Decision making is the process of making choices by identifying a decision, gathering information and assessing alternatives resolutions.
In its simplest sense, decision-making is the act of choosing between two or more courses of action.
Decision-making is an important management skill that can both drive and impede financial performance and any organisation or an entrepreneur that has fast and efficient decision-making processes are most likely to have a good financial stability.
THREE TYPES OF DECISION-MAKING
Decision-making can also be classified into three categories based on the level at which they may occur.
- Strategic Decision set the course of organisation
- Tactical Decision are decisions about how things will get down
3.Operational Decision are decisions that employees make each day to run the organisation
**FOUR WAYS YOU CAN USE FINANCE TO IMPROVE YOUR DECISION-MAKING **
- Estimate The Financial Impact Of Project And Initiatives: To manage your team and departments properly you need to decide which projects and initiatives are worth pursuing and which are not.
- Conducting A Cost-Benefit Analysis: You can use finance to make better decisions. This method of data-driven decision-making provides a framework for performing an evidence based evaluation of an initiative it allows you to access how it's cost which this approach you can easily break down complex business decisions and decide to pursue projects expected to yield the best outcomes.
- Track Financial Performance: knowledge of your organisation's past and present financial performance is crucial to sound decision-making. Monitoring the key performance such as gross profit margin, working capital and return on equity can equip you with an understanding of your company's financial health and your team's contributions to its strategic objectives.
- Perform Financial Statement Analysis: understanding the numbers on your organisation's ballance sheet can indicate its current financial position and show whether its on a trajectory for success or failure. By examing its cash flow statement you can gain insight into how cash is being generated and used through reviewing its income statement, you can gauge how your business is doing in relation to its expected performance.