Financial management involves the process of planning, organizing, directing, and controlling an organization’s financial resources, from buying supplies to paying employees, optimizing funds, and investing the organization’s money. It also helps businesses make important financial decisions, improve profits, and secure opportunities.
Financial management empowers CFOs and finance teams to manage accounting, fixed-asset management, revenue recognition, payment processing, and technological advancements. Financial management processes can be automated with real-time data.
Financial management is crucial to an organization, as it guides the acquisition and distribution of funds, and plays a key role in making critical financial decisions. It is a strategic tool that not only ensures financial stability but also significantly improves profits and increases the company’s value, making it an integral part of every organization.
A financial management system is software designed to manage an organization’s assets, income, and expenses. It helps users create, edit, store, and report many financial transactions to maximize profits and ensure sustainability. Using a financial management system, businesses can reduce accounting errors, ensure compliance, and manage audit trails, which help improve both short- and long-term business performance.
A good financial management system provides insight into how a business is performing. It helps them allocate resources efficiently, develop realistic budgets, and forecast cash flows while optimizing inventory and reducing carrying costs. With a financial management system, you can make informed decisions and strategic plans. An FMS helps you plan for such things as taxes and employee benefits. It also performs cash flow analysis so you can make sure enough cash is on hand to purchase inventory and pay bills.
A modern financial management system helps keep a business on track for meeting its goals.
Pre-delivered information views represent different aspects of your business performance. Use tailored reporting capabilities to analyze the data most relevant to your KPIs.
Financial management software ensures that all financial information is kept in one central location and can be accessed by end users across departments, business units, and branch offices for greater accuracy. It automates tasks and reduces manual errors. A financial management system also keeps control over records and categorizes expenses to help streamline audits and, importantly, reduce business liabilities, providing a sense of security and protection.
A financial management system allows businesses to keep up with federal, state, and industry-specific regulations while providing an audit trail to capture all changes, to manage approval limits, set thresholds, and divide duties. A financial management system also lets businesses see immediately how changes in finance law will impact their organization.
With a financial management system, you can answer important business questions that can help you determine future outcomes. It can create and assess “what if” scenarios and identify new business opportunities and trends that might occur to help you develop a more informed corporate strategy.
With a modern FMS, businesses can track, automate, and cascade tasks to staff on the go, reducing errors and streamlining the entire operations cycle. Instead of managing papers and working on spreadsheets, staff can track each step in financial processes and complete tasks more quickly and accurately.
This part of a financial management system supports general ledger, accounts payable, and accounts receivable. It reduces record redundancy, creates financial statements, and helps budget, forecast, and plan. It categorizes expenses and keeps detailed tracking records of assets and liabilities.
Financial statements cannot be completed without understanding the value and condition of assets. This functionality uses capital and operational data with descriptive information related to assets to show their appreciation and depreciation in financial statements.
Revenue tools automate billing processes and allow for viewing payments. They also keep the business compliant with statutory regulations. Cash and treasury management tools help staff predict cash flow, improve liquidity, and decrease risk. A financial management system can also integrate with banking systems to provide up-to-date information on bank balances.
A financial management system allows companies to create and manage charts of accounts to meet government regulations using compliant templates. With embedded internal controls and audit tools available in FMS, companies can monitor and protect their data from external and internal theft and fraud.
Modern technologies have changed the definition of productivity in financial management. Let’s examine these technologies, which are shaping the future of financial management and helping businesses compete in the global economy.
Integrating financial management with ERP software helps manufacturers unify their financial data with other business operations, such as supply chain operations, inventory management, production, and more. Thus, when a financial management system is integrated into ERP software, it ensures real-time financial decisions based on accurate data available from different departments in the organization.
When financial processes and data are unified, businesses can have a comprehensive view of their financial health, monitor cash flow, track costs, and generate reports quickly while managing other departments.
ERP improves compliance by tracking, monitoring, and creating financial reports accurately and timely. Real-time updates and automated workflows ensure compliant processes across departments.
With procurement, shipping, finance, production, and other essential modules in one software, manufacturers can analyze variances between actual spending and budgeted amount and adjust financial plans according to the situation.
