Abstract
The research seeks to find out the influence of information technology on financial management. The expansive nature of transactions in businesses requires accuracy among accountants and other members of the management handling the finances. The massive deals and huge sums of financial engagements have been facilitated by the rise in demands and publicity created by technology. The nature of contracts and a desire to abide by the rules without violating key concepts of upright business creates the need to have an upright and accurate financial system. The success of businesses depends on the approach the establishment takes on handling their finances. The paper will address issues relating to the emergence of technology and the impact it has had on the management of finances in organizations. The specific area of study in the paper will focus on the role of information technology in finance both in the small-scale and large-scale establishments.
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Introduction
Information technology is essential in managing finances and all other statements within an organization. The scope of IT operations in light of handling financial issues in a business includes keeping of personal budgets linked to the income of the establishment, documents relating to critical treaties and deals relating to the business, and sharing key information with other financial entities like banks to secure loans among other financial needs. Additionally, information technology gives room for rapid and accurate calculation of financial statistics, including electronic transfer of money both locally and internationally.
With the rise of technology and globalization, the approach of handling businesses has taken a different tangent. The companies need to reach consumers within and outside their geographical localities. The need for reaching clients in an effective manner makes it impossible to continue in the traditional approach of handling deals, financial statements, and other money-related deals. In light of such, the report purposes to outline the role of information technology on financial management in companies.
Research Questions
The study has a list of questions that will form the guiding principles in the discussion segment a collection of information relating to the role of IT in finance. Both general and specific research question segments will form a central pillar in leading the direction of the study.
General Research Questions
The general research questions will focus on the rise of technology in handling finances, especially in large organizations. The section will consider the historical analysis of financial management in such an organization and the dangers of using traditional means in handling finances. The segment will also focus on the rise of technology and the associated benefits it has brought to the organizations. Evidently, financial management is a central pillar in all businesses. The success or failure of most businesses is attributed to their approach in handling finances. For a large organization, financial management touches on all issues relating to the running of the business. Such operations include servicing expenses like remuneration and management of the sales departments.
The general questions will consider the analysis outlined in assignment 1 on processes of approaching financial deals and other operations. The expansive nature of businesses makes it necessary for the management to seek additional labor. With such requirements, the level of transparency in handling their remuneration packages and creating a balance between profit generation and managing employees becomes a burden. The management is often faced with the task of having to weigh the input against the output to remain relevant in the competitive market. Such pressing needs require accurate and precise financial projections that are only attainable through an established IT system.
The dynamic financial market as currently stipulated also needs an efficient and accurate financial system. It is impossible for an organization to remain relevant in the current competitive market without complying to the standard IT financial regulations. Different entities have emerged that take advantage of both the consumers and companies to fleece them of their resources. The market players have established a different mechanism to eliminate the participation of such unscrupulous operatives. The best approach to handling such cases rests in the implementation of Information Technology in handling financial operations. The implementation of IT in finance extends to the electronic transfer of money beyond borders in a safe and secure manner.
Specific Research Questions
Apart from the general issues to be addressed in the research, the following research questions will assist in creating a clear path of study:
1. What is the role of information technology in financial trading?
2. What is the influence of information technology on the compilation of financial reports?
3. How has IT impacted the transfer of financial data and associated processes?
4. What is the role of IT in creating an efficient budget and bookkeeping operations?
Conceptual Framework
The study is an extension of the findings established in the previous assignment. It touches on critical issues of managing organizational finances in light of the trending dynamics in business operations. Information technology and the principles of handling organizational finances make a perfect blend forming the best solution in the current business environment. With the rise of the internet and other interactive platforms, the approach of managing finances has grossly changed. The expansion of markets through globalization has created the need to have electronic money transfer options to cover clients on the international platform. Financial management through information technology is the most secure and accurate approach in handling operations in the current business operations.
The study will examine the existing software designed to handle financial statements and other areas of interactions within an organization. The efficiency with which this software managed and processed bulky information made it possible for organizations to understand their standing in the market. According to Bryson (2017, 43), the secret to success in managing a business rests on the management understanding of their financial standing. A proper understanding of the financial statements will patter the decisions such entities make within the market. However, the traditional way of handling the finances was tiresome and time-consuming. The analysis process delayed major decisions from coming to effect, a problem whose solution will be found in the implementation of IT in the management of finances.
Budgeting and bookkeeping also form a central factor of success in managing operations in an organization. The study will examine the rate of efficiency in handling large information and financial records after the incorporation of technology-based software. The study will also examine some of the negative effects of overreliance on IT and the impact it can have on managing finances. For instance, the rise of cybercrime and development of counter programs can result in a gross loss to the company. The research will evaluate some of the circumstances that have led to the loss of millions from organizations to cybercrime.
