While many of us do not actually work in the financial services industry, financial processes inevitably end up taking a lot of time and energy from your average business day. That’s valuable time and energy that could have been spent engaging with your core business. Thankfully more and more, companies are realising the benefits of using technology to improve efficiency, controls, and compliance throughout the entire lifecycle of their financial processes.
Let’s take a look at some of the day-to-day financial and accounting challenges that businesses face:
Inflexible systems - Systems and applications are often not flexible enough. This leaves the environment relatively fragmented as various applications and systems speak different languages and are not able to communicate with each other.
Time consumption - Closing the financial books is notoriously a taxing, lengthy process. Relying on manual inputing, it can be very laborious as data needs to be processed in batches, generally hampering performance across the board for other applications or systems which share the same resources. Not to mention the fact that the process is prone to human error.
Labour intensive – The manual process of sourcing all the relevant data and information for financial reports can be extremely cumbersome and time consuming (e.g. compiling information on investment records, or comparing profit and loss statements against different entities). Automating these processes through technologies makes it faster, but implementing this may negatively impact the technological operating environment. It is also prone to error, should any of the integration points, automated calculations, or technologies fail.
Accuracy issues – It can be a challenge to provide the executive committee with relevant financial and accounting information (particularly related to organisational and business performance) at the right time, quickly, efficiently and with complete accuracy.
How to optimize financial and accounting processes
Here are a few standard, generic approaches to optimizing your financial and accounting processes:
- Use a single ERP (Enterprise Resource Planning) system that supports a number of features across numerous departments (e.g. Leasing, Accounting, Investing, etc.), and/or...
- Use a flexible Accounting solution, either as part of the ERP or as a standalone system, that supports the automation of financial and accounting processes, while integrating with key existing systems or enough features and functionality to replace old systems, or...
- Use a combination of individual stand-alone solutions which specialize in specific areas of the business – ensuring that they communicate with each other.
- Use a financial reporting solution, either integrated as part of individual stand-alone systems, ERP, or accounting solution that allows the business to easily and seamlessly compile and acquire financial information based on specific parameters (e.g. profit and loss, income statement, forecasting, etc.)
- Put in place a system to plan, review and update budgets and do forecasts for all entities and across departments.
- Create an area to setup and assign key performance indicators (KPIs) with business goals in mind and use a dashboard to track and monitor them.
- Develop the ability to continuously measure business performance and the efficiency of business processes.
- Adopt technology that delivers integrated planning, accounting and performance processes with a view of the past, present, and future processes.
- Establish automated processes with good validation rules to reduce labour intensive processes and manual errors.
- Isolate processes and make them as granular as possible to make sure they’re easy to maintain and flexible.
- Introduce standardised languages and methods across processes, making it easy to add new steps in a particular process from a new source, or modify existing ones without significantly impacting existing processes.
- Invest in streamlining operational procedures to ensure more time is available to focus on
The days of collecting receipts and business documents and handing it to a bookkeeper at the end of the financial period are gone. Technology now plays a significant role in automating and systemizing this process which was previously time-consuming and laborious. This is dependent on your approach and the type of technologies that you choose.
Custom or Off-the-Shelf Financial Applications
Custom built or off-the-shelf solutions are beneficial in that they:
o meet specific business requirements and fulfil specific needs
o cater for a wide array of business processes (e.g. an ERP) across numerous business units, department lines, etc.
Software as a Service (SaaS)/Cloud
SaaS is a delivery model where centrally hosted software is licenced on a subscription basis. Accessed via a web browser or mobile device, it has become a popular model for many business applications, including office and messaging software, payroll processing software, DBMS software, management software, accounting, ERP, HRM, etc. There are many benefits to this approach:
- Lower implementation costs
- Lower ongoing costs in maintenance and support
- Potentially faster delivery of new features and functions
Mobile apps are generally extensions of custom, off-the-shelf, or SaaS applications, giving the user access to various features and functions wherever he or she is. From transaction approvals to on-site data recordings and reporting, and instant access to critical information, there are many advantages of mobile apps. This, in turn, improves financial processes by enabling a quicker, more efficient workflow and improving response times.
Web Services Integration
Web services allow different applications from various sources to communicate with each other without the need to develop custom code. The main benefit here is the fact that Web Services are compatible with any operating system or development language, making its implementation critical when using various financial and accounting systems across different departments within (and sometimes outside) of the organisation. This is particularly important when the various departments within one company are each using their own specialized apps or systems.
Where to from here?
Companies are quickly realising that automating their accounting and financial processes is more of an investment, than a cost. Because the process is so laborious, the ability to optimize it is seen as a huge benefit to organisational operations and integration points as a whole.
Here are a few of the prominent trends:
- Companies are choosing single, flexible solutions which have the ability to cater for most of their financial requirements (as opposed to individual systems which specialize in specific areas only).
- It’s no surprise that mobile technology is in great demand. The value of having critical information on hand cannot be underestimated. The ability to input key information, or manipulate and edit critical information anywhere, any time is a valuable benefit.
- Flexibility and functionality are becoming increasingly important due to businesses wanting to tailor solutions to their exact business requirements.
- Systemizing the budgeting process is becoming increasingly important, along with the ability to forecast and reforecast financial information to provide an accurate view of the organisation's financial health at any given point in time. This also helps companies to make better, more accurate decisions moving forward.
- Standardised environments are becoming increasingly important as companies move towards creating a homogenous, easily adaptable and flexible environment that can accommodate new applications, systems, processes and features efficiently.
To sum up, a move towards automation not only saves time, resources and frustrations, but more importantly it also gives you the opportunity to take a step back from the detail in order to gain a macro perspective on the business and how effectively it’s running. And sometimes, a fresh perspective is all you need to give your company the competitive edge.
We deliver custom software solutions and services to owners and operators of Real Estate