As an individual or business owner (whether small or large business), planning how well you use your resources is a vital success strategy in life. Which of course centers largely around managing your finances.
Financial or money management is a conscious discipline of the self in handling money issues. It involves a good deal of regular record keeping and monitoring your finances. It may be done on paper but better still, there are desktop software and cloud-based tools that can simplify and hasten the process of managing your finances. That way, they easily help in the efficient, safe and hassle-free running of your business.
Managing one’s finances should never be ignored nor handled childishly by anyone who wants to be successful in personal life or business.
So – What is a Financial (Management) tool?
The Cflow website defines financial management tools as tools that “help in tracking and managing financial transactions, making informed investment decisions, and creating budgets and saving plans.” Cflow is a versatile cloud-based workflow automation tool that can be used for financial management.
Also Read- How to Create a Successful Business Plan
Why do we need Tools to Manage our Finances?
Furthermore, the Cflow site states three reasons why financial management tools are critically needed:
“Financial tools for business help (1) to maintain the financial health of the organization by planning, organizing, controlling, and monitoring financial transactions. (2) For profit maximization and cost savings, a steady cash flow needs to be maintained. By using the right tools in financial management, businesses can keep a tab on the inflow and outflow of cash and budget future expenses.
“Not just for managing business finances, there are several money management tools available for managing personal expenses. No matter the size and type of the organization, or the purpose, using financial management tools (3) is key to smooth business operations. From analysis to expense tracking, finance tools can be used in several ways.”
Below in this article, we have extracted the commonly used and indispensable tools for managing business/corporate finances. A good combination of the most vital tools – particularly from the top 10, is highly recommended for any business owner. At the personal level, we present four essential tools for financial management you cannot afford to ignore. Please choose the softwares that fit into your budget while meeting your needs. See the recommendations below.
Business-level Financial Management Tools
- Payroll management
- Accounting systems
- Expense tracking
- Budgeting tools
- Bill payment service (Easy Billing)
- Inventory tracking/management
- Tax preparation
- Interest calculators
- Cash flow analysis
- Financial dashboard
- Credit monitoring services
- Investment portfolio management
Personal Financial Management tools
- Expense management
- Smart saving
- Retirement planning
Here’s a brief clarification on what each tool is actually used for. And backed with useful software examples in that category.
Payroll management software is used to keep the records of all employees as well as calculate employee salaries, allowances, tax and deductions (based on each worker’s work contract and attendance records). It would normally generate payslips as evidence, usually on a monthly or quarterly basis. Some of the best payroll tools available as we speak include CuteHR, Gusto, Paycom, Patriot software, Sage 50Cloud, QuickBooks and BambooHR.
Accounting tools are used to record, organise and generate reports of all your daily transactions. Good accounting software can perform a range of tasks that include tax calculation, project management, invoicing, accounts reconciliation, forecasting, storing documents and receipts in digital form, preparing reports and financial statements, tracking expenses and income, and much more. Some of the best accounting software of the modern world include Sage Business Cloud, QuickBooks, Xero, FreshBooks, NetSuite ERP, Zoho, AvidXchange and DocuPhase.
Expense tracking software helps you to record, categorize and monitor all your expenditures across all accounts. Those accounts would include your investment accounts, bank accounts, even your debit and credit cards. Some of them have integrated budgeting and receipt keeping functionality amongst others. Good examples of modern expense trackers include Expensify, Mint, SAP Concur, Personal Capital, Wally, YNAB, QuickBooks Self-Employed, Marcus Insights, and Mvelopes.
A budgeting software is used for financial planning – to create, manage and alter budgets. The budget itself is a plan of how to spend money judiciously to minimize waste or loss. The standard and common tool for budgeting is the spreadsheet – for which MS Excel and Google sheets are widely known. However, more rugged budgeting tools available include Mint, PlanGuru, AccountEdge, BOARD, Budget Maestro, Adaptive Insights, NetSuite, Sage Anywhere, QuickBooks Enterprise, Multiview and Xledger.
Bill Payment Service (Easy Billing)
Bill payment tools/services help you to execute recurring or one-time electronic payment of bills automatically from your bank account. Banks and websites (e.g. e-commerce sites) involved in payment processing often provide this facility for little or no extra cost. It is particularly useful for paying loans in installments, or regular utility bills. Notable bill payment tools of the modern world include Quicken, Paytrust, Prism, Mint, PocketGuard, and MyCheckFree.
Inventory Tracking /Management
Inventory management software monitors the stock or inventory levels in real-time. That is, as items are moved in and out of the inventory and as sales take place, the inventory tracker records every single movement. It often makes use of barcode scanners, mobile point-of-sale (POS), POS terminals, electronic dashboards, and/or RFID (radio frequency identification) tags to record items during each sale or movement. It also helps in detecting any attempt to steal items. Top modern inventory tracking software include Acumatica, Lightspeed, QuickBooks Online, Cin7, SOS Inventory, SAP, Zoho Inventory and Syspro.
Tax preparation software are used to prepare and present tax information, ready to be paid (by individuals or organizations). The best tax preparation software currently available include TurboTax, Gusto, eFile.com, Intuit ProSeries Professional, TaxSlayer Pro, Drake Tax, H&R Block, ATX Tax, and Jackson Hewitt.
Interest calculators are used to calculate the interest rate (in real money) on a loan or savings balance. In the case of loans, it will calculate the compound interest, the amount, and then deduct installmental payments for each month across the entire term of the loan (till it is fully paid). Hence you will often find compound interest calculators embedded in loan apps and websites, banks and investment platforms.
Cash Flow Analysis
Cash flow analysis tools are used to examine how cash flows in and out of a business, to establish the working capital of that company. The working capital is the amount of money available for carrying out any transactions or business operations. The simple formula is to deduct all current liabilities from all current assets (that is beyond the scope of this article). Modern cash flow analysis tools include Xero, QuickBooks, Cube, Anchor, Causal, Fathom, Vena Solutions, Planful and Phocas.
This is a financial intelligence tool used to visualize, track, understand and report on financial data. It allows indepth analysis of financial data to synthesize new information that can increase profits and reduce operating costs. Some good examples of modern financial dashboards include CFO Dashboard, CAGR Dashboard, Break-even Analysis dashboard, Cash Flow Valuation dashboard, Forecast Vs Expense dashboard, Profit Simulation dashboard, Margin Analysis dashboard, and Expense Detail Analysis dashboard.
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