TechDogs-All You Need To Know About "Financial Management Solution"

Financial Technology

All You Need To Know About Financial Management Solution

By TechDogs Editorial Team

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Overview

There was a time when managing money was purely mechanical: elaborate books, records, bank reconciliation statements and whatnot. Monetary management is complicated - or at least feels that way. Today, organizations see their balance sheets churn out reports for millions and billions of dollars with ease. There are dedicated financial departments that are supposed to know about every dime that the company spends or earns. It's no surprise that financial experts are considered wizards and Financial Management Solution is the perfect wand for their magic. Financial Management Solution may sound boring or too technical but at TechDogs, we do not touch anything boring. So, hop on and we will tell you about this not-so-boring tool.
TechDogs-Financial Wizards Of Wall Street- "Financial Management Solution"
Let’s start with a joke.
 
A young accountant fresh out of university is interviewed by the owner of a small business. “I need someone with an accounting degree,” says the man. "I have lots of things to deal with but I want someone else to worry about money matters and I am offering $75,000 a year as pay.”
The accountant is delighted but asks, “How can a business like yours afford to pay so much?”
“That,” says the man, “is your first worry.”


Hilarious, no?


Not exactly. Ask anybody who has to deal with company finances and they will tell you; the damned numbers are always worrisome.

One of the most important functions of any finance team is to keep the business running, smoothly if possible. They need to keep a steady cash flow and accurately predict the revenues and expenses for longer terms. Could they have insight that the new printer will break so soon?  Their job also includes churning out an insane amount of reports such as income statements, expenditures, capital investment, cash flows, debts, liabilities and the list goes on. We can't imagine the humungous number of files, spreadsheets and whatnot required to gather this data. Phew! Even the thought is so tiring! Wait! We live in the 21st century. Surely, the world's brainiacs would have figured out easier, more effective and a sublime way to do this? Indeed, we have! Say hello to Financial Management Solution.


What On Earth Is A Financial Management Solution?


For people labored by the company finances, it's a godsend. For the rest of us, Financial Management Solution is an on-premises or a cloud solution that organizations use to manage and administer their earnings, expenses and resources to increase profits and assure business continuity.

Useful Financial Management software will help businesses in improving short-term as well as long-term business performances by organizing all invoices and bills, reducing accounting mistakes, decreasing redundant record-keeping, asserting tax compliance and regulations, helping employees with budget preparation, churning out actionable reports and providing real-time financial visibility to the stakeholders.
 
Are you as impressed as we are? That's the jaw-dropping, mind-boggling, eye-popping, awe-inspiring power of sound Financial Management software!
 

And It All Began…


In the 19th century! Technically, finance is as old as humankind. There was the barter system earlier but hey, even then, you had to keep a tab on what you bartered, the number of sheep you traded for a plate of Shrimp Tempura sushi roll. The concept of money is ancient but financial management gained importance with the onset of the industrial revolution. It was during this time that the concept of FinTech (Finances and Technology) really evolved.

TechDogs-"History Of Financial Management Solution"-In 1950 "Diners Club" Becomes The Wordl’s First Multipurpose Charge Card


FinTech 1.0

 
  • In 1918, Fedwire, the first electronic fund transfer system based on telegraph and Morse code, is introduced.

  • In the 1950s, the concept of credit cards is introduced courtesy of Diners Club and American Express.

  • On June 27, 1967, Barclays introduced the first ATM (Automated Teller Machine) in Enfield, north London, England.

 

FinTech 2.0


This was the era of digitalization and the finance departments were no exception. Thanks to the digitization trend, we now had online banking and SWIFT (Electronic Fund Transfer), hurray for humanity!

This type and speed of advancement were why the need for dedicated Financial Management software emerged amid the FinTech 2.0 era.
 
  • In 1978, VisiCalc, the first spreadsheet software that enabled financial modeling on a computer came to the market.

  • In 1986, Tally was introduced as exclusive accounting software for basic accounting functions.

  • By 1998, QuickBooks was launched as an accounting program for day-to-day bookkeeping.

 

FinTech 3.0


At the turn of the millennium, accounting software evolved to do more than just basic accounting. It included internal accounting, budgeting, forecasting, etc., which led to the new and improved and very holistic (we must add) Financial Management software.
 

So How Does It Actually Work?

 

Very smoothly if the FinTech world is to be believed. Financial Management software uses automation technology to record and manage transactions as well as create reports and analytics, preferably centralized. This helps the financial performance to be analyzed and view reports in a single system. All financial transactions are recorded in real-time to analyze or create consolidated reports daily, across multiple departments and currencies, significantly reducing the time it takes to close the books.
 

TechDogs-So How Does Financial Mangement Actually Work?-Descriptive Image Where Finance Department Analyze And View "Reports In A Single System"Source


What Are The Different Types Of Financial Management Systems?


The three essential types of Financial Management software are:

An integral part of financial information systems, the financial accounting tool is all about creating revenue statements, general ledger, accounts receivable, balance sheets and cash flow reports for the stakeholders and government authorities (for tax purposes). These reports enable the decision-makers to make educated decisions and predict the financial trends for the business.

Specific for internal use only, the managerial accounting tool provides business insights to the investors, stakeholders and management.

Residing outside the regular finance box, corporate finance tools help you with business processes such as budgeting and forecasting, analyzing your company finances, achievement metrics and providing you with the necessary reports. All in all, this tool provides you with a workflow road map for the company's financial future.

