Here’s How To Make Financial Decisions With The Help Of An Accounting Software

How to build a stable financial plan for your unstable income

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Businesses have started adopting technology for every task to compete in the fast-paced market. Accounting sector is also accelerating with the adoption of the UK accounting software technology by many small and big businesses. With accounting software in UK, businesses get all the accounting tasks automated along with other business features which help in overall finance management.

best UK accounting software

But since the UK accounting software takes up all the redundant calculation part, this doesn’t mean the work of accountants is replaced. The technology can only deliver processed data in the form of charts and numbers, it’s the accountants and finance experts who study the results and make financial decisions.

Technically, financial decision making is a process of making strategic decisions and weighing their pros and cons respectively in terms of capital, revenue, and risk. For example, how to manage funds to repay borrowed money, loans,and other sources according to the deadline and interest rate respectively.

With the best UK accounting software, you can make financial decisions quickly and effectively. Let’s understand how technology helps in the financial decision making process through 3 major types of financial decisions.

1. Investment Decisions

This involves calculating the investment methods and amount of funds available into different assets of the company. These investments can be short term or long term investments.

With long term investments, also called capital budgeting investment, you invest huge amounts of money which reap huge monetary benefits in the long run. Whereas, short term investments are infused to sustain working capital funds for day-to-day operations on factors like inventory, cash levels, and receivables.

The UK accounting software allows you to make such decisions in the following ways:

With automated profit and loss statements, you can analyze the working capital utilization. Also, it helps in understanding inventory which is useful for stocking decision making.
Financial reporting feature of UK accounting software gives personalized reports with easy viewing options of sales tax reports, expenses reports, turnover ratio of every day or week or month, which helps in making decisions like tax planning, investment in shares and stocks, etc.
Also, clients with a good track record of payments and considerable transactions can be focused with more customized services in the next cycle. This will improve the customer experience and increase the revenue with more customers getting attracted to the service.

The accurate metrics calculated with real-time data by the UK accounting software like rate of return, cash flows of projects, etc. helps businesses make quick investment decisions.

2. Financing Decisions

The financing decision is taken to calculate the amount of money to be raised from various sources like, equity shares, debentures, preference shares, bank loans, venture capitalists, etc., to manage the capital funds of the company.

There are different factors which help you make financing decisions which include, cost of raising funds, financing risks, cash flow position, state of capital markets, etc. The UK accounting software eases this process in the following ways:

Real-time updated balance sheets reveal the current state of transactions, which shows the availability of funds to finance funding sources.
Integrating UK accounting software with the data analytics feature helps understand the financial health of different key performance indicators (KPIs) which gives different perspectives for decision making.
With UK accounting software, you can also monitor your stocks and forecast the future performance on the basis of past performances.
Also, UK accounting software calculates data which helps in accessing financial risks which may affect the company if not managed properly.

3. Dividend Decisions

This decision manages the profit earned by the company to decide how much of it to be distributed among the shareholders (dividend) and how much to be retained for the future contingencies.

Now the dividend decision also depends upon various factors like dividends stability, earnings, growth prospects, shareholders preferences, and taxation policy. It requires financial expertise of accountants and managers but the process gets easy with UK accounting software.

Updated tax compliant invoices and billings keep the shareholders updated through their mobile phones. The mobile app allows different users to access data at any time which helps in better decision making. This way shareholders are prepared with complete understanding of the accounts information and can make quick decisions without wasting time.
Also, the UK accounting software automatically calculates dividend from the profits and can be customized further to support the dividend decision making process.
The finance forecasting feature of UK accounting software helps the business owners to support their dividend distribution decision with facts and figures.

This way UK accounting software makes the financial decision making process easier and prudent at every level of the organization.

Conclusion

Accounting software technology has transformed the way businesses manage their accounts. It has made the financial decision making easier for the business owners and shareholders of the business with prudence. At every financial decision making step whether it’s related to investment, financing sources, or dividend, the accounting software delivers smartly with all the required information in a simplified and innovative way.