Information technology will offer stable solutions in the management of financial operations in organizations. The expansive nature of business operations has created the need to have a transparent, fast, and accurate process in handling payments. IT will offer security both to the clients and business entities. The protection of information from cyberbullies remains a lingering issue in this study. In some instances, criminals have taken advantage of the information in the systems to extort money from unsuspecting victims. However, the study will examine the best approaches in making IT as secure as possible to all the users including associated stakeholders. The conceptual framework will keep the study on track by outlining the research questions. With a comprehensive solution to the problems, the study will meet the objectives and make reliable recommendations.
Literature Review
Globalization has introduced the concept of the global community that has transformed how people do business. Interestingly, the rising manner of business beyond borders brings another dynamic to the operation, financial transaction. Different nations and trade blocks have unique trade policies and currencies. The introduction of information technology has provided the solution to most of the trending problems in the market. Some of the benefits of IT in financing have been captured by different scholars at different lengths. The scholarly coverage can be classified into five segments; trading, reporting, function, convenience, and budgeting and bookkeeping.
Trading
Financial trading is greatly influenced by the trending technologies. Information technology is the greatest force that has led to the revolutionization of financial trading in the current market. The creation and establishment of trade prices have become a simple task with the management and marketing officials having an array of information from the international market. The fluctuating rate of stock prices requires close monitoring and evaluations. Additionally, businesses should understand the approaches in the market trend and consumer demands to strike the needed balance. While it is key to addressing the demands of consumers, organizations should shun avenues that may result in serious losses. Creating a balance between addressing the concerns of consumers and sustaining the business finds the best solution with the introduction of IT in finances.
Information technology is central to creating a consistent database for consumers and market trends. With such consistencies, businesses can know the approaches to take in creating the best path for future trends. The identification of the consumer needs makes it easy for traders, retailers, and other stakeholders in business management to identify the best investment areas. According to Laudon and Laudon (2015, 12), information regarding the stock market is key to the success of expanding business entities. The inception of globalization also makes it necessary for businesses to have a clear comprehension of the international market trends. The exchange of ideas through the internet is a leading IT invention that has facilitated the creation of a solid front in addressing market issues like pricing.
Convenience
Information technology has simplified personal finance. Banks and other financial institutions provide data on balance inquiry and other transactions like withdrawals and deposits. The approach has eliminated doubts and cases of fraud where members had little information regarding the performance of their accounts. The approach is similar in nature to the cases witnessed in corporate entities and other business organizations. Business organizations can also find the details regarding the transactions in their accounts within a short time. The concept of downloading financial statements within a click of the computer makes it easy for individuals and business entities to rack their performance. The software developed for finances allows the businesses to know the amounts and time deposits or withdrawals are made to assist in tracking financial progress.
Budgeting and Bookkeeping
Budgeting processes in companies are often tedious and time-consuming. Information technology has made it possible for large organizations to establish accurate plans and budgets in line with their resources. Market demands and trends are leading factors to consider when making a budget. The computer software has made the calculation of loans and interest rates simpler. With a simplified financial projection, companies can embark on activities and investments that will favor their standing in the market. Other areas that the IT implementation has improved in the budgeting segment include estimation of returns on investment, displaying the interest and principal of a loan, and online transfer of data.
Reporting
Financial reports are key to the management of business transactions. The concept is common among business entities where different stakeholders have a say on the operations. However, the concept is even still relevant to the management and other employees particularly on the marketing segment. Information Technology has made reporting a manageable exercise. The expansive nature of business transactions makes it necessary to have a centralized reporting platform that is not limited by location. The implementation of IT infrastructure in companies has created the platform where employees can engage managers and other stakeholders regardless of their locations.
Methods
Considering the nature of information needed in the study, both qualitative and quantitative approach will be effectively employed. The qualitative approach will assist in bringing out issues relating to the application of IT in business operations. The areas touching on ethics and other associated parts will find a comfortable ground in the approach. The quantitative segment will center on the numeric and statistical representation of in the study. Getting a better grip on the impact of IT in finance to require econometric analysis and other financial procedures to understand stability.
The study will collect data from primary and secondary sources. The literature on the entry of IT in finance and related studies will form the center of study. Additionally, some key information will come from interviews and distribution of questionnaires. The following are some of the few approaches the study will employ in getting the needed information:
1. Interviews
The study will conduct several interviews with key stakeholders on the best approach in handling IT in finance. Additionally, the interviewees will give a clear insight into the impact of technology in financial management and other operations in business. The selection of those to be interviewed will be based on experience and knowledge of the issues at hand. Financial specialists and IT professionals will form the majority of the group to be interviewed.
