Microsoft Dynamics 365 Business Central Capability - Financial Management - Part 1

Blog Series I: Financial Management (Part A)

I. What is Financial Management?

Financial management may be defined as the area or function in a Small/Medium Business (SMB) which is concerned with profitability, expenses, cash, banks, and credit. Financial management is generally concerned with short-term working capital management, focusing on current assets and current liabilities, and managing fluctuations in foreign currency and product cycles.  The function also entails the efficient and effective day-to-day management of funds, and thus overlaps treasury management.  It is also involved with long-term strategic financial management, focused on capital structure management, including capital raising, capital budgeting, and dividend policy.


   Specific tasks that comes through Financial Management:

  • The main objective of Financial Management is profit maximization which happens when marginal cost is equal/close to marginal revenue.
  • Maintaining proper cash flow is a short-run objective of financial management. It is necessary for operations to pay the day-to-day expenses e.g., raw material, utility bills, wages, rent, etc. Good cash flow ensures the survival of SMB.
  • Minimization of capital cost in financial management can help operations gain more profitability.
  • Estimating the Requirement of Funds: Businesses make forecasts on funds needed in both the short-run and long-run; hence, they can improve the efficiency of funding. The estimation is based on the budget e.g. sales budget and production budget.
  • Determining the Capital Structure: Capital structure is how a firm finances its overall operations and growth by using different sources of funds. Once the requirement of funds is estimated, the financial manager should decide the mix of debt and equity and types of debt.

II.  Financial Management through Microsoft Dynamics 365 Business Central

Microsoft Dynamics 365 Business Central is designed to help SMB to take control of their operations. Offering a familiar interface, easy-to-understand pricing, and a wide range of customizations that can handle your unique business needs, this platform delivers a modern solution for growing businesses. At the core of a business management software functionality, financial management gives users the power to make informed decisions, improve their closing and reporting capabilities, increase forecast accuracy, and much more. Following are some advantages of Financial Management in Microsoft Dynamics 365 Business Central.

  • See the Big Picture: Financial Management in Microsoft Dynamics 365 Business Central delivers the right information to the right people at the right time. Whether it is by providing a glance of information from the home screen, automatically connecting data with other modules and applications, or giving you new ways to slice and dice data using business intelligence, Financial Management lets you see the whole picture.

Make Smarter Decisions: Business is king and liquid gold. Break down silos and centralize data from finance, sales, service, and operations to get an accurate, end-to-end view of your business. It shall help further by using real-time updates that help you spot trends or problem areas before they become major issues.

  • Work Faster: Streamline accounts receivables and payables, and automatically reconcile accounts to close and report on financials quickly and accurately, while maintaining compliance. Boost efficiency with automated tasks and workflows — all from within familiar Office tools like Outlook, Word, and Excel. With a unified solution, get an end-to-end view of your business, with built-in intelligence when and where you need it.
  • Improve forecast accuracy: Refine financial forecasts by modeling and analyzing data across multiple dimensions. Customize reports using seamless Microsoft Excel integration.

Extend Your Financials: With a wide range of third-party integrations built into the Business Central Financial Management module and many more available from an extensive network of ISVs, you can operate your business on your terms.