The finance element of an organization is an important one that is ever-changing. People began keeping accounting records 3,000 years before the wheel was invented. Financial Management and Financial Management Systems (FMS) have evolved as the world and its technologies have advanced.
Financial management is the planning, organizing, directing, and controlling of an organization’s financial resources. It involves things such as maintaining the supply of funds, ensuring shareholders get a good return on their investment, optimizing use of funds, and investing the organization’s money in practical and secure opportunities.
Financial management is important to an organization because it helps determine how to acquire and distribute funds, make important financial decisions, improve profits, increase the value of the company, and keep the business financially stable. Financial management is at the core of every organization.
Accounting is the process of recording, maintaining, and reporting the movement of money and assets of a company to demonstrate their financial position. Conversely, financial management administers the economic activities of the organization to achieve financial objectives and help management make informed decisions. Accounting is focused on reporting and financial management is centered around higher-level activities, like how to generate cash, create wealth, utilize assets, and get good returns on investments.
A financial management system handles all of the financial transactions within a business and keeps track of the money as it comes in and out of the organization. It’s software that an organization uses to view and manage its income, expenses, and assets to maximize profits and ensure sustainability. It helps to improve both short- and long-term business performance.
A financial management system handles all of the financial transactions within a business and keeps track of the money as it comes in and out of the organization. It’s software that an organization uses to view and manage its income, expenses, and assets to maximize profits and ensure sustainability. It helps to improve both short- and long-term business performance.
A good financial management system will provide insight into how a business is performing and provide an understanding of why it is doing well (or not.) With a financial management system in place, you can make informed decisions and strategic plans. It can help a business be more profitable by showing what is happening within the business around key financial issues.
The system can help your business be proactive rather than reactive. It allows you to easily see your profit margins to know how to price goods or services. It helps you monitor all costs so you can keep them low. An FMS helps you plan for such things as taxes and employee benefits. And, it performs cash flow analysis so you can make sure enough cash is on hand to purchase inventory and pay bills.
Any organization that wants to scale up its business operations through improved decision-making and financial performance needs a financial management system. A financial management system 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. As stated earlier, financial management is at the core of your organization and it’s important to have the tools that will allow you to know what’s happening in day-to-day business operations.
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.
A modern financial management system helps keep a business on track for meeting its goals.
With a financial management system, parts of the financial process are automated, which reduces errors in tax or payroll calculations, for example. It also keeps control over records and categorizes expenses to help streamline audits and reduce business liabilities. All financial information is kept in one central location and it can be accessible to end-users across departments, business units, and branch offices for greater accuracy and consistency.
An FMS helps remove risk by ensuring compliance with the latest accounting standards. It provides an audit trail to capture all changes and you can manage approval limits, set thresholds, and segregate duties to reduce fraud. A financial management system also lets businesses see immediately how changes with finance law will impact their organization.
With a financial management system you can answer important business questions to help you determine future outcomes. It can create and assess “what if” scenarios, identify new business opportunities, and identify trends that might occur to help you develop a more informed corporate strategy.
An FMS allows tasks to be automated which reduces errors and streamlines business processes. Staff can move away from time-consuming spreadsheets and use built-in workflow and process management capabilities to track each step of the close process and complete it much more quickly and accurately.
With a financial management system, parts of the financial process are automated, which reduces errors in tax or payroll calculations, for example. It also keeps control over records and categorizes expenses to help streamline audits and reduce business liabilities. All financial information is kept in one central location and it can be accessible to end-users across departments, business units, and branch offices for greater accuracy and consistency.
An FMS helps remove risk by ensuring compliance with the latest accounting standards. It provides an audit trail to capture all changes and you can manage approval limits, set thresholds, and segregate duties to reduce fraud. A financial management system also lets businesses see immediately how changes with finance law will impact their organization.
With a financial management system you can answer important business questions to help you determine future outcomes. It can create and assess “what if” scenarios, identify new business opportunities, and identify trends that might occur to help you develop a more informed corporate strategy.
An FMS allows tasks to be automated which reduces errors and streamlines business processes. Staff can move away from time-consuming spreadsheets and use built-in workflow and process management capabilities to track each step of the close process and complete it much more quickly and accurately.
