What is the definition of a Financial Management System?
The financial component of a business is an essential one that is constantly changing. The first accounting records were kept by people 3000 years before the invention of the wheel. Financial Management and Financial Management System (FMS) have developed in the course of time as technology and technology has advanced.
What exactly is Financial Management?
Financial management involves the planning and organizing, managing, and controlling an organization’s financial resources. It involves managing the flow of funds as well as ensuring that shareholders receive an excellent return on their investment, maximizing the use of funds and investing the business’s capital into secure and efficient opportunities.
The management of finances is crucial to any organization as it can help determine the best way to obtain the funds and disperse them, take crucial financial decisions, increase profits, boost its value to the business and help keep the business financially sound. Financial management is at the heart of all organizations.
What is the difference between the two? What is the difference between Accounting and Management?
Accounting is the act of recording, preserving, and reporting on the movement of funds and assets within an organization to show its financial standing. In contrast, financial management manages the financial activities of the company to reach goals in the financial area and assist management make better decisions. The accounting function is concerned with reporting, and financial management is concerned with the more important aspects of how to earn cash or wealth, use assets, and earn excellent returns on investments.
What is the purpose of an Accounting Management System?
A Financial management system is designed to aid in the implementation of the strategic and tactical objectives that are related to the finances of a business. Its purpose is to ensure that things are done correctly for tax reasons, keep the business costs in check and identify the company’s financial situation, increase profits, identify areas of weakness, highlight areas that could be developed, and identify the risks to be aware of.
Why is an Accounting Management System Needed?
A sound financial management system can provide an insight into how your business is performing. And offer an understanding of the reasons why it’s performing good (or in a negative way.) If you have a system for managing finances implemented, you are able to make informed choices and create strategies. It will help your business become more profitable by revealing what’s going on within the company around important financial concerns.
The system will help your company be proactive instead of reactive. It lets you quickly see the profits margins and determine the best way to price products or services. It assists you in monitoring the costs of everything so that you can reduce them. An FMS can help you plan for tax issues such as or employee benefit. It also performs cash flow analysis, so that you can ensure that there is enough cash on hand to buy inventory and pay for bills.
Who is in need of a Financial Management System?
Businesses wishes to increase the size of operations by enhancing financial and decision-making capabilities requires an effective finance management program. A financial management system can help create informed decisions. If you are looking to expand your company by expanding your operations, an FMS can help you plan to achieve your business objectives while keeping track of your income and expenses to aid in financial planning. As mentioned earlier Financial management is at the heart of your business, and it’s essential to have tools you need to monitor what’s happening in the day-to-day operations of your business.
What are the advantages of an Accounting Management System?
A modern system of financial management assists in keeping a business in line with its objectives.
Greater Accuracy
With a financial system, certain aspects of the financial process can be automated. Which helps reduce errors in payroll and tax calculations, for instance. It also maintains control over financial records and categorizes expenses in order to streamline audits and minimize business liabilities. Financial information is all stored in one location, and accessible to users across businesses, departments and branch offices to ensure greater precision and uniformity.
Improved Compliance
An FMS can help reduce risks by ensuring compliance to the most recent accounting standards. It gives an audit trail to record every change and allows you to manage approval limits, create limits, and separate tasks to prevent the risk of fraud. Financial management systems allows businesses to see in real-time the way that changes to finance laws affect their business.
Better Strategic Planning
Through a system for managing finances. It is possible to answer critical business questions that will help you determine the future direction of your business. It can help you create and analyze “what is the scenario” scenarios, pinpoint potential business growth opportunities and also identify the trends that may happen to help you formulate an effective corporate strategy.
Improved Productivity
An FMS can allow tasks to be automated, which minimizes mistakes and speeds up business processes. Staff can eliminate lengthy spreadsheets and utilize integrated workflow and process management capabilities to keep track of every step of the closing process and finish it quicker and with greater accuracy.
What is the difference between the Accounting Management System and ERP?
A financial management software is designed to manage the financial and accounting aspects of a company. It’s a standalone system that streamlines financial transactions, and also supports general ledgers, account payable as well as accounts receivable. It assists in managing cash flow, monitor fixed assets as well as reconcile bank statements and provides financial reports and analysis.
An ERP system comes with an integrated financial management system within it, but it also applies to other business processes. ERP software modules comprise financial Management, Human Resources, Sales and Marketing Customer Relations Management, Purchasing, Inventory Management, Business Intelligence, and Production Management. Each module is linked to the identical database. The information is updated continuously which means that everyone in the company has access to the same database.
What are the benefits of the Financial Management System Integrated with ERP?
When a financial management software is utilized on its own. It is necessary to collect information from various sources like logistics, production management as well as billing. When you utilize an ERP system it is possible to have all the data sources are integrated which makes it easier to access accurate information fast.
An accounting software that is standalone will provide the reporting features you’ll get from the ERP software. Instead of the basic reporting capabilities, ERP allows you to quickly create reports and alter existing reports. You can view your business from multiple angles by using drag and relate or drilling down on data. ERP software assists you in making better decisions by improving reports by providing powerful visuals. It lets you track fixed assets, monitor budgets and costs for projects with greater precision and effectiveness.
Because ERP is integrated with other areas of business workflows are able to be automated to increase effectiveness. This means that there is no requirement to enter data from multiple systems. In many instances this eliminates manual data entry, thus reducing mistakes and making processes quicker. It also keeps the track of who was responsible for what, which means that when an error occurs you will know the person responsible for it.
ERP and financial integration allows everything to be monitored in real-time, based on a single database to create one version. A ERP system can break down silos within departments for better communication and collaboration. You’ll be able to make better business decisions and enjoy more control over the company’s finances as well as its overall operation.
How can you pick to Choose the Right Finance Management System?
When selecting a program there are some important steps to be taken. It is important to consider your pain points that you would like to eliminate and the goals you’d like to accomplish. You should make your list to help you identify a solution that is the best fit for you. Make a budget, and bring the right personnel on board to help select the right software. You might want to include your IT team to gain their expertise in technical aspects and also the able employees within the company that can supervise the selection and evaluation process.
Begin to look at the systems and determine if they meet your requirements. Conduct your own research and look up what others are saying about the software you’re looking at. Be sure that the software is user-friendly and will help your business in the future. When speaking with vendors, you must be comfortable with their style of dealing and their ability to answer your questions. They must be able to show how their software can aid in solving your problems.
Find out the type of training is available and how much it’s going to cost. It is important to make sure that the end users are properly trained to use the product. Choose your preferred options by watching their demonstrations and have any questions addressed. Check pricing, verify references and then make your final decision.
Receive a fully Integrated Accounting and Financial Management using RealCube
Manufacturers require full connection between the accounting departments as well as their manufacturing and purchasing departments to ensure efficiently. RealCube is an ERP system specifically designed for the real estate sector, offers strong financial and accounting capabilities and shops floor management, inventory control and costing of jobs. You will have immediate access to both shop floor and financial data that will help you run shorter production times, keep up with the latest developments in your product and provide a more personalized customer experience.
