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Advantages of Computers in Finance

Computers provide numerous advantages for organizations in finance. They allow for better organization of files and information, greater self-sufficiency through automated tasks, and cost savings through efficiencies. Computers also speed up processes like data collection, ordering, and inspection. Research and development costs decrease with computer tools for product development. Additionally, online sales can generate higher profits. However, computers also present disadvantages like heavy reliance on the systems, high startup expenses, potential job losses, hacking risks, and employee distractions.

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Mark Anthony Legaspi
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4K views5 pages

Advantages of Computers in Finance

Computers provide numerous advantages for organizations in finance. They allow for better organization of files and information, greater self-sufficiency through automated tasks, and cost savings through efficiencies. Computers also speed up processes like data collection, ordering, and inspection. Research and development costs decrease with computer tools for product development. Additionally, online sales can generate higher profits. However, computers also present disadvantages like heavy reliance on the systems, high startup expenses, potential job losses, hacking risks, and employee distractions.

Uploaded by

Mark Anthony Legaspi
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Advantages of Computers in Finance

Organization

Computers allow the application of different types of software that can help businesses keep track of
their files, documents, schedules and deadlines. Computers also allow businesses to organize all of
their information in a very accessible manner.

Self-Sufficiency

Computers have made staff and companies more self-sufficient by allowing them to do tasks that
previously had to be outsourced. For example, a company can now use office software to create
their own training material.

Cost-Effective

Emerging technology makes new tools and services more affordable and allows companies to save
on their staff payroll and office equipment. Because computers allow work to be done faster and
more efficiently, it is possible for a company to hire fewer staff.

Speed

Computers help speed up other business operations. The collecting of consumer feedback, ordering
of raw materials, and inspection of products is made quicker through the use of computers, allowing
companies to operate much faster and to produce better quality results.

Cheaper Research and Development

R&D, or research and development, costs will also decrease with the help of computers. Scientific
research can now be done using the Internet and computer software applications designed to
develop and produce new products and services.

Sales

Computers can help generate higher sales and profits for businesses via a company website. Many
businesses now operate online and around the clock to allow customers from around the world to
shop for their products and services.
Disadvantages of Computers in Finance

Heavy Reliance

Many businesses rely so heavily on computers that a power loss or system crash can prove
devastating. Valuable files may be lost, sometimes permanently, which can have long-term
implications if the files were not backed up with paper or other methods.

Startup Expenses
Businesses, particularly those small in size, may find computers too costly a
proposition. Computers, printers, scanners and software are just part of the expense
incurred. Some sellers of software also charge extra fees for each person using
software at a company. Additionally, many companies require information technology
support for those occasions when computers act up, and such support can be
expensive, depending on the severity of the problem.

Job Losses
While many employers are concerned only about their profits, there are those who care
about their employees. The efficiencies created by computers can lead employers to
difficult decisions in eliminating faithful, long-time workers. Cutting staff because
computer usage has made them unnecessary can also cause rifts with customers,
particularly those who have worked with and are familiar with employees who have
been shown the door.
Dangers of Hacking

Even small businesses use computers to store sensitive customer information, such as credit card
numbers, Social Security numbers, bank account information and addresses. If a hacker
successfully breaks into a business's computer system, he can use the information to drain bank
accounts or run up charges on credit cards

Distractions

Computers can create distractions, especially if employees are provided with full Internet access.
Instead of working, employees may be tempted to spend time aimlessly surfing the Web, sending
videos to friends, playing games or engaging in Instant messaging conversations. 
Uses of Computers in Finance
Ease of Communication
Computers enhance financial communication within members of an
organization through a network system connecting various departments.
With the use of computers, key financial decision makers are able to send
financial reports and strategies instead of holding meetings.

Spreadsheet Software
Spreadsheet software influences the way both large and medium-sized
firms, as well as individuals, key in and organize financial data.
Spreadsheet applications are used to run day-to-day financial tasks,
such as compiling financial data, presenting the data in an organized
manner through the use of charts and graphs, drawing budgets and
calculations of complex transactions.

Data Storage
Computerization makes data storage manageable and less bulky.
Computers enable organizations to store large amounts of files in a
small space, allowing us to have a large track of historical
transactions, while avoiding consumption of space that would
otherwise be consumed by piles of files in cabinets.

Programmed Transactions
Computerized financial software conducts programmed business and
accounting transactions. Most finance departments utilize accounting
applications, such as QuickBooks, to perform financial transactions
and to manage a company’s income and expenditure. These
programmed applications enable an organization or individuals to keep
track of financial operations and also conduct complex transactions
effortlessly without consuming a lot of time and labor that would
otherwise be used in case of manual transactions.

Financial Information
Computers have enhanced access to wide financial information
through internet access. Business operators or individuals can now
access information on investment prospects, and conduct detailed
research on its profitability.

Importance of computers in Finance

Trading
Financial trading is enhanced with information technology. Some computer systems
even trade for the users. A system is programmed to enter buy and sell orders when the
price of a stock or bond reaches a certain level, and automatically closes the order
when the target price or the stop-loss is reached.

Reporting
Financial reports are also improved with information technology. The language known
as XBRL, or Extensible Business Reporting Language, is used to standardize the
financial information in public companies' annual reports. Traders can quickly sort
through records in this format. 

Function
Financial data can be easily transferred with information technology. Instead of using
checks and checking accounts, information technology can clear a transaction
instantly. 

Convenience
Personal finance is simplified using information technology. Banks provide data on
checking and savings deposits and withdrawals in standardized formats. A customer
can download account transactions and store them in records on a home computer. 

Budgeting and Bookkeeping


Information technology is also helpful for companies that are considering financial
transactions. Computer systems calculate and display the interest and principal of a
loan, and estimate the returns on investment when the company borrows money to
expand its operations. 

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