ERP integrates financial data directly with supply chain activities and purchase operations to ensure inventory is on hand when needed.
ERP helps businesses scale to accommodate transaction volumes, complexities, and increased business operations. It supports inter-company accounting, multi-currency transactions, and financial consolidation across multiple business units or locations.
An ERP system breaks down departmental silos for improved connectivity and collaboration. You can make better business decisions and have a higher degree of control over your company’s finances and its entire operations.
A stand-alone accounting system will not offer the reporting capabilities you’ll find with an ERP system. In place of basic reporting functionality, ERP allows you to create new reports and customize existing ones easily. You can see your business from various perspectives using drag-and-relate or drill-down data. ERP software helps you make better decisions by enhancing reports with powerful visualizations. It allows you to track fixed assets, control budgets, and monitor project costs more accurately and efficiently.
When choosing any software, there are important steps to follow. Before selecting the right financial management system, consider the pain points you want to address and how the software can help you overcome them. ERP allows for informed financial decisions using real-time, accurate data from different departments in the organization. Make a list of pain points to help you find a system that will work best for you. Determine your budget and get the right people to help you select the software. You may want to involve your IT staff for their technical expertise and other capable people in the organization who can oversee the evaluation and selection process. Their involvement is crucial in ensuring a comprehensive evaluation and selection.
Begin looking at systems and comparing them to see how they fit your needs. Do your research and see what people have to say about the software you are considering. Make sure the systems are easy to use and will support your company well into the future. When speaking to vendors, you should feel comfortable with their approach and willingness to answer your questions. They should be able to demonstrate how their software can help solve your problems.
Find out what training is available and what it will cost. Ensuring that end-users are fully trained in its use is crucial as this will maximize the software’s benefits and return on investment. Narrow down your selections, watch their demonstrations, and get any follow-up questions answered. Then, get pricing, check references, and make a final determination.
Review the gains you will receive from a warehouse management system to help you determine your budget. You should receive a return on your investment in the form of:
Look for systems that will perform the functions most important to your organization. Some of the essentials you’ll want are:
Manufacturers need full integration between their accounting department and their purchasing and manufacturing operations to run a truly efficient organization. OptiProERP, a system specific to the manufacturing industry, is designed to boost business efficiency, with strong accounting and financials as well as shop floor execution, inventory management, and job costing. Get immediate access to financial and shop floor data to help you have shorter production runs, keep up with product changes, and deliver a personalized customer experience.
OptiProERP is built on SAP Business One, the market-leading platform for small and midsize enterprises. It extends the platform to provide a more advanced, fully integrated, end-to-end solution designed specifically for manufacturers.
Any organization that wants to scale up its business operations through improved decision-making and financial performance needs a financial management system (FMS).
FMS helps to make informed business predictions. If you want to grow your business, an FMS will help you strategize to meet your business goals while tracking income and expenses to help with financial planning.
Accounting is the process of recording, maintaining, and reporting the movement of money and assets of a company to demonstrate its financial position. Conversely, financial management administers an organization's economic activities to achieve financial objectives and helps management make informed decisions. Accounting is focused on reporting, and financial management is centered around higher-level activities, such as generating cash, creating wealth, utilizing assets, and getting a good return on investments.
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A financial management system is designed to handle a business's accounting and economic aspects. It's a stand-alone system that automates financial transactions and supports general ledger, accounts payable, and accounts receivable. It helps manage cash flow, track fixed assets, reconcile bank statements, and provide financial reporting and analysis.
An ERP system has a financial management system built into it but extends to all business operations. ERP software modules include Financial Management, Human Resources, Sales and Marketing, Customer Relationship Management, Purchasing, Inventory Management, Business Intelligence, and Production Management. All of the modules are integrated and connect to the same database. Information is updated in real-time so everyone across the company works on the same data.
eWorkplace Manufacturing, Inc. is a global provider of market-leading, industry-specific software and services focused on the manufacturing and distribution industries. Through its innovation and deep industry expertise, eWorkplace Manufacturing delivers industry-focused solutions that address the unique challenges of discrete and process manufacturers and distributors.
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