Financial Information System

The best financial planning and forecasting choices may be made with the help of a financial information system, which is a sort of business software used to input, accumulate, and analyze financial and accounting data. The combination of a decision support system with a financial information system (FIS) is a powerful tool for any company looking to keep its finances under control.

Accounting reports, cash flow statements, and financial statements are only some of the reports that this software generates, all of which are useful to a manager in making sound financial management decisions and so ensuring the smooth operation of the organization.

Meeting the firm's financial obligations when they come due utilizing the least amount of financial resources compatible with a predetermined safety margin is the primary goal of the financial information system.

A financial management information system is:

• An information system that trades financial events and summarizes information.
• Support adequate management reporting, policy decisions fiduciary responsibility, and prepared statements. of auditable financial
• Should be designed with good relationships between software, hardware, personnel, procedures, controls, and data.
• Generally, financial management information system refers to automating financial operations.

Elements

• General ledger
• Budgeting accounting
• Accounts payable
• Accounts receivable

Advantages of FIMS

• Integrated financial information. The flexibility of reporting and additional control over expertise.
• Less administration is required within the business.
• It provides financial information to All financial organizations. managers within an
• It is a process and procedure that is used by an organization's management to exercise financial control and accountability.
• It supports financial managers in decision concerning. 

Major categories of financial management

1. Cash management
   A company's cash flow is tracked in detail, either in real-time or on a quarterly basis, by use of a cash management system. Example: on a daily, weekly, or monthly basis.
    
2. Investment management
   In order to earn investment income until the funds are needed, many firms invest their surplus cash in short-term, low-risk, marketable securities in higher-return alternatives.
    
3. Capital budgeting
   Profitability and financial impact analysis are two key steps in the capital planning process. Predicted ongoing costs for infrastructure.
    
4. Financial forecasting and planning
   Financial forecasts concerning the economic situation, business operations, type of financing available, interest rates, and stock and bond prices to develop an optimal financial performance of a business.

Function of FM

• Estimation of capital requirement
• Determination of the capital structure
• Choice of the source of funds
• Supervision of cash receipts and payments.
• Financial controls
• Management of cash
• Disposal of funds
• Investment of funds