreadsheets will confirm this.

Budget holders can also set up their own projects of anticipated spend as far into the future as they wish to plan, giving an immediate real-time view of the budget implications in future periods. Once a project is approved, it delivers the budget that allows the actual costs to be captured and highlights both under and overspend as it takes place.

The company replaces the budget holders homegrown spreadsheets with a single fully automated solution where all the information is instantly available to everyone that needs to know.

Invoice capture and processing

It is already extremely simple and inexpensive to fully automate the capture of inbound invoices, as most are already arriving as a PDF via email. All invoices (including the residual paper invoice) can be captured and converted to data (e-Invoices) on receipt, removing all of the paper from the entire process.

Every invoice is then automatically reconciled with the relevant order (and receipt), ensuring that all discrepancies are immediately highlighted prior to approval, without any user intervention to this point.

It is extremely simple to place an invoice under query with associated narrative on why and the appropriate next action – usually demanding a credit note because you have been overcharged. Compare that with the current processes for invoice approvals where most invoices are never checked against the order.


Purchasing, receipting and invoice approvals are also fully automated and can be undertaken at any time from any device, including dedicated smartphone Apps.

For orders, the approver now has all the information they require, whether it is within budget, access to all historic pricing, how much they are spending with a given supplier, the current status of the supplier account, queries and unpaid invoices – all the information required to get best value.

For invoices, all the reconciliations are completed automatically and it is a simple matter of deciding whether you are happy to pay it or not and dealing with the exceptions is so simple that you can expect an initial growth in credit notes as your supplier learn to bill the correct values or suffer the cost of credit notes and the delay in payment.

Once approved, the invoice is posted to the accounting software ready for timely payment, the foundation of being a good customer and enjoying all of the business benefits that follow.


Good financial management is about giving the tools to the budget holders that replaces their spreadsheets, simplifies the entire purchasing process and delivers all the information they need to become more compliment, capable and diligent as fiscal management of their budgets.

By default, it delivers finance with total oversight of all current and planned spend, available at any time from any device and saves a huge amount of time.

For the business, it delivers a single real-time view of the TRUTH, to everyone that needs to know, whenever and wherever that might be.

This is simply a far better way of working and it starts with every business recognizing that the inclusion of your budget holder requirements in the purchasing automation project is the absolute foundation stone of achieving true next-generation financial management.


Because good financial management is about making the most effective use of every penny available, not just a diligent process to financially accounting for it.

It is the budget holders that spend the money, so achieving good financial management must start there!


Effectively managing finance in your business will inevitably include bringing together your finance teams with budget holders. Read Compleat's free eBook below to learn how a "happy marriage" between the two can indeed be possible.

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Neil Robertson

Neil has a 39-year track record of building successful direct and channel global software businesses predominately in the financial software market place. Neil Robertson is Executive Chairman of Compleat Software. A 39-year veteran of the financial software marketplace, Neil has a long track record of building disruptive start-ups into successful businesses, including his time as CEO EMEA of Great Plains where he built the business outside of the USA from 1995 - 2001. Compleat is no exception and perhaps the most disruptive of them all.
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