financial management system

financial management system

Optimizing Financial Management Systems: Strategies for Efficiency and Growth

1. Introduction to Financial Management Systems

Impact is important. Efficiently implemented, a financial management system that supports business goals can help increase effectiveness and fuel growth. A system that compiles necessary reporting consistently, efficiently, and accurately can enhance a company’s bottom line. With the acceleration of qualification reporting and the increasing need for financial accountability, powerful technology tools are necessary to meet many of today’s key business demands. Finally, finding simple, easily understood management information and financial reporting is crucial for both internal and external users.

Automated financial management systems can help businesses improve operations, increase transparency, and relieve the burden of daily repetitive tasks on their staff. The key is not only to implement top-notch accounting and finance software, but to know which system is best for a particular company. The right accounting system can improve both a company’s financial management and overall performance, as well as its record-keeping. A well-organized and efficient accounting system cuts red tape, paperwork, and wasted time, while improving user interfaces and maximizing revenue capture.

2. Key Components of an Effective Financial Management System

A fiscal year-end planning schedule coordinates financial management activities for the end of each year. By developing a set of logical, realistic financial management standards, the end-of-year process can be facilitated and the potential for mistake minimized. Moreover, the fiscal activities of each budget unit, as part of the whole district financial system, are interdependent. Delays in any part of the system usually have a domino effect and lead to other problems. Each budget unit, manager, or employee of the district is responsible for the preparation of the various functions of the financial system and must be aware that delays anywhere in the system could have potentially severe implications. To be successful, all areas of the system must retain a well-structured plan of fiscal coordination. This will ensure that the financial system acts as a leader for effective organizational change within the educational setting.

An effective financial management system streamlines fiscal activities, including documentation, record-keeping, and reporting. These activities frequently can be integrated to reduce the duplication of effort and to ensure compatibility among activities. An effective financial management system also relies on components and procedures that accommodate critical performance measures, year-end work, and day-to-day work activities. To be effective and efficient, the fiscal activities must be continually watched and those involved should be aware of the implications of their actions on other activities and other budget units within the system.

3. Best Practices for Implementing and Maintaining Financial Management Systems

Focus on the CEO’s needs. Many improvements become possible when the CEO’s information needs become paramount in designing, revising, or re-implementing financial systems. A diagram that illustrates the categories of information the CEO needs to know to succeed is provided. A fundamental organizational tenet for the financial department is full support of the CEO by reminding each department manager that the CEO must know what he or she needs to make optimum decisions; make sure the decision is based on dissimilar, objective, accurate, verifiable information; let the CEO know potential risks due to demand for reliable performance; and provide proactive solutions in a reliable time frame.

An optimized financial management system should be designed both to support the present and enable envisioned future plans. The complexity of implementing a broad strategy, particularly during current hard times, has generated a demand for methods that produce focused, quick performance improvement. To deliver better information with current resources, we developed best practices derived from the larger strategy and crafted a model for executing an efficient financial management organization that is independent of the size of the total organization, whether large or small, domestic or international.

4. Case Studies and Success Stories in Financial Management System Optimization

The capital budget concept is particularly useful for budgeting health care facilities and information utilities and programs since their operating revenues and appropriations have been overdeferred such that a decline in capital assets must result. A capital budget will mobilize the special teams needed to address both market and regulatory compliance issues while the major risks are yet manageable. The stand-alone operating stores accounting concept is useful in those service areas classified as enterprise operations in major governmental accounting systems. The separate accounting enterprise organizes and tracks expenses by project enabling assessment of project consumption patterns. Information about outside revenues received provide better pricing information and create incentives to design project operations that are both convenient and profitable to customers. A student should note that cash payments to the operation in charge are not.

This part includes case studies from a nonprobability sample to illustrate strategies for maximizing the use of financial management systems. These case studies provide insight by allowing the illustration of specific decision points and explaining how others have managed them. The case studies include a small for-profit business (Aristo), a public health care project located within a governmental entity and utilizing both fund accounting and program budgeting subsystems in its financial management system (PTP), a public medical school located within a governmental entity and utilizing a separate fund accounting financial management system (NJCMS), and a small producer services unit of a university (NJERI). Each reflects modifications and practice that are common to many private and public entities in nonhealth as well as health services. Each case could serve as a prototype for a number of organizations.