Finance is the oxygen of any business, whether big or small. But, when it comes to managing a small business, a healthy cash flow and healthy expense management becomes highly significant. All the decisions in a small business are driven by only one question: Do we have enough money to meet the expenses and keep the business running? Thus, it becomes important to gain in-depth insights into the company’s financial situation, make the right decisions, and improve forecasting accuracy. The best financial planning software can help you do that seamlessly and flawlessly.
As per a recent report, in 2020, 21,655 business bankruptcy cases were filed in the United States. The key reason behind this is poor financial planning. Thus, it becomes essential to set the proper budget and control costs. Having clarity over the financial position of your business on a real-time basis can make this possible. Financial planning software can help you in planning your finances well and ensure seamless cash flow within the company. Though investing in financial planning software can be a considerable investment, it can save your small business from an economic breakdown in the long run.
So, let’s first have a basic overview of financial planning software and its features, and then will delve into its major role in the financial success of a business.
What is Financial Planning Software?
Financial planning software is an application that can automate financial calculations and provide figures that show the business’s financial position on a real-time basis. It can create financial plans with clear goals enabling the financial department of the business organizations to make informed decisions. The financial planning tool also allows representing the accounting information to the sponsors and stakeholders of the business in a highly comprehensive manner. It includes documentation storage and collaboration tools that help the entire financial team to work together efficiently. To know further, let’s have a look at some of the key features of financial planning software –
Financial Accounting – Maintains accounts and tracks revenue generated and expenses incurred.
Risk Management – Enables identifying and controlling financial threats to the business organization’s capital and revenue generation.
Investment Management – Handles acquisition and disposing the financial assets and portfolios in benefit of the business
Tax Management – Helps in filing returns on time, documentation, auditing, TDS deduction, etc.
Budgeting – Prepares budget plans that can help you in balancing company’s income and expenditures.
Significance of Deploying a Financial Planning Software
Financial planning software is significant for every business. Especially for small companies and startups where personal finances are used as startup capital, it is even more critical to use financial planning software that can guide the decision-making process daily and save the company from monetary losses. Here are the 5 significant reasons financial planning software is essential for your small business.
#1 Strategizing Business Goals
Small businesses usually put too much emphasis on daily financial issues rather than planning for the future. The financial planning software provides a clear picture of the expenditures and revenue generated daily, enabling the business owners to plan accurately for the future.
#2 Controlling Costs
For small businesses, it is essential to prioritize important expenditures and identify the less important ones to maintain the budget and conserve finances for the future. The financial planning software helps in monitoring and analyzing expenditures regularly. This would eliminate the chances of underestimating the amount required for business operations and running out of cash in the future.
#3 Distinguishing Between Personal and Business Finance
Small businesses should be able to distinguish between personal and business finances to avoid confusion and prioritize wisely. Having separate records for personal and business expenditures is necessary to plan your long-term and short-term financial goals. Financial planning software helps you do that effectively.
#4 Making Better Decisions
Financial planning software can tell you about which products and services turned out to be more lucrative at the end of a term. Based on those accurate financial reports, you can plan effective marketing channels and strategies and set the right sales targets. With so many decisions taken regularly, it becomes difficult to determine the right ones without a robust financial planning system in place.
#5 Measuring Progress
Small businesses already need to deal with several financial challenges. Not being able to analyze the progress of the business is one of them. Financial planning software helps in comparing the actual results with the forecasted one and provides clarity over the consistent financial growth of the business over the period of time. This can motivate the employees to work harder and achieve even the unachievable.
Wrapping it Up
Although businesses are slowly resuming after touching peak Covid era, overall, there are many still trying to overcome the challenges that emerged due to this pandemic.The new normal has taught us the importance of remote working capabilities and collaboration. It has also reminded the business organizations that only the latest technology and tools can help businesses sustain through uncertainties. Cost budgeting and financial planning are key business functions that depend on clean, clear, comprehensive, and accurate data available at the fingertips. Thus, the need for actionable financial planning tools has become critical for every business. If you have not invested in the financial planning system for small business, the time is now to get equipped with one now and confidently compete with larger organizations with better resources and budgets.