What is controlling?
Controlling refers to the process of planning, steering, and monitoring financial activities and business processes within a company. It is a strategic management function aimed at ensuring the financial health and performance of the enterprise. Through the collection, analysis, and interpretation of relevant data, controlling contributes to making informed decisions at all levels of the organization.
What is the purpose of controlling?
The primary goal of controlling is to efficiently and effectively achieve the company's objectives. By providing information and conducting analyses, it helps optimize resource allocation, minimize risks, and maximize profitability. Controlling allows for early detection of deviations from planned goals and, if necessary, adjustments to ensure long-term business success.
What tasks does controlling encompass?
- Planning and Budgeting
- Controlling involves the creation of budgets and financial plans that serve as a guide for resource allocation. This aids in setting financial goals and monitoring implementation.
Key Figures and Reporting
- In controlling, financial and operational data are collected and analyzed to create performance indicators. These reports enable management to assess the current situation and make future decisions.
Cost and Performance Accounting
- Through the analysis of cost structures and processes, controlling identifies cost-saving potentials and opportunities to increase efficiency.
Investment Evaluation
- Controlling assists in evaluating investment projects and making informed decisions about capital expenditures.
Risk Management
- By identifying and assessing risks, controlling contributes to the development of strategies to minimize or cope with risks.
What methods are used in controlling?
Target-Actual Comparison
- By comparing planned (target) and actual results, discrepancies can be detected and analyzed.
Break-Even Analysis
It helps determine the profitability of products or projects by indicating the point where revenues and costs break even.
Cost Accounting Systems
These include methods such as full costing or contribution margin analysis to analyze cost structures and profit margins.
Cash Flow Analysis
Cash flow analysis evaluates the flow of funds into the company,
providing insights into liquidity and financing needs.
Balanced Scorecard
Balanced Scorecard combines financial and non-financial indicators to assess performance from various perspectives.
Overall, controlling is an essential component of a successful company. It provides the tools and analyses needed for informed decision-making to ensure sustainable financial health and competitiveness.