Financial policies are the rules or principles of your business's accounting and financial practices. They should reflect your business's values and culture.

Your procedures are the instructions that outline what your employees must do to abide by these policies.

Depending on your business, you might have financial policies and procedures about things like how to handle petty cash, debt collection or payments from clients and customers.

Benefits of financial policies and procedures

It might seem daunting but creating financial policies and procedures manual can have many long-term benefits for your business.

For example, your manual will:

  • ensure all staff are aware of their obligations
  • help your managers and supervisors make consistent and reliable decisions
  • give employees a clear understanding of what you expect and allow
  • reduce disputes
  • add to the professionalism of your business.

Creating financial policies

Policies provide an overview of certain rules that you have in your business. They should:

  • align with business goals and plans
  • reflect the culture of the business
  • be flexible
  • be easily interpreted and understood by everybody in the business.

Creating financial procedures

Sometimes a policy will need a supporting procedure.

Procedures are clear and concise instructions on how to abide by the policy. They detail the sequence of activities needed to complete tasks.

Your procedures should:

  • be factual, succinct and simple to understand
  • be in the best format for their purpose ­ for example, a procedure could be presented as written steps, a flow chart or a checklist
  • be written in a step-by-step style that shows people how to follow the procedure through from beginning to end
  • include references or links to any related documents and forms that must be completed when following the procedure.

Types of financial policies and procedures

The policies and procedures that you'll need will depend on your business. Think about important areas of your business where having consistent rules and processes would add value.

For example:

  • which job roles are allowed to authorise various activities within the business
  • when and how new bank accounts are opened
  • new suppliers and how to choose them
  • new customers and how to manage them
  • buying and purchasing – for example, how to determine when stock, equipment and assets need to be purchased
  • debt collection
  • insurance and risk management.

Policy and procedure manual template

Use our financial policy and procedure manual template as a starting point.

How to write your financial policy manual

If creating a full manual feels overwhelming, try to complete it in real-time as you work. Writing while doing helps to break it into manageable chunks and ensure you capture every step:

  1. Start by thinking about what you want to achieve.
  2. Get your employees involved.
  3. Write down your policies and procedures as you do each activity throughout the day.

For example, if you have a new customer, write up how you'll record the details, where these will be kept, how you'll set a customer credit limit and any other standards you want to set.