Monthly Archives: January 2016

Systems that do Accumulation and Analysis of financial data (FIS)

The world has changed almost all the activity becomes digital. Digitalization is also happening in the financial world. From the planning, analysis, and prediction of the final result of financial already can be served from the beginning. All is contained in the Financial Information System (FIS)

Definition – What does Financial Information System (FIS) mean?

A financial information system (FIS) accumulates and analyzes financial data used for optimal financial planning and forecasting decisions and outcomes. An FIS is used in conjunction with a decision support system, and it helps a firm attain its financial objectives because they use a minimal amount of resources relative to a predetermined margin of safety. An FIS can be thought of as a financial planner for electronic commerce that can also produce large amounts of market and financial data at once obtained from financial databases worldwide.

Techopedia explains Financial Information System (FIS)

Financial data analysis may be conducted through trend evaluations, ratio analyses and financial planning modeling. Data outputs that are produced by FIS can include

  • Operating and capital budgets
  • Working capital reports
  • Accounting reports
  • Cash flow forecasts

The predictive analytics included in these applications may also narrow down exactly what could be expected from a business interaction or transaction that has yet to take place.

The management of financial information in an e-commerce business is paramount in order to gain maximum operating results in the shortest amount of time. An FIS can also yield huge amounts of data for daily business operations. Financial markets traders and salespeople have the greatest demand for FIS because they work in very fast environments and their on-demand computing systems must keep up with real-time activities in order to allow these professionals to operate in real time. Broker investigating, investment and trade data along with fiscal asset classes can be relayed through an FIS. This also works for smaller businesses that need to obtain financial data about local markets. FIS is a form of real-time operating system that works to enhance financial information exchanges.

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The Waterfall Methodology in Management business

The Waterfall approach to systems analysis and design wass the first established modern approach to building a system. This method was originally defined by Winston W. Royce in 1970, (“The Waterfall Development Methodology”, 2006). It quickly gained support from managers because everything flows logically from the beginning of a project through the end, (Jonasson, 2008). Sources differ when it comes to the specific steps in the Waterfall process (Jonasson, 2008), and I will detail some of these differences in the next paragraph. However, the basic underlying logic and steps present themselves in each interpretation.

Waterfall_modelFigure 1: Waterfall method

(“The Waterfall Development Methodology”, 2006)

The original Waterfall method, as developed by Royce, is featured in Figure 1. The steps include Requirements Determination, Design, Implementation, Verification, and Maintenance. Other models change the Requirements phase into the Idea phase (Jonasson, 2008), or break the Requirements phase out into Planning and Analysis (Hoffer, George, Valacich, 2008). Furthermore, some models further break the Design phase out into Logical and Physical Design subphases (Hoffer, et al, 2008). As previously mentioned, however, the basic underlying principles remain the same.

The Waterfall method makes the assumption that all requirements can be gathered up front during the Requirements phase (Kee, 2006). Communication with the user is front-loaded into this phase, as the Project Manager does his or her best to get a detailed understanding of the user’s requirements. Once this stage is complete, the process runs “downhill” (Hoffer, et al, 2008).

The Design phase is best described by breaking it up into Logical Design and Physical Design subphases. During the Logical Design phase, the system’s analysts makes use of the information collected in the Requirements phase to design the system independently of any hardware or software system (Hoffer, et al, 2008). Once the higher-level Logical Design is complete, the systems analyst then begins transforming it into a Physical Design dependent on the specifications of specific hardware and software technologies (“Software Development Lifecycle”, n.d.)

The Implementation phase is when all of the actual code is written (“SDLC Phases”, n.d.). This phase belongs to the programmers in the Waterfall method, as they take the project requirements and specifications, and code the applications.

The Verification phase was originally called for by Royce to ensure that the project is meeting customer expectations. However, under real-world analysis and design, this stage is often ignored. The project is rolled out to the customer, and the Maintenance phase begins.

During the Maintenance phase, the customer is using the developed application. As problems are found due to improper requirements determination or other mistakes in the design process, or due to changes in the users’ requirements, changes are made to the system during this phase. (“SDLC Phases”, n.d.).

The Waterfall method does have certain advantages, including:

  • Design errors are captured before any software is written saving time during the implementation phase.
  • Excellent technical documentation is part of the deliverables and it is easier for new programmers to get up to speed during the maintenance phase.
  • The approach is very structured and it is easier to measure progress by reference to clearly defined milestones.
  • The total cost of the project can be accurately estimated after the requirements have been defined (via the functional and user interface specifications).
  • Testing is easier as it can be done by reference to the scenarios defined in the functional specification (“The Waterfall Development Methodology”, 2006).

Unfortunately, the Waterfall method carries with it quite a few disadvantages, such as:

  • Clients will often find it difficult to state their requirements at the abstract level of a functional specification and will only fully appreciate what is needed when the application is delivered.  It then becomes very difficult (and expensive) to re-engineer the application.
  • The model does not cater for the possibility of requirements changing during the development cycle.
  • A project can often take substantially longer to deliver than when developed with an iterative methodology such as the agile development method. (“The Waterfall Development Methodology”, 2006).

Due to these and similar problems, systems analysts began looking for alternative methods of designing systems. In the following sections, I will go over select methods that have been developed. I will concentrate on methodologies that have been classified as Agile. In this paper, I will concentrate on Extreme Programming, Scrum, and Test-Driven Development.

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Balancing the Right Debt and Equity in Small Business Finance

Develop a business plan and loan package that has a well developed strategic plan, which in turn relates to realistic and believable financials. Before you can finance a business, a project, an expansion or an acquisition, you must develop precisely what your finance needs are. Finance your business from a position of strength. As a business owner you show your confidence in the business by investing up to ten percent of your finance needs from your own coffers. The remaining twenty to thirty percent of your cash needs can come from private investors or venture capital. Remember, sweat equity is expected, but it is not a replacement for cash.

Financing a small business can be most time consuming activity for a business owner. It can be the most important part of growing a business, but one must be careful not to allow it to consume the business. Finance is the relationship between cash, risk and value. Manage each well and you will have healthy finance mix for your business.

Depending on the valuation of your business and the risk involved, the private equity component will want on average a thirty to forty percent equity stake in your company for three to five years. Giving up this equity position in your company, yet maintaining clear majority ownership, will give you leverage in the remaining sixty percent of your finance needs. The remaining finance can come in the form of long term debt, short term working capital, equipment finance and inventory finance. By having a strong cash position in your company, a variety of lenders will be available to you. It is advisable to hire an experienced commercial loan broker to do the finance “shopping” for you and present you with a variety of options. It is important at this juncture that you obtain finance that fits your business needs and structures, instead of trying to force your structure into a financial instrument not ideally suited for your operations.

Having a strong cash position in your company, the additional debt financing will not put an undue strain on your cash flow. Sixty percent debt is a healthy. Debt finance can come in the form of unsecured finance, such as short-term debt, line of credit financing and long term debt. Unsecured debt is typically called cash flow finance and requires credit worthiness. Debt finance can also come in the form of secured or asset based finance, which can include accounts receivable, inventory, equipment, real estate, personal assets, letter of credit, and government guaranteed finance. A customized mix of unsecured and secured debt, designed specifically around your companys financial needs, is the advantage of having a strong cash position. The cash flow statement is an important financial in tracking the effects of certain types of finance. It is critical to have a firm handle on your monthly cash flow, along with the control and planning structure of a financial budget, to successfully plan and monitor your companys finance.