Governance, management and controls have different jobs

Governance sets decision rights and oversight. Management executes the business plan. Controls provide specific checks within the workflow. A payment approval is a control; deciding the authority limits and reviewing breaches are governance activities.

Start by understanding how the owner, directors and management team currently make decisions. A practical framework should support the company’s real responsibilities and existing constitutional arrangements, with legal advice where needed.

Document decision rights and escalation

Identify which financial decisions can be made by operational managers and which need additional approval. Consider recruitment commitments, borrowing, major contracts, capital spending and exceptions to budgets. Specify what information accompanies a request and how urgent decisions are recorded.

Authority limits should be appropriate to the company and approved through the correct process. An informal finance procedure cannot override the articles, shareholder agreements or other applicable requirements. Keep the approved framework accessible and review it when responsibilities change.

Build a board or management reporting rhythm

A useful agenda separates items for information, discussion and decision. Circulate an agreed reporting pack with enough time for review and highlight assumptions, cash pressures and unresolved issues. Record the decision, rationale, action owner and follow-up date.

  • Financial performance against the plan.
  • Cash outlook and significant commitments.
  • Key risks, changes and planned responses.
  • Decisions required and supporting options.
  • Progress on earlier actions and outstanding exceptions.

Connect the agenda to management accounts and KPI reporting so meetings use consistent information.

Make the risk register actionable

Illustrative example: a business relies heavily on one customer. The register could identify the exposure, nominate an owner, track payment behaviour and contract dates, and define when management reviews the cash scenario. The response might include collection action, customer diversification or contingency planning.

A risk label without an owner, evidence or review date does little to support a decision. These are process examples, not a prediction that a particular customer will default.

Keep SME governance proportionate

The FRC explains the scope of the UK Corporate Governance Code. It should not be presented as a universal requirement for private SMEs. Some private companies have separate governance reporting obligations; assess the company’s actual position.

Our focus is practical finance governance: reporting calendars, decision records, risk ownership and follow-up processes. This does not replace legal advice, company secretarial work or independent assurance. Link the framework to internal controls and agree the desired deliverables, responsibilities and fees before starting.

Your questions, answered.

Is governance only for large companies?

No. Smaller businesses can benefit from clear decision rights, consistent reporting and recorded actions. The process should be proportionate to their complexity.

Does this make us compliant with every governance requirement?

No. Requirements depend on the company and its circumstances. This service provides a defined financial governance scope, not a blanket compliance certification.

Can a fractional FD lead the process?

A fractional FD can help design and maintain the agreed finance processes. Directors and authorised decision-makers retain their own responsibilities.