18 Best Practices For Crafting Effective Financial Policies

Financial leaders play a crucial role in shaping the fiscal success of their organizations. One of the paramount responsibilities they shoulder is the review and revision of financial policies and procedures, which serve as the blueprint for fiscal stability and transparency. However, simply having sound financial policies isn’t enough; getting buy-in from stakeholders is equally vital.

Here, Forbes Finance Council members share the essential best practices financial leaders should consider when reviewing and updating financial policies and procedures, ensuring that their vision aligns with the broader objectives of their organizations. These insights will guide you in crafting policies that not only promote compliance but also foster trust and confidence among your team and stakeholders.

1. Include Stakeholders In Decisions
Like all good leadership practices, including as many of the stakeholders in the decision-making process is most effective. Communicate change early, explain the negatives and celebrate the positives. If you want buy-in, make it all transparent. – Rupert Lee-Browne, Caxton

2. Express Your Vision
Casting vision for new policies is more of an art than a science. Considering that policy development aims for stakeholders to comprehend, adhere to and champion the policies, it all comes down to people. Artistry in policy management involves galvanizing staff through authentic human engagement throughout the policy life cycle. This method promotes community as opposed to monarchy. – Dr. Jason Jackson, IBS Institutional Capital an IBS Investment Bank sister co.

3. Delegate When Necessary
We, as leaders, need to be rivers, not reservoirs. Don’t keep everything for yourself. When there is excess or an abundance, let’s pass that along. Whether that is for bonuses to employees, or giving to charities. Allowing our team to pick what charities to support gives them excitement that we are having an impact on the world beyond our pockets. – Mark Troyer, Troyer Retirement

4. Create A Committed Environment For All
A great way to ensure consensus on new policies and procedures among stakeholders is to cultivate an environment that is committed to the success of all involved. It is essential to clearly communicate the merits and benefits as well as any potential risks of not complying, request and consider feedback, answer questions thoughtfully and follow up with guidance and any necessary training. – Robbin Caruso, Prager Metis CPAs, LLC

5. Leverage Existing Compliance Practices
Many companies undervalue the importance of existing compliance and control management processes or see them as a “check the box” exercise when the opposite is true. Having accurate and agile compliance practices protects organizations by reducing risk, providing clear visibility into ownership and accountability and empowering data-driven insights for greater organizational strategy. – Mike Whitmire, FloQast

6. Put Customers Top Of Mind
When reviewing and updating financial policies and procedures, leaders should put customer wants and needs at the forefront. Being responsive to customer feedback and smoothing out friction points in their experience builds buy-in and loyalty. By prioritizing customer-centric policies rather than solely what is best for your bottom line, you are setting your business up for long-term success. – Luz Urrutia, Accion Opportunity Fund

7. Explain The Rationale
When proposing any changes, one best practice is to explain the rationale. Explain how the changes align with the company’s goals, regulatory requirements and industry best practices. Demonstrating the “why” can make it easier for stakeholders to buy into proposed changes. Also, consider pilot testing before full implementation. – Geanette Rodriguez-Ojeda, GRO Accounting and Tax

8. Provide Adequate Training
An often-forgotten but crucial practice is adequate training. By overlooking its importance, we risk misalignment and noncompliance. When stakeholders grasp the “why” and “how,” they trust the process more, bring clarity, reduce mistakes and facilitate smoother transitions. Ultimately, when people comprehend and trust the updates, they commit more readily, enhancing buy-in and implementation. – Amanda Kristinat, Moonshot

9. Explain The Impacts To The Organization
Share how those financial policies impact the organization as a whole and further bring it down to how their department or project contributes towards the organization. Bringing organizational policy down to a department, project or individualized level is the best way to help others understand and buy into the change. – Christopher Foder, CExP, First Financial Group – Meridian Financial Associates

10. Be Aware Of The Work For Administrators
Be very cognizant of the actual and perceived administrative burden you put on people with policies and procedures. Buy-in and compliance will drastically go up if you can show a low admin burden on those affected. If you show you take everyone’s needs into account, they will be more receptive to your needs. – Aaron Spool, Eventus Advisory Group, LLC

11. Ask Stakeholders To Review Regularly
Make key stakeholder reviews a recurring process. Don’t just go to key stakeholders when you feel a change is necessary. Regularly review key policies (at least annually) and solicit feedback from other impacted teams. They’ll feel more included even when ad hoc changes are necessary. – Michelle DeBella, JumpCloud

12. Avoid Jargon
Complex financial terminology may be confusing to those who are not well-versed in finance. Use plain language that is easily understandable by a broad audience. Also, illustrate key points with practical examples to help people better grasp how the policies and procedures apply to their work or financial transactions. – Sean Frank, Cloud Equity Group

13. Keep It Simple
Keep procedures as simple and to the point as possible. Financial policies can get complicated, and in order to get others on board, they need to be digestible. Offering clear explanations about the benefits and being upfront about the intentions behind the policy can create a foundation of trust and keep everyone aligned on the same page. – Nick Chandi, Forwardly

14. Get Employee Feedback
Include key stakeholders from each department to gather employee input and feedback. This collaborative approach helps ensure that the financial policies and procedures are both practical and align with the organization’s goals. Additionally, it’s best to gain policy support from those who will be affected by them. – Anthony Georgiades, Innovating Capital

15. Provide Clear Communication Throughout The Process
One practice to prioritize when reviewing and updating financial policies and procedures is clear communication throughout the process. Transparency is essential to provide the rationale behind policy changes, the potential impacts on different teams and the expected outcomes they will produce. Doing this helps build stakeholders’ trust and encourages informed decision-making. – Jeffrey Bartel, Hamptons Group, LLC

16. Remove Excess Information
In today’s world of automated accounting, it’s easy to end up with too much information. Look for places where additional detail is not adding value and reduce the complexity of the data. This will make financial procedures easier to execute, making buy-in much easier. – Julie DeLong, Backyard Bookkeeper

17. Allow Employees Time To Adjust
It’s essential to give employees enough time to learn about and adjust to changes in financial policies and procedures. This could include offering training sessions or other resources to help them understand the changes and how they will affect their work. Providing adequate time and support will help reduce frustration and ensure that the new policies are adopted smoothly and effectively. – JD Morris, RHC 21 LLC (an SPE Fund) with family of Special Purpose Entities (SPE or SPV)

18. Be Transparent
Transparency is paramount. Financial leaders should ensure clarity in every policy, engaging team members in its formulation. This inclusion not only demystifies the process but also promotes ownership, understanding and commitment among stakeholders. – Matt Johnner, BankLabs

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