In the previous blog, we saw the benefits of applying technology to financial management. In this article, let’s look at the top five areas where a good financial software can bring about a revolution in the way you operate.
1. Financial Planning and Analysis
Plan, budget, forecast. These are the three main mantras that any finance department lives by. When you make use of a financial management application that is suited to your needs, you will be able to easily integrate or combine all these functions with any cloud technology that you may already have installed - so that your entire business system is running smoothly on the same platform, and you are able to take advantage of instant search results about your financial status and instant analysis.
In technology terms, when an organisation is able to quickly adjust to changes and continuously make improvements in its way of functioning, it is called an agile company. The best way to understand this is to think of a bird. A bird is light, can fly high and far for long distances and can move to newer areas faster in case there is a drought or flood. Similarly, such flexibility is an essential part of any successful business strategy, particularly for an MSME that has a lot of room for growth. This is possible only if the financial aspect is on track and is able to foresee and adapt to changes - something that tech can help you with.
2. Accounting and Financial Close
In accounting, two of the most critical processes that decide the ease with which you close the books are finance consolidation and finance reconciliation. In consolidation, one has to combine data from all the transactions conducted by various departments to create a report of expenses, for example. On the other hand, reconciliation is the process of matching evidence of spending with the expense, so that there is proof of transaction for every spend. The common feature between these processes is reporting - without proper reporting, you cannot file taxes and meet the necessary regulatory requirements, nor can you close your books for the month or year.
This is where financial management software plays an important role of centralizing your finances - to get all your reporting needs in order. Additionally, it will also automate your financial close, simplify compliance or following of regulatory procedures and make your tax filing process accurate and easy.
3. Treasury Management
The treasury department has the most critical responsibility of taking care of the treasury or cash flow in a business. Managing working capital requirements, liquidity, loans, and internal payments are the major jobs that come under this function.
When you use financial management software to manage your treasury, you will be able to, first and foremost, lower the cost of your operations, because every single task is organized, brought together in relevant groups and managed automatically.
With the support of actionable insights, that is, the analysis generated by technology that you can act upon- not just technical information - you will always have an eye on competitive rates of interest and other such banking news, which will give you opportunities to lower your banking costs. All your payment needs, across multiple banks and institutions, are also taken care of - you have an overview of the entire financial supply chain.
4. Billing, receivables and payments management
Another heavy source of documentation and worry for the finance department is managing the customer billing and accounts receivable, i,e., tracking payments from customers who purchase products or services of a company on a credit basis.
When you apply a capable financial management software, you can revolutionize the way in which you conduct your business, just by changing the way you manage billing. Rather than generate a bill at the end of a purchase, you can offer customers the option of subscription or usage-based billing or go in for a multi-sided partner revenue model - all of which maximize your chance of expanding your reach, creating loyal customers, and increase your profits.
In the case of account receivables, Machine Learning plays a huge part in ensuring effective invoice matching to avoid default in payments by customers due to wrong invoicing. It also provides customers access to their invoices so that there is no confusion about the payment status or deadline.
5. Governance, Risk, Compliance (GRC) and Cybersecurity
The last aspect of tech-driven finance management is generally associated with large enterprises but is something MSMEs must be aware of as well, as they introduce more tech in their functioning and that is to do with reducing overall risk to your business that can come from various places. These include risks due to non-compliance with laws and regulations due to oversight or manual errors, lack of proper screening of trading partners, particularly international ones, and becoming vulnerable to cyber attacks due to poor network security.
With secure financial management software, you can build intelligent controls around critical information and assign access to trusted employees. You can also set up internal audits and monitor potential threats, so you can prevent an attack before it happens. As in the case of other areas of financial management, you can also constantly integrate this information with your leading cloud platform, so that you remain ever alert and ever agile.
For more information about the five areas of financial management, visit this link.