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Midsize business

How financial management software can help your small business

When you started your business, your financial management decisions were probably driven by one key question––Do we have enough money to keep operating and maintain a healthy cash flow?

As your small business becomes midsize and beyond, you’ll need more detailed insights into your business processes and financial performance. Simple cash flow monitoring will no longer cut it. To make informed decisions and increase forecasting accuracy, you’ll need access to financial data. This is where financial management software, automation tools, and enterprise resource planning (ERP) solutions come into play.

Financial management software and ERP solutions provide the functionality needed to monitor and manage your business’s financial performance. The right financial management solution can help you better understand how your business works and provide you with the performance management you need to continue scaling up.

What is financial management?

Simply put, financial management is the process of creating a realistic business plan and then making sure all departments stay on track. It’s essentially how companies obtain and use money to maintain a healthy cash flow to operate effectively and continue to grow.

Accurate financial management ensures your team has access to financial data to help them make long-term budgeting plans, address day-to-day business functions like accounts payable and accounts receivable, and make investment decisions. It also helps to provide insights on how to fund investments, profitability, liquidity, and cash runway.

A financial management solution provides the functionality needed for real-time visibility into the financial processes and financial health of your company.

Let’s take a look at the core objectives of an effective financial management solution:

  • Monitoring liquidity and cash flow to ensure there’s enough money to operate
  • Increasing profits by analyzing costs of raw materials and other asset management and supply chain factors that could increase pricing of goods.
  • Planning, organizing, and controlling funds, including funding procurement
  • Complying with state, federal, and industry-specific regulations
  • Improving financial performance to ensure shareholders are getting a return
  • Creating financial scenarios based on the business’s current state and forecasting that accounts for a wide range of outcomes based on potential market outcomes
  • Assisting in funds procurement from different sources (loans, raising capital)

Why is financial management important?

Financial management is essential for making informed business and market-specific predictions. Ultimately, it enhances risk management by guiding your financial team and helps your business make more evidence-based decisions.

Here are the key reasons why financial management is an important part of your wider business strategy:

  • Helps you strategize — figure out what financial processes you need to achieve your business goals
  • Assists with decision making with up-to-date financial reports
  • Helps departments stick to their budgets and come together to achieve overall company-wide goals
  • Tracks income and expenses for conducting better financial planning

Financial management should be a core part of any business looking to optimize their financial decision making.

Types of financial management solutions

Different software solutions can help the CFO (chief financial officer) with the planning, forecasting, and controlling of financial expenditure.

When you integrate software, your financial management system gives you real-time and accurate insight into the financial state of the business while enabling day-to-day business operations.

ERP 

An ERP system integrates various parts of the business into a single system, bringing together multiple divisions like sales, marketing, finance, and human resources into one system. ERP is about creating business-defined workflows to automate business processes and make sure policies are always followed.

ERP can be less effective if not implemented carefully, but can help you reduce business management costs in the long term.

Financial management

Although less comprehensive than an ERP, cloud financial management software is a less expensive and easier to implement solution. It’s helpful for streamlining the financial processes in your business.

With a financial management system, you can:

  • Organize your finances – Take care of bookkeeping, expense management, and other day-to-day financial processes and workflows.
  • Issue invoices and make payments – Create, send and monitor invoices on the go from smartphones and laptops to help maintain cash flow.
  • Track cash flow – View all your transactions and incoming cash in one place. Use forecasting tools to predict your future cash flow to help you better manage your finances.
  • Run payroll – Store all your employee payment details in one place and run quick and accurate payroll each month.

Features of financial management systems

When you’re choosing a financial management system, look out for a few key features that will help optimize financial performance and your day-to-day business operations run smoothly. Having these features will also make it easier to scale up your financial processes as your business grows.

  • Financial accounting –Tracking financial data on revenue and daily expenses.
  • Billing and invoicing – Create and send invoices, track existing invoices payment status.
  • Financial reporting – Generate financial reports for stakeholders and shareholders.
  • Human resources – Manage and automate payroll.
  • Inventory management – Track on-hand inventory and better supply chain and asset management.

Financial management system benefits

Cloud accounting software can help you streamline your business processes, but a financial management system provides the structure and tools for you to scale up your business operations. Whether you opt for an ERP or financial management system, you need a solution to help you improve decision making and optimize your business management and ultimately improve your company’s financial performance.

  • Simplifies financial management – Financial management system can integrate collecting financial data and financial services and systems controls into a centralized system that makes it a faster, simpler, and more accurate way to manage your company’s finances.
  • Better budget control – Every department can gain visibility and access to financial data to make adjustments, this helps to streamline financial processes that optimize budget control.
  • Enhances financial performance – Financial management systems increases the accuracy and efficiency of financial management by automating many crucial, but resource heavy, financial processes that boost financial performance.
  • Promote and sustain growth – Increases financial and operational data accuracy and accessibility and provides greater insights into the financial performance of your company to identify areas of growth, growth opportunities, and ways to sustain growth.
  • QuickBooks can help you make informed decisions and increase your forecasting accuracy. This will help you better understand how your business works and provide you with the performance management you need to continue growing your business. Try QuickBooks today.

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