Myth: All too often companies might think that their size determines what is relevant to the way they conduct themselves.
Myth Buster: No company is too small or too big to implement the right foundations on ‘how to do business’.
Yes, bigger businesses, with bigger budgets can allow for the ‘bells and whistles’ about business structure and governance, but do not be a fooled with your director roles and responsibilities. You may not be a publicly listed company, and you may be the only shareholder, but the Corporations Act does not differ.
Often business owners that are in the owner/operator space find it hard to distinguish that the company is a separate legal entity, however ‘your’ company needs to have rigour, you need to recognise that it is a separate legal entity and you need to have the processes and procedures around the ‘running’ of the business to ensure that there is a separation of duties from employee and director/shareholder.
There are many things to be considered regarding the foundations of how a business conducts itself, but this article will focus on the finance functions and the benefits of financial policies and procedure.
Firstly, lets determine the difference between policies and procedures. Policies are the rules or principles on how you go about business and should reflect the values and culture of the organisation. Procedures are the instructions on how you and your employees deliver on these policies.
Financial policies and procedures might consider things like payments from clients or customers, debt collection, electronic banking and authorisations, supplier terms and contracts etc.
Creating financial policies and procedures can have many long-term benefits for your business by adding professionalism to your operation, enables consistent and reliable decisions to be made by staff and management, reduces disputes and risks of fraud.
In determining what is required in your business, think about key areas of your business where consistent rules and processes would add value and then go about drafting policies and procedures to reflect these.
It may seem daunting, but there are templates available to assist businesses with this and if this is something that you need to implement in your business, please reach out to Anita Dahlenburg of Business Blindspots for the link to this free resource.
Do not be naïve, complacent or blame lack of time to put some fundamental business policies in place, because the reality is it is going to save you time, money and potential grief and set your business up be of rigour and set for sustainability in the current market.
Please note that this article has focused on the company structure, but it is recommended that all businesses, regardless of structure consider the benefits and implementation of financial policies and procedures in their operations.
