Best practices in financial management in services

Regardless of the business lifecycle stage or size, financial management is an aspect of the organization that cannot be neglected. Because the financial department is the heart of companies and the other departments depend on good planning and control over financial resources to perform their functions well. Thus, having little or no knowledge on the subject can compromise the business in the short, medium and long term. It’s no wonder that not investing in good financial management is usually one of the reasons why 6 out of 10 companies go bankrupt in 5 years .

In this context, it is important to note that profit cannot be the only measure of whether the company’s finances are doing well. Other indices need to be monitored for a service provider to consolidate. So, take better advantage of opportunities in your industry, better manage risks, reduce costs and become more competitive.

It is financial management and best practices that help companies understand how their financial health is and, above all, why. Only in this way will it be possible to overcome some challenges, such as the difficulty in building adequate processes, loss of relevant information, failures in financial analysis, ineffective planning, etc.

Plan, direct, communicate, control, evaluate. Repeat the process!

There is no formula for success in running a business. But successful companies have in common a well-structured administrative base based on the harmony between their long, medium and short term objectives. There is an organizational process subdivided into 5 essential steps for financial management: planning, direction, communication, control and evaluation.


The starting point is to do an “X-ray” of the company’s entire financial situation to identify opportunities for the correct use of financial resources, considering some scenarios designed by the finance team. In addition to defining goals and the paths that need to be taken to achieve them.

In the long term, there is strategic planning aimed at expanding the business operation over a period of more than 5 years. As constant changes occur around the world, strategic planning is considered more flexible and with few details.

Tactical planning covers a period of 1 to 5 years. Through it, it is defined which activities will be carried out to achieve the objectives that were determined in the strategic planning  – such as, for example, financial control .

Finally, short-term planning over a period of 1 year, called operational planning. This step contains the action plan necessary to maintain and adapt the day-to-day processes of the financial department according to the current scenario and the long and medium-term objectives established earlier.


It is necessary to ensure that good planning is well executed. Due to the complexity involved in corporate financial management, mainly due to the need to carry out financial control, the company’s leaders are vital to guide the team and help it to deliver increasingly better results.


In addition to understanding what needs to be done, efficient communication between the financial team will help to chart new paths on how to achieve the objectives outlined in the planning.


Because it is common to find it difficult to standardize services, the need for process control aims to monitor its implementation to avoid errors, rework and determine possible realignment measures on what has been established.


Planning also needs to determine the result indicators sought through the objectives that were defined. The measurement of results is done through an analysis of records present in the company’s financial processes.

Best practices in financial management in services 

As mentioned,  just as and even more important than knowing how a company’s finances are doing is, above all, determining what has led the service provider to this scenario. 

An  interesting  solution  to deal with challenges is to implement the best practices in financial management in services, such as: cost mapping, financial planning, cash flow management, periodic control , process automation. 

1. Map  costs 

It is part of the process of improving financial results to regularly identify how the service provider’s financial resources are being used. Mapping costs can make the business more efficient, as it allows the  financial department to reassess priorities and facilitate decision-making based on the cost-benefit of what is or is not aligned with the business strategy. 

When mapping costs, the report must contain :  division of the company into cost centers ,  expense groups and respective amounts ,  depreciation costs ,  provisions. 

2. Do financial planning 

It is financial planning that determines where the company is and where it needs to go.  After a service company maps its costs,  it is possible to know whether, with the financial resources available, the company’s objectives will be achieved or not.  The implementation of financial planning depends on what has been established at the strategic, tactical and operational levels.  

Its success in the short, medium and long term generally presents a coherent structure with the following 6 steps: definition of objectives, analysis of the external scenario, internal analysis (organizational, mainly, financial), proposal of alternatives, formulation of the strategic plan, implementation .

3. Manage cash flow

Closely monitoring the financial resources that come in and out of a service provider’s cash helps accounts payable and accounts receivable to assess the source of revenues through a more robust structure and, therefore, more transparent and efficient. 

Based on the quote highlighted in the introduction to this article on wealth and profitability, managing cash flow can help turn on a warning sign of myopia in financial control. That is, even if the cash flow is positive, the operating result can be negative.

It is recommended to establish predictions through the data that the organization has and project what are the results that need to be achieved  As forecasts become real, the data is updated within the cash flow. In this context, it is essential to use consistent data and use standardized reports. Systems integration is a key step to increasingly improve cash flow management. 

  • Create new sources of revenue 

It is important for the survival of a company to constantly think about new ways to add value to the product/service and also new sources of income, not only in times of crisis.

Among the alternatives for this are: brokerage fee (widely used by card operators and insurance companies), usage fee (present in hotels), licensing (existing in the technology and media sectors), subscription fee (used in streaming), loan (here it can involve money and even tools for home repairs), advertisements (in the 4.0 world, technology, media and events companies stand out), resource sales (the oldest of all, which happens when a product becomes the property of another person upon payment).

In what other ways can your company’s equity be expanded? 

4. Create a financial control routine 

The time to measure financial planning results is every day, week, month, year. It depends on which objective the service provider needs to verify that  it has been achieved. Reports and statements are interesting formats for this detailed assessment.

It is important to define a periodicity and analyze the results from a more accurate comparison between certain periods. Because, as the objectives have a date to be achieved, errors can be corrected at all levels of financial planning.  See  the examples:  

  • daily control: cash flow,  bank reconciliation , balance sheet verification, control of accounts payable and receivable ; 
  • weekly control: inventory, cash and account conferences; 
  • monthly control: statement of income for the fiscal years (DRE), balance sheet; 
  • annual control: balance sheet, income statement. 

5.  Automate processes

After understanding  which  and  how the best  financial management practices in services can help plan, execute and control the company’s finances, it’s time to literally take ideas off paper and implement process automation .  

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