The financial and accounting system of a company or business is vital for health and performance. It is a basic business intelligence tool and the reason why accounting is considered the most important business study field.
Financial management is intimately tied to many aspects of business development and operation. The system you have in place for financial control and accounting can affect:
- transactions (incoming and outgoing)
- tracking and tracing of money
- sales forecasts
- sales figures
- operational process development.
Using the right financial system will ensure you know exactly where your money is every step of the way. If for example a customer or a client pays you $5,000, you need to make sure you know exactly where that sum is and what it’s going to be used for.
You will need to understand your out-goings and other expenses and how much more money you have coming in all the time. The $5,000 may be put towards buying new office equipment or paying your employees’ wages for the next few months depending on the size of your business, but it may also be saved for other bills.
Knowing where you money is will help you to know exactly how much you have and what you’re likely to use it for. The right system can help you to be aware of any up-coming bills and any stock you need to buy in order to keep your customers happy and the business running smoothly.
Even if you run a small business, you should be recording and measuring business activities. It can be as simple as placing transactions into a spreadsheet and doing some simple analysis. Online Microsoft Excel courses are available, so there is no excuse for not quantifying business transactions.
Sales Results and Forecasts
Sales results and forecasts are useful in planning and it would be hard to run any size business without being on top of the numbers. Sales results let you know how well certain products are doing. Sales forecasts let you know how things are likely to be in the near future.
These and other quantitative measures are used daily in business. The need for measurement in business makes finding and using the right system essential. Knowing your financial position at all times helps identify problems early and facilitates good decision making generally.