Standard operating procedures should be written to cover every aspect of your company’s business, but they’re especially important for your business’s finances. Financial SOPs need to be clear, detailed, and thorough so that your financial operations are in order. When your company is audited, its SOPs related to finance will be closely inspected. Lenders will also look carefully at your SOPs when considering your company for loans.
All of your company’s bookkeeping procedures need to be documented in detail. This includes all expenses, credits, transactions, assets, and liabilities. Procedures should be outlined for creating, reviewing, and documenting budgets.
How you take payments from customers or clients are an important part of your standard operating procedures. The payment process and any other transactions with third parties, including customers and clients, need to be documented in SOPs.
Management of Account Documents
Make sure that your company’s system for managing, organizing, and storing account documents is clearly detailed in your SOPs. These procedures should include all information on how you secure the documents and protect your customers’ privacy.
Financial SOPs should include employee expenses and how they are reimbursed. Your employees need to use company money for travel, supplies, and other work-related expenses. Clarify which expenses are eligible for reimbursement, how your employees get this reimbursement, and how reimbursement records are kept.
You need a clear system in your SOPs for recording expenses for tax purposes. Also included should be procedures for storage and management of tax documents. Include the steps for filing and preparing for a tax audit.
Financial Reporting and Analysis
Financial reporting is how your company tells the world how it’s performing. This reporting chronicles your business’s ups and downs. SOPs should clarify how this regular reporting is done and the measures taken to ensure that it is as accurate as possible. You might also include a review process and performance appraisal procedures.
Sales and Marketing
Not all companies have sales and marketing SOPs, but it’s a good idea to include this area as well. The key is to make sure your sales and marketing procedures are codified while also allowing room for flexibility. The members of your sales staff need to rely on their own skill and experience, not just given guidelines.
Sales and marketing SOPs may include areas such as market research, public relations, marketing methods, tracking sales, advertising, and reputation management. SOPs can cover procedures for specific marketing activities such as direct mail, email marketing, social media, and so on.
The Importance of Financial SOPs
Even if you have only one person in your accounting department, all financial procedures need to be documented. Creating financial SOPs ensures that your company is in compliance with all laws and regulations, and allows it to change easily if these laws and regulations should change.