5 main Tools for controlling the finance of your organisation

5 main Tools of Control in management are as follows:

1. Financial Controls:

Budgets, financial analysis of the organisation, accounting statements, and the use of break-even analysis are the primary tools of financial control system. Each can make major contributions to the control process.

Budgets represent the goals and objectives of the organisations. It is a financial plan listing in details the resources of funds assigned to a particular product, division, or project. Inherent in the budget is control through timely feedback.

Financial analysis is the use of the specific techniques to study a firm’s financial documents and control the flow of funds, products and services both within and outside organisation. These statements provide the means for controlling die liquidity, profitability and general financial conditions of the organisation.

Break-even analysis is a method of determining the minimum sales volume needed to cover all costs at a certain price level. This analysis is useful in providing managers with profit or loss estimate at different levels of sales and at different cost estimates. It can also approximate the effect of a change in selling prices of the firm.

2. Production Control:

Production controls are the second general type of control. It is generally concerned with the scheduling, timing and routing of a product or project. Production control employs such tools as Gantt Charts, Programme Evaluation and Review Technique. (PERT) and Critical Path Methods (CPM) in monitoring actual performance and comparing it with expected results.

3. Organisational Control:

Organisational control includes both the control exerted by the organisational structure and its planning systems and the control of organisational members. Programmes such as Management by objectives serve as important means of control to synchronise the performance of the organisational members with the structure dictated. Another critical organisational control tool is an effective Management Information System.

4. Inventory Control:

Inventory control, the fourth type of control is concerned with the amount of assets that should be held in inventory; raw materials, work in progress and finished goods. A number of sophisticated methods have been developed for determining the optimum levels of inventory for different kinds of organisations.

5. Quality Control:

Quality Control, deals with maintaining the quality of a firm’s goods or services. In the organisation where quality level requirements are high, individual inspection of each unit of output will be conducted. Whereas in some other firms only a sample percentage of the output alone will be subjected to inspection.