This is first thing , first. One person (necessarily a professional ) responsible for efficient financial management should be deputed , As this is a task , no body is doing in the company and whatever promoters are doing (there may be exceptions i have not come across) through their accountants is actually reverse of it. In my experience CFO service engagement works even better.
Senior Ex CFO’s are helping companies on financial management on affordable basis, through CFO services concept
We understand accounts function as finance function. Payment, recording of transaction and compliances are accounts part however Finance function would required budgeting , MIS and more of forward looking function
We can build a mature finance management system through Separate MIS’s on fund management, generally reviewed by such senior leadership and presented to management on periodical basis. Generally Accounts persons are not trained for this.
This area is of immediate attention. Accounts deptt is generally a payment deptt. We have to recognise other functions through separate MIS’s I e Tax, Treasury , MIS, Finance, Secretarial and other compliances, and accordingly should be manned. Generally its not in good shape and needs immediate correction. We should allocated at least 15% of total employee cost budget . But the genesis of problem is that budgeting function is absent in Most of SME’s
Preparing monthly BS is key to financial /Fund management. Monthly closing of books and it’s presentation to management should be ensured. Generally in SME’s , We prepare BS annually and that too in sep, next year. Fundamental of financial management is absent. It takes a senior leadership to make this happen
Excel preparation at the end of any period is cumbersome and generally will not work. It should be replaced by automatic reporting generated by accounting / Systems . Possible and easy if daily/ monthly book closing are adhered. CFO service guidance is a must for doing this.
MIS’s around finance management is not a pattern of working in SME’s, generally, because most of the time it is not summarised well. One pager MIS’s around fund management, working capital management and overall financial management needs to be discovered and adhered. It can’t be done in absence of strong finance leadership. Again CFO service can be a game changer.
Weekly discussion with key line-functions of the organisation is key for better finance management. Involving other HOD;s (Sales, Operation , Purchase etc ) will yield better results. Only a senior finance leadership can do this , again
This is least understood (and done) part on the part of SME promoters. Changing payment terms with customers/ vendors, Factoring / Bill discounting , Marginal costing approach of pricing etc are game changer to long term finance management. Should be planned under due supervision of senior finance leadership
A must and only possible if finance leadership is there. Accounts are to be closed monthly
Apart from above , robust systems should be in place to tracks budget . Excel based working should be replaced with more mature system
CA SUNIL K PANDEY
CA, CMA, IIM C
With over 11 years of experience in banking and corporate finance, Sumit Sharma has worked with global brands like Deloitte, Mahindra World SEZ, and USA-based IT firms, gaining exposure across India, the Middle East, and international markets .His expertise spans financial structuring, process optimization, and tech driven automation, with a strong track record in ERP implementation, cost retaionalization, and corporate finance reforms. He has successfully led debenture issuances backed by land mortgages and drive cross-departmental financial efficiency initiatives.
A member of ICAI and ICSI, with an L.L.B(Professional) from the University of Rajasthan, Jaipur, Sumit Sharma brings a unique blend of finance, law and technology to the table. His Strategic approach to financial transformation and governance has helped busniesses streamline operations and scale effectively.
