An integrated financial management system is an accounting system that facilitates managing finances and conducts financial analysis to determine the financial health of a business or individual. Integrated financial management is an electronic system that documents financial transactions and provides custom reports related to financial health or activities. Unlike other financial management tools, an integrated financial management system can be customized for personal finance management or business finance management.
Usually, integrated financial management is utilized by businesses to help financial personnel make budget decisions. Publicly traded companies also use the data collected to prepare financial statements for shareholders. Government entities employ integrated financial management in a similar manner, which makes it easier for agencies to communicate budget and spending needs with each other. Families can also use this tool for monitoring bills and saving money.
The integrated aspect of this system of financial management derives from its single database where financial information can be archived. All financial data entered is classified under similar standards, consequently eliminating discrepancies in how expenses are categorized. There is also a standard protocol for data entry and transaction processing times, which increases efficiency. The system is also capable of detecting duplicate entries that can affect spending. This makes organizing and accessing accurate data much easier.
There are many other features and benefits related to integrated financial management. Budgets from previous years can be stored on the database. Users can access timely information regarding the inflows and outflows of cash. The system can also generate a listing of the business or individual assets and liabilities. This versatility allows an integrated financial management system to perform general accounting, payroll, resource control, expense management, and auditing.
Companies can also use integrated financial management to monitor cash flow. They can refer to the financial data to ensure that there is enough cash allocated in the budget prior to purchasing an item. The system can also process invoices and submit payments when due. Conversely, it can generate bills and receipts. An integrated financial management system also reviews cash flows and checks to ensure that the information contained in bank account is congruent with the records kept in the system.
Government entities operate more efficiently when there is a single source that all personnel can access. This means departments can find the information they need quickly and generate a wide array of reports like balance sheets, costs reports, and cash flow projections. These reports help department leaders plan new budgets, monitor the use of expense accounts to prevent abuse, and manage cash flow.