Financial spreadsheet: Learn how to set up adequate control for management

A financial spreadsheet is one of the main tools used in business management. Learn how to create one in Excel for your company in this article.

The financial area is a very important one for any kind of enterprise, but at the same time, it is one of the activities that poses more challenges and demands time and effort. In this sense, technology can become the best ally of managers and other employees in the finance department of an organization.

The days of making calculations and notes on paper are over. Financial spreadsheets created on a computer offer much more practicality, speed and the certainty that calculations and analyses are being done accurately.

Poorly made, however, a spreadsheet may turn into real headache. Besides making it difficult to access information that must be consulted, an error might influence decision-making and put in jeopardy the entire financial health of a company.

To avoid this from happening, you need to know what to do when creating your business spreadsheets. If you don't have much experience in that activity, this article is going to help you!

What is the purpose of financial management within an organization?

Financial management can be defined as an activity comprising control, monitoring, administration, and planning of finance. When used in a business environment, financial management has an objective that includes maximization of profit with minimization of costs and expenses.

Although there is no precise formula for how this can be done, since each company operates in a different manner, there are some methods and tools that can be applied by managers and professionals in the area for carrying out all management activities. In this sense, spreadsheets are one of the most used tools due to their low cost, practicality, and performance.

It is, however, relevant to mention that, rather than just performing a few activities, financial management should be used in order to set up which strategies the company is going to adopt for developing its revenues and better market performance.

Briefly, financial management attempts to provide the company with good health from a financial standpoint. Its tools to attain this end are activities of organization of processes, data collection, definition of goals and plans, and monitoring results of the company's actions throughout time.

How to control a company's expenses?

There is some information that managers or finance professionals need to have access to and knowledge of in order to perform their activities well. Even with the help of a spreadsheet, it is first necessary to know what data should be collected and entered into it.

First, it is necessary to have good knowledge and control over all the company's expenses and costs . In this sense, it is recommended to separate fixed costs from variable expenses.

This will help you identify how much revenue the company needs to have in order to avoid debt and be able to honor all its commitments. In addition, it will be possible to identify which areas are experiencing excessive spending, and it will be possible to plan how to reduce it.

After carrying out good expense control , it is necessary to know all of the company's revenues, whether obtained through the sale of products or the provision of services. Having access to this information is crucial to knowing the financial health of the company, whether it is meeting its growth objective and which products or services are experiencing an increase or decrease in market performance.

What is a financial spreadsheet?

A financial spreadsheet can be defined as a tool where data about a company's finances are entered, especially input data (revenue and profits) and output data (costs and expenses). This way, this data can be consulted and used in analyses and planning to define the results and the next steps for the organization .

As highlighted previously, creating a spreadsheet on a computer using Excel offers several advantages, such as greater speed, practicality, security and easy access for other members of the company.

Excel also has hundreds of features and formulas that can be used to let your computer perform spreadsheet calculations. This means you'll never need to use a pencil or calculator to make sure your data is correct.

How to make a company's financial spreadsheet?

Now that you know the importance of having a financial spreadsheet, we will show you step by step how you can create yours and use it.

1. Set a standard

First, organize a pattern for each type of financial movement (input and output) carried out by the company. You can separate costs and expenses into different categories, such as: administrative, operational, tax and labor. Revenues can also be divided into services , sales, operational and occasional. This way, it is possible to know which area offers the greatest profit or costs for your business.

2. Define the items that need to be inserted

This topic is extremely important, especially if more than one person will be entering data into the spreadsheet. It is essential that each employee responsible for the spreadsheet knows what data needs to be entered, and where. Otherwise, the spreadsheet will be confusing to analyze.

3. Have a goals tab

In Excel , a single spreadsheet can have multiple tabs. So, create a specific tab for your company's growth goals. Have you noticed that your administrative department is spending too much? Create a cost-cutting goal and monitor whether the actual amount is getting closer to the stipulated amount over time.

Once again, we emphasize that the main objective of financial management is to define the company's strategies in relation to its costs, expenses and revenues, and to create goals for the organization's growth. With a good spreadsheet, it is possible to access and monitor this data. Just create yours and start using it.