2. Use of Questionnaires
The study will employ both closed-ended and open-ended questionnaires in getting the needed information. The questionnaires will be distributed randomly to employees in establishments wit operational IT. A sample of responses will also emerge from other entities that operate using the traditional approach in handling operations. Both responses will assist in creating a continuous pattern on the ideal settings in handling businesses and the impact of IT in such operations.
3. Focus groups
The researcher will also identify a group of individuals drawn from different professions to give a clear statement on the impact of IT in handling businesses. The group will address ethical issues surrounding the implementation of the techniques in businesses. Issues like cybercrime and development of firewalls will take a center stage in such discussions.
4. Observations
The researcher will also embark on making personal follow-ups on the manner of behavior among individuals in areas with IT empowered business model and those without. Monitoring the movement and manner of operation will give a clear picture of the activities and the impact of IT in handling business operations.
The collected data will be analyzed in different forms depending on the type of information required. Graphs and tables will form the basic part in the analysis docket. Other statistical analysis methods will also come in handy especially when handling the numeric. SPSS will be in action to identify the relationship between the dependent variables and the consistency of the outcomes. The collected information will be classified in different portions depending on the area of question they need to address. The difference in classification will assist in eliminating unnecessary confusion arising from collection biases.
Significance
The study is applicable in both private and public business establishments. The role of technology in managing finances is a critical point of study especially in the current setting where the economies of nations are closely knit together. Globalization is pushing the approach of handling business operations from the traditional manual setting to the digital platform. The efficiency and speed with which the companies process large amounts of data is a leading advantage attributed to information technology in finance. The incorporation of IT in finance management will assist in eliminating errors that resulted in the loss of funds in leading organizations.
The study is also key in bridging the gap in the literature. While different studies have been conducted on financial management and its associated benefits, little information exists on the best approach to take when it comes to the incorporation of IT. Different scholars have diverse opinions on the approach to take and the associated dangers of surrendering the running of finances to technologically designed techniques. The study will bring a clear perception of the benefits linked to IT in finance. For instance, the efficiency and accuracy of its technique in handling information. Additionally, the fast transfer of financial statements and records across geographical boards.
An examination of the influence of IT on financing also outlines the developmental stages in technology and the influence it has on businesses. With globalization, the concept of business is getting a better meaning. Traditional boundaries that limited business dealings in the past have been broken through the internet and other technological platforms. The increasing number of consumers and rising demands of goods and services require an open and transparent financial management scheme. While the traditional approach of handling finances through manual files and accounting techniques assisted in the previous dispensation, the rise of the new business frontiers requires an efficient and accurate management process. Information Technology in financing offers the needed solution.
Limitations and Delimitations
The study is extensive and requires adequate time to accomplish. The compilation and analysis of different financial trends and approaches to managing finances in the companies are tedious and complicated. Time is the leading limitation in the research. The approach the study took required extensive study and analysis of the trends relating to circumstances leading to the current financial changes. Additionally, the information about IT requires specialists to illustrate the approaches it will undertake in the current and future settings.
The percentage error makes it possible for researchers and future scientists to find a comfortable margin of extending their studies. In most instances, the identification and observation processes require an open area for interpretation. The interpretative approach often appears at different times and with different techniques. The percentage margin establishes grounds for such findings to add unto the grade of accuracy. The margin also covers any associated error that might have been encountered during the study. In most instances, different human faults may corrupt the overall findings. Therefore, establishing a safe scope of percentage error makes the findings realistic and accurate even in instances of gross scrutiny.
Business organizations can also find the details regarding the transactions in their accounts within a short time. The concept of downloading financial statements within a click of the computer makes it easy for individuals and business entities to rack their performance. The software developed for finances allows the businesses to know the amounts and time deposits or withdrawals are made to assist in tracking financial progress. The success of most processes and projects depend on the approach a leader takes in communicating to the stakeholders. An effective leader must ensure the members understand the set objectives and the outlined approach in achieving the goals. Additionally, proper communication enables the members and those involved in a process to avoid areas of conflict.
Ethical Issues
The greatest ethical challenge with incorporating IT in finance touches on leadership compromises and communication. Effective leadership qualities nature the talents and strengths of the people under the sphere of such leaders by building their commitment and zeal towards the achievement of set objectives. The qualities that make one an effective leader is diverse in application and context. However, their application follows a similar pattern as common with outstanding leaders. Of all the qualities of effective leadership, good communication skill is the most vital. The essay will focus on communication as a leading quality of effective leadership.
The second ethical issue centers on the weaknesses of the technology especially relating to cybercrimes. The programs that assist in data analysis and transfer of finances require strong protection from unscrupulous individuals. The level of exposure depends on weaknesses relating to software updates. The scope of IT operations in light of handling financial issues in a business includes keeping of personal budgets linked to the income of the establishment, documents relating to critical treaties and deals relating to the business, and sharing key information with other financial entities like banks to secure loans among other financial needs.
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