Uses of Management Information System in

Finance

SUBMITTED BY,
RATHAN SINGH
3RD SEM, BBA
MICA
SUBMITTED TO,
M/S
MICA
 Management Information System
A management information system (MIS) is an information system[1] used for decision-making, and for the
coordination, control, analysis, and visualization of information in an organization; especially in a company.

The study of management information systems examines people and technology in an organizational context. [2]
In a corporate setting, the ultimate goal of the use of a management information system is to increase the value
and profits of the business.

Uses of Management Information System in Finance

Management Information Systems (MIS) in Finance have been widely adopted both by
corporations as well as governments. They are information systems with capacity to maintain
large data bases enabling organizations to store, organize and access financial information easily.
These systems are primarily used for accounting operations and generation of financial reports..
Increasingly they are also used to support budgetary, planning and decision making
processes.These systems are credited with increasing financial transparency, efficiency and
accountability. .

General uses of MIS in Finance

 MONTHLY ACCOUNTS OF TRANASCTIONS

 CASH FLOW

 SOURCES & USES OF FUNDS

 LEDGER & JOURNAL

 MONTHLY RETURN AND STATEMENT PROCESSING

 TRIAL BALANCE & BALANNCE SHEET

 PAY ROLE ACCOUNTING

General Ledger
The main use of a management information System (MIS) in finance is that it automatically
updates all the transactions in the General Ledger. The General Ledger is the core component of
all financial information systems. Financial transactions are simultaneously posted on the
various accounts that comprise the organization's "Chart of Accounts". Simultaneous updating
of accounts such as sales, inventory and accounts receivable, reduces errors. It also provides an
accurate and permanent record of all historical transactions.
Cash Management
Cash flow management is an important use of MIS in Finance. Cash Management refers to the
control, monitoring and forecasting of cash for financing needs. Use of MIS in Finance helps
companies track the flow of cash through accounts receivable and accounts payable accurately.
Accurate records also help in monitoring cost of goods sold. This can help pin point areas that
eat up cash flow such as inventory costs, high raw material costs or unreliable sales.

Budget Planning
Financial budget planning uses proforma or projected financial statements that serve as as
formal documents of management's expectations regarding sales, expenses and other financial
transactions. Thus financial budgets are tools used both for planning as well as control. MIS in
finance helps organizations evaluate "what if" scenarios. By modifying the financial ratios,
management can foresee the effects of various scenarios on the financial statements. MIS thus
serves as a decision making tool, helping in choosing appropriate financial goals.

Financial Reporting
The use of MIS systems in Finance enables companies to generate multiple financial reports
accurately and consistently. Generation of financial statements both for internal reports as well
as for shareholder information takes less effort because of the automatic updating of the
General Ledger. Compliance with Government regulations as well as auditing requirements is
also easier because the records are accurate and provide a permanent historical map of
transactions that can be verified.

Financial Modeling
A financial model is a system that incorporates mathematics, logic and data in the form of a
large database. The model is used to manipulate the financial variables that affect earnings thus
enabling planners to view the implications of their planning decisions. MIS in Finance enables
organizations to store a large amount of data. This helps managers develop accurate models of
the external environment and thus incorporate realistic "what if" scenarios into their long-range
planning goals.
 References
 Small Business Notes: Financial Management
 United States Agency of International Development: Integrated Financial Management
Information Systems
 The World Bank: Implementing Financial System
 International Monetary Fund: Introducing Financial Management Information Systems