Wednesday, 4 February 2015

What is Management Information System and its need in Finance Management

Management Information System (shortly known as MIS) is a process which involves an organised and systematic approach to the study of data required by an organisation's management for making strategic decisions in order to facilitate an efficient control of the organisation at all levels.

The aim of MIS is to discover and implement smart processes and procedures for providing accurate and timely reports in suitable and required formats, periodically, to the management for a better management and control of the business.

This process involves in collection and analysis of various data in the form of statements and surveys. These statements are known as managerial information statements (or MIS in short). They are prepared through the mutual coordination of finance, accounts and all other departments.

Normally, most of the MIS statements are derived from preset formats of the computer software programmes. But some reports may also be prepared manually in their fixed formats. These formats are designed by the management with the consultation of all departmental heads.

Some of the kind of information provided to management can include the following reports which can be provided on Daily, Weekly and Monthly basis:-

  • Production Report (product-wise)
  • Labour Report (plant-wise engagement & total strength & cost of labour)
  • Stock Report (item-wise)
  • Sales Report (product-wise)
  • Debtors Report
  • Creditors Report
  • Process wise Cost Report
  • Cash Flow
  • Fund Flow
  • Budget & Actual expenditure comparison Report
  • Break Even Point statement
There can be many more reports and statements as per requirements of the management to control the business efficiently.

MIS for Financial Management

Finance Management involves efficient handling and management of finances of the company through constant vigilance and regular analysis of the inflow and outflow of funds.

The main aim of Finance Manager should be to minimise cost and maximise profit for the company. This is done through collection and comparison of various data related to the production processes of the company including sales, stock and funds utilisation.

  • Data relating to current period is compared with previous years' figures and deviations in results are to be explained with proper reasons.
  • Each item of deviation in performance needs to be located in the process and it is to be reported to the management and also to the related departments.
  • In this process, product wise cost sheets may also require to be prepared and deviation charts are to be performed.
  • Budget planning is also a part of MIS. Budgets are prepared by comparing past achievements and fixing a reasonable target for the current year on those results.
  • Fund management is done through analysis of Cash Flow and Fund Flow statements and through efficient Inventory Control methods. 

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