The world we live in is today is extremely fast-paced. This is even more so due to the thirst for success and the need to provide solutions to problems. As such, seeing businesses getting set-up so often is not an uncommon sight.

Almost every day of the week, as an entrepreneur or a business owner, you are working round the clock. You are sweating to ensure that you can make a mark in the areas that you want to. This, however, is simply because that career path is incredibly tasking both mentally and physically. At first, things are relatively easy as and you can handle almost everything by yourself. You only need Microsoft Word to type out documents. Asides that, there is PowerPoint to make that business pitch and Microsoft Excel to keep your records straight.

However, things would ultimately start getting a bit more challenging to handle when growth sets in. The best way to deal with this difficulty is by using financial management tools

What are financial management tools?

A financial management tool is a software or system that helps you to keep track of anything that involves revenue in a business/organization. These records can include anything from taxes to staff remuneration, and even advertising costs, etc.

Why do you need financial management tools for your small business?

As stated earlier, in the starting phase of a business, proprietors can easily manage most segments of the business. If things are going your way, you would even start making a couple hundred/thousand dollars in your first few weeks. However, like everything else, your business would begin to grow. You would need to keep a record of the things that come into and out of your account. You would need to file your taxes and maintain a proper record of your expenditure.

All of these are relatively easy if your sole job is to keep track of the expenses and data. However, being the owner of the business, your attention is divided among several other things. Having said that, here are a couple of ways that financial management tools can help your small business:

1. Extended Business Lifespan

In the early stages of your business, you would be dealing with employees, suppliers, intermediaries, distributors, etc. All of these individuals or groups need paying, and these are only of the few factors that would take revenue out of business’s pockets. If you fail to keep a proper record of those expenditures, you will lose money. Failure to keep track of the spending for a prolonged period would lead to you losing a lot of money. When you lose too much money in the early phases, it is easy to get bankrupt and have to kill the business before it even sees the light of day.

Financial management tools, according to financial planning software Australia, would help you to keep proper track of these records. Consequently, you would save more money. When you can save money, you would have the extra cash needed to keep the business running and still ensure that there is a profit. It is a bit of a butterfly effect as one thing leads to another.

2. Easy Report Provision

In more than one area of business, you would need to provide reports. Shareholders want regular information on how the company is doing. They also want to know how safe their shares are. Tax collectors need reports so that they can collect sales tax. Even the business itself needs key performance reports. It is merely one of the many things that aid a business’s growth directly or otherwise.

Using financial management tools would help you to keep a proper record of all variables needed to make these reports. Also, if used appropriately, you would not need to worry about inaccuracy. That way, you would not be overcharged by the taxes and whatnot.

3. Increased Efficiency with Automation

The interesting thing about software, and basically anything that involves technology is that they do not always need you to carry out their “duties.” It could be your invoices or the money that you are paying your employees or even the amount you are spending on electricity for the office. Whatever it is, the right financial management tools can help you record these data automatically. It would require minimum effort from you. That is an excellent thing as you would be able to focus on other aspects of the business.

4. Aids Business Growth Planning

In business, it is incredibly unwise to make decisions that involve expanding, among other things, without being adequately informed. The information that we are referring to here is accurate data recorded and compiled over some time. We have established that financial management software helps to record and calculate your expenses efficiently in your business. These precise records can then be collated and used to plan the methods that would scale up the business for more profit.

In conclusion

These days, it is rather challenging to manage every area of your business by yourself. Sadly, however, this is what many people do due to a lack of exposure to better methods. What we have tried to do in this article is to try and show you the benefits that your business can reap from using financial management tools. Now that you understand, we hope that you would begin looking into which and which are best for your business.

By Chakraborty

Dr Chakrabarty is the Chief Innovation Officer of IntuiComp TeraScience. Earlier she was Assistant Professor of Delhi University, a QS ranked university in India. Before that she has held research positions in IIT Mumbai, IIT Chennai and IISc Bangalore. She holds 2 patents and over 20 research publications in her name which are highly cited. Her area of research is in smart technologies, integrated devices and communications. She also has a penchant for blogging and is an editor of Business Fundas.