The Importance of Financial Management in Facility Management
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By Joanne Jeffries
Financial management in any business is key to success. In facilities management, not allowing the budget to run away with itself, planning and reviewing spending is important. There are many ways to keep tight financial control; these are our top 8 tips.
- Have a business plan
From contracts to SLAs, to a business-wide business plan, there is no substitute for understanding where your money will need to be targeted, how much of an emergency fund you will need and so on. The importance of financial management is such that planned expenditure always means savings over ad hoc expenditure.
- Monitor your financial position
Once you have planned your expenditure, apportioned sub-budgets and the like, you now need to monitor expenditure. If there is consistent over-spend on one area, there is obvious need for change. Don’t forget facilities management will not stay the same, thus your budget will need to change too.
- Credit control
Cash flow is important in facilities management; if it stops flowing, it presents significant issues. Credit control is more than just checking people have paid. It should also be about being pro-active in reducing customer debts rather than waiting for payment that may never come.
- Knowing day-to-day costs
Facilities Managers should have a firm grasp on the day to day operational costs they are responsible for. One key way to do this is to ensure all external costs via suppliers are clearly agreed within a contract.
- Up-to-date financial records
If you cannot lay your hands or eyes on the latest spreadsheet that gives you an immediate financial snapshot of the business, then you are divorced from financial reality. Of all the activities within the background running of your business, pro-activeness when it comes to keeping financial records is without doubt, top priority.
- Increase efficiency in overheads
Every business has overheads and when the budget starts to bite, controlling overheads can be the fastest way of saving money. Look at the average costs of heating, lighting, and air conditioning etc., checking you have the best deals. Don’t be lazy – always check for better deals via benchmarking and competitive negotiations with suppliers.
- Tackle financial problems as they arise
Allowing financial difficulties to fester is clearly not the best means of financially supporting and evolving facilities management. If there is a problem, deal with it.
- Become financial astute
This means including financial management training as part of your own professional development, and that of your employees.
As a facilities manager it is likely that you will be responsible for the financial management of the services you manage. Whether it be budgeting, forecasting, or reconciliation, to be successful you need to be confident that you are managing the monetary aspects of your services. For more information, you might consider an FMP accreditation since within the syllabus Finance and Business is covered.