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An integrated financial management system takes many different business activities and places them in a single unit. The purpose is to give decision makers the opportunity to review relevant information in a timely manner. Common information that comes through the integrated financial management system is from budget, cash management, and fiscal planning activities. All types of companies and government agencies can and may use this system in business management; however, some alterations may be necessary between the two entities when using this system. Overall, the system should be able to strengthen the organization and provide it with better processes for completing tasks or other activities.
A budget is typically the financial road map a company uses to guide it through the economic environment. An integrated financial management system gathers financial information from multiple departments and individuals in order to have the best data possible. Using this data can create a better, more accurate budget for use in the organization and for managing individual business units. In short, owners, executives, and other top-level individuals are not always the best people to put together the budget. Using participative input from frontline managers and even workers can create budgets that fit all situations the company may go through.
Cash management is another important piece in the integrated financial management system; it usually comes after a company creates its budget. This activity typically involves management over the cash receipts and cash payments in a company’s business activities. Upper-level management may review the amount of expenditures and receipts in order to assess these levels as compared to the previously planned budget. This integrated system ensures that real-time management over the entire system will help improve the business rather than detract from it. Accountants or financial analysts may be necessary to aid in the collection and dissemination of information over the entire system.
Fiscal planning activities often use historical data taken from a company’s integrated financial management system. For example, planning for next year requires information on the expected costs and cash receipts for different activities. The budget and cash management portion of the integrated system can provide the data for fiscal planning in future business periods. A board of directors or outside stakeholders may have an interest in the fiscal planning of an organization. The integrated financial management system can provide information for these individuals to review a company’s activities.