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Budget Management vs Financial Management Systems: Everything You Need to Know

By Sebastian Fallenbuchl | updated December 01, 2020

Let’s face it, managing your money can be a headache. From tracking expenses to filing taxes, it can get overwhelming fast. Thankfully, technology has risen to the occasion with software solutions catered to your every need. However, with the wide range of systems available, choosing one for your business is no easy task.

The first step in choosing any platform is assessing your needs. What features are most important to you? How do you intend to use this platform to improve your business? Some good questions to begin with are:

  • How do I conduct most of my business?
  • What metrics am I most interested in?
  • How do I track spending?
  • What are my financial goals?

With your needs in mind, we can now distinguish between a budget management system and a financial management system. While they may seem like two names for the same thing, in reality they each perform specific tasks to keep your operations running smoothly.

A financial management system (sometimes referred to as an enterprise resource planner, or ERP) is a system that aims to streamline your record keeping, granting you a clear view of your business operations from a high level perspective. An effective financial manager will:

  • Collect bills and invoices
  • Minimize redundancies in your records
  • Ensure tax compliance
  • Maintain an up-to-date general ledger
  • Accommodate growth

A budget management system on the other hand, deals with allocation of funds and tracking spending. It will tell you exactly when and where each expense comes from, down to the exact amounts so you can make the most accurate forecasts and reports for all of your projects. Without a background in business, it might feel like sitting down and creating a budget is impossible, but it doesn’t need to be that way. An effective budget management system should:

  • Track and record all of your expenses in near real time
  • Extract data from various sources
  • Generate immediate at a glance” financial reports

Keeping an updated and accurate record of your project spending is critical to aligning to your financial goals. Having a good system in place will help you track multiple expenditure sources while accommodating growth as well as allowing for accurate forecasting.

Click here to learn more about Rain Technologies’ Budget Manager™ and see how this application could be the solution your business has been looking for.

At the end of the day, introducing software to your business management model will improve efficiency, reduce errors and empower you and your team to focus on other important aspects of your business.