Question

Write a paper of 2,000 words, explaining why it is necessary for all business organisations to have effective financial management systems and explaining how the information held in financial management systems contributes to ongoing business performance and business planning.

Answer 1

A  financial management systems is the technique and software program that an employer uses to supervise and govern its profits, expenses, and assets with the goals of maximising income and ensuring sustainability.

An effective  financial management systems:

Improves short- and long-term business overall performance by using streamlining invoicing and bill collection
Eliminates accounting errors
Minimises record-maintaining redundancy
Ensures compliance with tax and accounting regulations
Helps personnel to quantify budget planning
Offers flexibility and expandability to accommodate alternate and growth.

different  financial management systems :

There are 3 main types of economic management structures. These are:

Financial accounting
Managerial accounting
Corporate finance
Financial accounting is a part of monetary statistics structures that provide income statements, balance sheets, and announcement of coins flows to creditors, investors, and taxing authorities. These reports are month-to-month outputs that create the ability for choice makers to determine economic trends referring to the commercial enterprise.

Managerial accounting is a machine that provides statistics internally to individuals and businesses. These are normally not released to the general public and are best for internal use most effective. Decision makers can really request statistics they desire to peer and ask for a specific format, if important.

Corporate finance is part of monetary control structures that resides out of doors of the regular accounting statistics structures. These include budgeting, economic analysis, forecasting, and performance metrics, among others. The sports in this gadget take accounting records to create essential reviews. The main cause of company finance, is to offer a avenue map or plans for a company’s future activities.

Not all financial management systems encompass the equal sports. A small commercial enterprise will not have the same wishes as a much larger corporation in phrases of financial management. Creating a selected system tailor-made for the company’s wishes is what sets these systems aside from others.

With the information available from financial management systems the company can do the following:

1) Financial Management in Normal Operations
In its ordinary operations, a corporation provides a product or service, makes a sale to its customer, collects the money and starts the system over again. Financial management is shifting cash correctly thru this cycle. This approach that handling the turnover ratios of raw substances and finished items inventories, selling to clients and amassing the receivables on a well timed basis and beginning over by using purchasing extra raw substances.

In the meantime, the business should pay its bills, its suppliers and employees. All of this need to be performed with cash, and it takes astute economic control to make sure that these price range flow efficaciously.

Even even though economies have a long-term records of going up, occasionally they'll also experience sharp declines. Businesses need to plan to have enough liquidity to climate these financial downturns, otherwise they'll want to close their doors for lack of cash.

2) Reporting on Business Operations
Every business is responsible for providing reviews of its operations. Shareholders need regular facts about the go back and protection of their investments. State and nearby governments need reviews so that they can collect sales tax. Business managers want other styles of reports, with key performance indicators, which degree the activities of different parts in their businesses.

As well, a comprehensive economic management gadget is capable of produce the various kinds of reviews needed with the aid of all of these unique entities.

3) Filing and Paying Taxes
The authorities is always round to acquire taxes. Financial management have to plan to pay its taxes on a well timed basis.

Financial management is an crucial skill of every small enterprise owner or manager. Every choice that an owner makes has a monetary effect on the agency, and he has to make those decisions within the general context of the corporation's operations.