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Business Finance Software
Business finance software is fast gaining popularity, especially in computerized financial planning systems. At the heart of a computerized financial planning system is a model that specifies the relationships relevant to the firm. A computerized financial planning system helps in preparing proforma financial statements, estimating the requirement of external funds, and calculating a variety of ratios. Such a system naturally offers a number of advantages. Once the model has been developed, the tedium of manual computations is eliminated with the help of business finance software. The circularity problem is easily tackled as the computer can quickly perform the required iterations. Finally, business finance software can be employed very conveniently to perform sensitivity analysis.Thanks to the above advantages, the computerized financial planning system strengthens the firm’s planning ability. However, there is a potential disadvantage associated with it that may be overlooked. The ease that computations can be performed with the help of business finance software and forecasts generated may result in misdirected efforts. A large quantity of low-quality predictions may be churned out creating confusion and on the part of management. Quality may be sacrificed to quantity. To guard against this danger, greater thought should be given to the scenarios evaluated and the quality of analysis when using business finance software.With electronic data processing, it is possible to handle large amounts of data and to make information available to a large number of people. Thus, one can obtain, analyze and organize timely data quite inexpensively by using business finance software. But it must never be forgotten that data is not necessarily information. Information must inform someone. With the help of business finance software, you can use computer graphics. It can inform visually, displaying important company information. Managers can now quickly display a colored map showing their competitive picture instead of computer printouts for information.
Should Project Accounting Software Treat Tendering Cost As Project Expense Or Company Overhead?
As construction companies grow, the issue of bidding for new jobs becomes more important. For instance once they employ dedicated estimators they need to determine how do they account for the estimators salary in their Project Accounting Software.Tendering as a Project ExpenseSome companies prefer to have their estimators allocate their hours on their time-sheets to the individual (potential) projects they are working on. If the company is not the successful tenderer then these would become loss projects and the costs written off.Tendering as an OverheadOther companies will argue that the cost of estimating for a prospective new client is an overhead because the company needs to retain the estimating staff even if you have no projects currently underway. If the Project Accounting Software in use does not have an integrated payroll which facilitates posting hours across multiple projects then often companies will go for the overhead option just because it simplifies the process of data entry.Other Views on the Cost of Tendering?Some companies adopt an approach based on the amount involved. So they may say that is the cost is less than a defined figure, say $5,000 then it should be treated as overhead. But as soon as an estimate costs more than this threshold amount then it should be treated as a specific project expense.This makes it easier for management to assess the worth of continuing with certain bids as they can set a budget limit of say $10,000 or $20,000 on going for a job. The budget may need to be set higher, for example in the Club and Retirement Village construction market a submission end up costing over $50,000 when you take account of draftsmen’s time and consultant to validate the proposal. With this sort of money involved there needs to be a review policy in place.Review or PerishSuccessful contractors with a growing business are well advised to instigate formal reviews of the jobs they are tendering on. Otherwise they could come to the end of the year only to discover that they have spent more than $100,000 chasing potential business that may not have come to fruition.Having a review policy may well save the business when construction activity passes its peak. Quite often you can find managers who have only known the good times and the company may not adjust quickly enough to tighten expenditure when the lean times commence.The Role of Project Accounting Software in TenderingWhen you are treating tendering as a project expense you need to extend the use of your Project Accounting Software into the bidding stage. And the use should not be restricted to the use of any integrated Estimating module but rather the establishment of tendered projects, budgets for tendering and time-sheet entry of hours against these same projects.Of course the details of earlier unsuccessful tenders are then readily available to management so the history can be accessed before even committing resources to tendering for similar work in future.
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