How to use the 5W2H methodology in your Financial Management

Action Plan Worksheet 5W2H - Strategic Consulting
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Go back to:
1. All about Quality Management
2. Control action plans with 5W2H

In this article we will talk about:

What is 5W2H?

5W2H is an already recognized methodology that aims to assist in the creation of efficient Action Plans. With Action Plans created by this method it is possible to make better decisions and better understand what needs to be done to solve a problem or implement a new process, for example.

Basically the 5W2H works as follows: to create an Action Plan you must answer 7 questions. Are they:

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What will be done?

Who (Who will be responsible?)

When will it be done?

Where (Where will it be done?)

Why (What is the reason for doing it?)

How (How will it be done?)

How much will it cost?

5W2H applied to Financial Management

5W2H can be an important tool when creating Action Plans and can help a lot in your Financial Management. Let's see some examples:

1. Expenses forecast

Having an expense forecasting process is important because you can anticipate and plan for future costs. In order to have a good Expenditure Forecasting process, it is important, in addition to doing the financial planning, to control the step by step of the tasks required to complete the goal, so let's create an Action Plan for each of these tasks.

Carry out financial planning

Every financial manager should worry about doing the company's Financial Planning, so he can understand exactly how much each area can spend, how much the company needs to sell, and, with those numbers hitting, how profitable the company will be.

The company's budget will give the business a sense of both how much it should sell and how much money it can spend. So its importance.

How to use the 5W2H methodology in your 1 Financial Management

With the above Action Plan we have defined exactly the task to be done, we have already been able to define the responsibility of who should do it and we describe the main steps for the implementation of the Action Plan. This is why the 5W2H tool is useful when doing it. financial management.

Raise budgets when making purchases

Based on this Financial Planning, areas now have budgets on which they can base themselves to make purchases. Since they have limited resources, it is important that with each purchase they need to make, it is necessary to quote prices before and see which ones fit the budget. For this we can create an Action Plan as well.

How to use the 5W2H methodology in your 2 Financial Management

Verify planning effectiveness

Once the financial planning time has passed, it is time to check if the Planned is being carried out correctly. This is an essential routine to keep track of if there are no areas that are overshooting or if the company is following the plans drawn.

How to use the 5W2H methodology in your 3 Financial Management

This is a task that is often overlooked by financial managers, but using the 5W2H Action Plans methodology, you can define the responsibility of the task and a deadline for one of the team's employees.

2. Decrease Costs

A very clear objective for the financial area is to lower the costs of the company. The decrease in costs is one of those responsible for increasing your rate of profitability, since you will spend less to have a revenue equal to previous levels. In the example below we will see how a company can lower its costs with some action plans.

Map costs

Before you begin to reduce costs, it's important to map your company's top expenses and find out which ones have the most impact. For this it is important to create a Chart of Accounts and to make a record of the main movements of financial inflows and outflows of the company.

How to use the 5W2H methodology in your 4 Financial Management

In this case, we created an Action Plan so that the Chief Financial and Administrative Officer can create this Plan of Accounts and thus we begin to better understand the costs and revenues of the company.

Analyze Cash Flow

Once the Chart of Accounts is done it is time to start analyzing the company's financial results through cash flow analysis. This way you will be able to clearly understand the main expenses that are affecting your profitability.

How to use the 5W2H methodology in your 5 Financial Management

Renegotiate with suppliers

Let's say that based on the report made in the previous step we found in our example company that spending on suppliers was high due to negotiations made at the time with our suppliers. For this, we have drawn up an Action Plan to renegotiate with these suppliers.

How to use the 5W2H methodology in your 6 Financial Management

Remembering that in our example case, the measure to reduce costs was to renegotiate with suppliers but will always vary from case to case based on your cash flow analysis.

Tip for using 5W2H in your Financial Management

In this article we cite two examples of situations where we could use the 5W2H methodology for Financial Management but you can use it in several other situations. The main tip is: whenever you need a task to be done with a defined goal and deadline, use the 5W2H method and create an Action Plan for it. This way you can better understand what should be done in the task and what conditions to perform it. It also makes it easier to communicate the task to your team.

If you need a ready tool to make and control your Action Plans using the 5W2H methodology, you can test our Worksheet for free by clicking here!

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