Organisations are facing significant challenges in the wake of COVID-19. Many are struggling to deal with the impact. They are trying to address cash-flow issues, fulfil contracts and deal with virus-related shutdowns while trying to survive. Being able to quickly review their financial position will help them stay in business. Advanced management information (MI) tools will give enterprises real insight into their financial situation. It will help them make informed decisions to deal with the current crisis.
What is management information?
Management information (also known as management insight) is the data used by organisations to make business decisions. The data can help businesses to analyse trends, make future forecasts and resolve issues it highlights. Financial MI includes:
- Management accounts
- Key performance indicators
How can businesses derive the best value from their MI?
Organisations can only make informed decisions if they have a system in place to store, organise and analyse their data. It may be a manual system where data management is done by people or automated by software.
Manual vs an automated MI system
A smaller business may think a manual system can cover their MI needs. They are cost-effective compared to an automated system, as there are no upfront costs. They are also flexible, and changing business requirements can be added quickly to the system.
However, they are likely to be time-consuming as data will need manual verification, and it will take time to retrieve data from different sources. They are also more likely to be error-prone and can’t guarantee data consistency.
Automated advanced MI tools address the issues of manual systems. They enable faster data processing and information retrieval. Data is more accurate because of the advanced validation and verification checks the software can carry out.
There is less data duplication as once someone uploads it; it is automatically available to all system users. Users can access the data from anywhere if the data is stored in the cloud. That way, they’re not tied to working in the office.
Automated tools allow employees to easily access the information needed for the day-to-day running of the business. Systems also act as a central repository for all business transactions and provide an audit trail for compliance purposes.
What are the benefits of using advanced MI tools?
Organisations that don’t have a robust MI system are guessing about business performance. They have no real way of identifying underperforming areas and are unlikely to have tangible goals and objectives to give their employees direction. A management information system can provide these benefits:
- Improves the quality of decision-making: with better-quality information, managers can make better decisions based on reliable data.
- Improves employee productivity: manual processes are reduced, and employees can focus on more complex tasks.
- Greater overall transparency: MI systems give an overview of the entire operation rather than part of it. They make it easier to see what is working and what isn’t.
- Better performance insight: Managers can get feedback about the performance of their areas in real time.
- Increases customer insight: Mi will provide insights into customer behaviour which helps organisations improve their services and market to customers more effectively.
- Driving workflow and process improvements: allowing organisations to align their processes to customer requirements.
- Empowers managers: the accuracy of the information MI tools provide can enable organisations to place decision-making with people managing departments, rather than at senior management level.
- Boosts internal communication: when all managers are sharing the same information, it’s easier to discuss issues and find solutions they all agree on.
- Provides a platform for innovation: the management team can manipulate the data to explore alternative scenarios and review projected results before making decisions.
- Reinforces competitive advantage: using MI to mitigate weaknesses will make a company more efficient and increases its competitive advantage.
What advanced MI tools are available?
Businesses can choose from several different MI tools to enable decision making and improve business performance.
Accounting software, for example, Xero, records financial transactions and gives insights into overall financial performance.
Cash-flow software like Furtrli helps businesses to manage their daily cash and forecast their cash flow.
Data analytics software like Klipfolio helps organisations understand and track KPIs, metrics and other essential information.
In normal circumstances, advanced management information tools produce valuable reports and insights so organisations can make informed decisions and stay competitive. However, the information they provide needs to be shared with the relevant managers and team members.
When they have overall visibility over their department and its performance against agreed goals and objectives, issues can be identified and resolved quickly. Underperformance can be addressed and efficiency maximised.
In the current environment, MI tools offer businesses uniform financial data which will help them to reallocate resources to where they are needed and prioritise spending. They can also provide financial information for Government grant applications and loan schemes.
If you need business advice to get through this difficult time, take a look at our COVID-19 business support hub. It provides useful information and tools to help you manage your business. Alternatively, you can contact us directly, and we’ll do our best to help.