Financial control is control of financial resources as they flow into the organization (i.e., revenues, shareholders investments), are held by organization (i.e., working capital, retained earnings), and flow out by the organization (i.e., expenses). This type of control method aid managers in acquiring, allocating, and evaluating the use of financial resource, such as: cash, accounts receivable, accounts payable, inventories, and long-term debt. These methods also enable managers to achieve acceptable liquidity, solvency, and profitability standards.
Financial control techniques include the use of financial statements, ration analysis, break-even analysis and others.
A complete discussion of financial management is beyond the scope of this thesis, but some of financial methods I shall examine in Volume 2.
The Budgetary Control
Budgets are the most widely used control system, because the plan and control resources and revenues are essential to the firm's health and survival.
Budgeting is the formulation of plans for a given future period in numerical terms. By stating plans in terms of numbers and breaking them into parts of an organization, budgets correlate planning and allow authority to be delegated without loss of control.