Some of the most well-known Financial Management Software include names such as SAP BPC, FreshBooks, Oracle Financials Cloud, etc.


And It Is Important Because…

 
The simple answer here is a single system for all financial transactions. Every financial guru worth their salt will tell you that a Financial Management solution is a boon. The need for this tool depends on whether your business is running in current times or if you're thinking of a time capsule that will take you back into the 1900s. Finance is the heart of every organization; it pumps out money for every other department and we all know what would happen if our heart won't work at its optimum capacity.

A comprehensive financial system will streamline your core functional areas such as:
 
  • Maintaining financial ledgers with no need for additional software or hardware.

  • Forecasting your organization’s financial health with a well-oiled system that integrates banking, auditing, expense management and other functionalities.

  • Accurately managing inventory as capital and operational data related to assets help to record appreciation and depreciation.

  • Reporting and Analytics to convert raw data into actionable insights.


What Are The Benefits?


It reduces the stress! (Anything that reduces pressure is revered at TechDogs, we are cool that way.) While there are many benefits, we have picked out the ones that undoubtedly move the needle.

TechDogs-What Are The Benefits Of "Financial Management Solution?"-Best Picked Benefits Undoubtedly Move The Needle-"Increase Productivity-Real-Time And Accurate Reports-Seamless Integration-Compliance And Security-Enable Better Decisions-Plan For The Future"  
  • Increase Productivity: Streamlined operations and automated workflows mean that people are more invested in exercising their grey cells where it matters and not on mundane routine debit and credit logs.

  • Real-time And Accurate Reports: Single and truthful version. Real-time visibility into business activities, actionable dashboards and a centralized platform.

  • Seamless Integration: Financial management solutions offer seamless integration options that can harness other applications' power and create a dynamic system capturing every detail.

  • Compliance And Security: Financial records require the highest security levels and at the same time need to be compliant with a bevy of regulations. If not managed, this can be a terrible headache.

  • Enable Better Decisions: Organizations deal with a considerable amount of financial data and the key is to be able to leverage it effectively to make better decisions.

  • Automate Accounting Procedures: Shift routine and manual clerical work into an automated system to streamline accounting activities.

  • Scalability For Growth: Most Financial Management software allows companies to scale as their systems and processes increase.

  • Plan For The Future: Financial Management software gives a clear vision of the organization's financial health. This equips the stakeholders to plan and make the right decisions.

 

So, What A Is Must-Have For Financial Management Solution?

 

Money, haha! (finance folks should have fun too). On a serious note, there are a few elements of FMS that are a must-have and TechDogs being good folk, have listed them for you here:
 

  • Control Environment: Financial management systems must be compliant with internal control systems and provide a robust structure for financial reports and practices.
  • Risk Management: Your software should alert you for relevant risks or procedures that are not followed. This will help organizations mitigate risks and take appropriate measures.
  • Controls: Every organization has a battery of controls that help the personnel ensure that proper operating standards are maintained. Your financial management system will ensure that.
  • Information And Communications: Financial Management Software should be able to provide relevant, reliable and timely information to the stakeholders to help them make smart decisions.
  • Monitoring: Financial management systems should be able to monitor every financial activity to ensure compliance and security.
 

How Does The Future Look For Financial Management Solution?

 

Bright - as per industry experts and, no prizes for guessing, AI (Artificial Intelligence) is involved. Going into the future, Financial Management software will harness the power of AI to automatically reconcile bank statements, prepare ledger and cash flows, use raw data for forecasting and purchase planning and create invoices for approval. Many Fintech companies have already started investing heavily in these aspects.

They are focusing on even more seamless integrations, such as Email Service Providers ensuring that invoice tasks are completed within your email platform itself. When that happens, we can actually quote Rachel from F.R.I.E.N.D.S - "And that my friend is what they call closure!"

Frequently Asked Questions

What is a Financial Management Solution and how does it work?


A Financial Management Solution (FMS) is a software tool that organizations utilize to manage and administer their earnings, expenses, and resources, with the aim of increasing profits and ensuring business continuity. Whether deployed on-premises or in the cloud, FMS assists in organizing invoices and bills, reducing accounting errors, ensuring tax compliance, aiding in budget preparation, generating actionable reports, and providing real-time financial visibility to stakeholders. FMS operates by leveraging automation technology to record and manage transactions, create reports, and conduct analytics, typically in a centralized manner. This streamlines financial performance analysis and reporting, allowing for real-time monitoring and consolidation of financial data across multiple departments and currencies.
 

What are the different types of Financial Management Systems?


Financial Management Systems encompass three main types: financial accounting tools, managerial accounting tools, and corporate finance tools. Financial accounting tools are primarily focused on creating reports for stakeholders and government authorities, including revenue statements, balance sheets, and cash flow reports. Managerial accounting tools provide insights for internal use, aiding investors, stakeholders, and management in decision-making. Corporate finance tools, while residing outside traditional finance functions, assist in budgeting, forecasting, and analyzing company finances. Well-known examples of FMS include SAP BPC, FreshBooks, and Oracle Financials Cloud.
 

What are the benefits of implementing a Financial Management Solution?


Implementing a Financial Management Solution offers numerous benefits, including increased productivity, real-time and accurate reporting, seamless integration with other applications, compliance and security assurance, better decision-making capabilities, automation of accounting procedures, scalability for growth, and improved planning for the future. By streamlining operations, providing accurate insights, ensuring data security and compliance, and automating routine tasks, FMS enables organizations to optimize financial processes and enhance overall efficiency and effectiveness.

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