Financial reports help managers keep control over the organization and monitor if their objectives are being achieved. They can also be used to provide information to outside organizations regarding the company’s financial operations and compliance requirements.
This part of a financial management system supports general ledger, accounts payable, and accounts receivable. It reduces records redundancy, creates financial statements, and helps to budget, forecast, and plan. It categorizes expenses and keeps detailed tracking records of assets and liabilities.
This function uses capital and operational data with descriptive information related to assets to show the appreciation and depreciation of assets in financial statements.
With revenue tools, billing processes are automated and payments can be viewed. It also keeps the business compliant with statutory regulations. The 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 have up-to-date information on bank balances.
These features help to ensure the organization’s activities correlate with its goals to minimize risk. It helps keep the company compliant with laws and regulations to avoid hurting the business's reputation.
A financial management system is designed to handle the accounting and financial aspects of a business. It’s a stand-alone system that automates financial transactions and supports general ledger, accounts payable, and accounts receivable. It helps to 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 also 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 is working off of the same data.
When a financial management system is used by itself, there is a need to enter data from a variety of sources such as production management, logistics, billing, and more. When you use an ERP system, all of these data sources are integrated, making it easy to get accurate information quickly.
A stand-alone accounting system will not offer the reporting capabilities that you’ll find with an ERP system. In place of basic reporting functionality, ERP allows you to easily create new reports and customize existing ones. You can see your business from a variety of 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 with greater accuracy and efficiency.
Since ERP is integrated into other areas of the business, workflows can be automated for greater efficiency. That means there is no need to reenter data in multiple systems. In many cases, it eliminates manual data entry, reducing errors and making processes much faster. You can also keep track of who did what, so if an error is made, you can determine who made it.
ERP and financial management integration allow everything to be viewed in real-time, working off of one database for a single version of the truth. An ERP system breaks down departmental silos for greater 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.
Having all data and workflows housed and orchestrated in one system that is shared across the organization increases visibility throughout the company. It also integrates manufacturing and warehouse operations with core business functions like financials, customer service, logistics, and it improves coordination and collaboration.
Eliminate manual entry and errors from data having to be re-entered because it is housed in one system of record and source of truth that other business functions and departments can access and share, avoiding the need for redundant data entry.
Real-time information from the warehouse provides insight into what is happening with inventory movement, customer orders, and overall scheduling and planning across the organization to help make informed decisions.
Provides the sales team with information on what is in stock and the lead times needed. It equips your customer service team with real-time status on customer orders and delivery timing so your business can make promises it can deliver upon.
With a modern ERP system that is connected across the company, all departments are in sync and it is simpler to adjust business processes as needed when critical information is easily accessed and shared.
Having shipment information processed immediately and sent to accounting allows for invoices to be sent quicker and payments to be received faster.
With instant notification about where employees are with jobs, managers can ensure things are kept moving and they can track how well staff are performing.
When choosing any software, there are important steps to follow. You should consider the pain points you want to solve and what future goals you want to achieve. Make a list of these, which will help you find a system that will work best for you. Determine your budget, and get the right people on board to help you select the software. You may want to involve your IT staff for their technical expertise, as well as capable people in the organization who can oversee the evaluation and selection process.
Begin looking at systems and compare them to see how they fit with 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 their 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. You want to ensure that end-users will be fully trained in its use. 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 in order to run a truly efficient organization. OptiProERP, an ERP system specific to the manufacturing industry, has strong accounting and financials as well as shop floor execution, inventory management, and job costing. Get immediate access to both 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.
After 15 years of steady growth, DACSA (Design, Automation and Centrifuges), a manufacturing business that modernizes sugar centrifuges in the sugar mills of Mexico, had outgrown the manual processes they used to run the business.
DACSA needed advanced manufacturing functionality to help them fully cost the products they were delivering, including sub-contracted services. They also needed the ability to manage parallel processing in order to meet delivery deadlines.
DACSA relies on OptiProERP to standardize processes, define distribution channels and automate manufacturing processes. Focused on continued growth, DACSA relies on the continuous quality system checks from OptiProERP to meet their aggressive goals.
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