A business created is aimed at “profit” or return of invested capital invested. If your business is running stagnant, last year’s revenue is the same as the previous year, or revenue growth is less than operational cost growth (opex), it may indicate a need for more in depth reviews and evaluation of the business. A business that does not grow beyond cost, is not a difficult thing to do next.
Regardless of the Financial Statement’s calculation mechanism in business decision making, there is something else that needs to be the concentration of businesspeople, Process Excellence . Good business will be run with the right process mechanisms. And in the journey, then the business process is always followed by a good Internal Control as well. Internal Control is a common thing to do in business management, to get the process of excellence and optimal results. Internal Control is part of Process Excellence in Enterprise Strategy Management to grow sustainably.
Internal Control can generally be divided into 2 categories based on its purpose, ie as a Prevention process and as a Detection process .
A good business can run for years or even decades. Many global companies are already aged not only a year two years, but up to tens or hundreds of years. Regardless of the company’s strategy in market acquisition, the Prevention behavior of a potentially bad business process has been structured. Prevention is the first parameter in an Internal Control activity, where there are sections in the business process that pay attention to the actions that inhibit the loss. Action prevention aims to reduce risk factors in a business activity that runs.
Suppose a multi story building, the need for fire prevention devices on each floor. These tools work in fire prevention activities, though not necessarily. But if there is a fire then the losses can be minimized quickly.
Another example is the use of a firewall in a computer database server, which aims to prevent the entry of spyware or hacking of corporate data. The data that become the company’s assets will be better protected from the hands of ignorant in the presence of a reliable data security system.
Detection (Early Detection)
Next in the second Internal Control parameter is the early detection process. Detection is part of the business process sampling, so it can be avoided the potential loss in a running process. This detection process is regular, there are and no cases that harm a business, the detection process still needs to be done. Detection can run simultaneously with the Prevention process. The increasing nature of the risk of a process requires a more detailed and deep detection process . It is expected that with the detection rate error that occurs will be able to reduce the occurrence of problems in the future.
Suppose a multi storey building that is equipped with fire extinguishers on each floor, still needs to do early detection, by checking the structure of the building, the structure of electrical or gas installations, so that the installation error can be fixed immediately to avoid the fire factor in the future. This early corrective action can also be called Correction.
Internal Control is the continuation of a mandatory process in a business process. Processes that have been designed in such a way but not coupled with the existence of a good control process and correct, will potentially give adverse impact on the final result. Similarly, if a business process is equipped with a robust internal control activity, but it does not go well and correctly, or is often violated, often distorted, it remains a waste of business. Internal Control is part of a Process Excellence in Enterprise Strategy Management.