Whether it’s a small, medium or a large business, the need and importance of implementing effective financial management information system cannot be underestimated, as it adds value to an organization by improving the functioning state of a business. This article highlights the need and importance of financial management information system in business organizations.
Financial management information system is of great value and importance for a business organization. It involves collecting and analyzing financial data which is used in running a business in a way as wanted as well as making good financial decisions. There are many benefits of implementing financial management information system in an organization. Some of most important benefits are mentioned in this article.
Financial management information system is of great help and assistance in tracking the financial events and summarizing the information. At this point, it is important to discuss briefly about information. Information may be defined as the data which is organized and presented so as to facilitate effective decision making process and enable the users to take necessary actions.
In this way, information consists of collected facts and data which is processed, stored and used for various purposes in a business.
If designed, developed and implemented in an effective manner, financial management information system aids greatly in preparing auditable financial reports, making policies, while it supports in preparing various management reports. Facilitating an organization to connect all the processes and procedures in relation to its operations, it provides timely, accurate, reliable information, so that the decision making process may be made effectively and efficiently. It not only provides the advanced financial reporting system, but it also helps in evaluating the strength and weakness of a business organization leading to reduce or eliminate the bottlenecks that impede the progress of a business.
It needs to be designed in such a way that a strong connection with software, hardware, personnel and procedures may be established in order to access and control the data to deliver useful information for a business management. Reducing the time and efforts of the employees to a great extent, it aims at integrating financial information in an effective manner. Another important benefit that is attained from implementing the financial management information system is that it maintains the transparency of information which is necessary to determine what is happening with the business financially and to evaluate various aspects of a business. Besides. One of the extremely important benefits of implementing financial management information system is that in addition to automating the financial operations of a business organization, it generates the outputs which include various reports: working capital reports, reports of operating and capital budgets, Cash flow and many more.
Thus, providing a business organization with a framework for integrating functional processes and financial resources and assisting the management in planning process, financial management information system – FMIS gives a business a competitive edge while maintaining effectiveness and efficiency in financial operations and reporting procedures.
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Strategic management is a vitally important accompaniment to a business that maintains the efficiency and effectiveness in overall performance while ascertaining long term goals. It's also meant for creating value for customers, as well as shareholders.
A financial ratio or accounting ratio is a relative magnitude of two selected numerical values taken from an enterprise's financial statements. It may also be defined as the relationship between two accounting figures, expressed mathematically.