Financial tasks are complicated and time-consuming. Worse, founders and C-level executives often fixate on fundamental tasks, such as paying suppliers on time or tracking incoming revenue. The questions they should be trying to answer should be much closer to:
What is the reason they don’t spend enough time examining the critical financial issues? A lack of an integrated financial system. So, why should you integrate your financial system into your technical infrastructure to start making better business decisions?
Without a full and thorough integration of the financial system across your company’s technical infrastructure, you can’t make the critical business decisions that drive your company forward.
The reason? Business decisions are only as good as the data they are based upon. The problem is that most companies are making crucial decisions based on inaccurate, out-of-date and irrelevant data.
Think about how many applications and programs you use on a daily basis. For example, the data surrounding a single sales meeting with a client could spread across several software programs such as Quickbooks, Zoho, Slack and Expensify.
You may be aware that much of the data contained within these programs overlaps. But what happens when that data is updated at different speeds in all four applications? Suddenly you’re making decisions based on incorrect or incomplete information.
That’s why it’s so critical to integrate all systems together to ensure that data is consistent across the board. But connecting all the data points is only the beginning of creating a winning financial strategy. You need to evaluate your financial processes too.
There are several financial tasks involved in a company’s day-to-day operations—purchase orders, invoices, credit notes, travel expenses and so on. But very few businesses devise well-defined financial processes to ensure that every team member is on the same page and that financial data flows through the chain with uniformity.
Thus, it’s best to take the time to roadmap a clear and unambiguous financial workflow and communicate it effectively to your team.
With all employees aware of the chain of actions surrounding each business transaction, not only can you reduce data errors, but you can ensure that data dependent on manual actions (e.g., submitting an employee travel expense claim) is consistent, regardless of which specific person submits the information.
In this specific area, integrated financial systems can also speed up and automate your workflow. For instance, let’s say the process for expense submissions is to collect receipts, submit them to the accounts receivables department and allocate them to client activities. This process can be automated by integrating systems together.
For example, your team member can upload their expense receipts to Expensify, which are then pulled through immediately to Quickbooks for approval. The approved data is then sent to Zoho so that those expenses are attributed to the correct client in both your CRM system and invoicing software. With just one manual action, you can let a fully-integrated financial system do the rest.
Once you’ve built a high-performing financial workflow and an automated financial system, you can start digging into the data that will shape your company’s future.
Implementing the work mentioned above means nothing if you don’t subsequently use your integrated financial system to look at the most critical metrics. With accurate and frequent data reporting, you can start to use many of the tools supplied by leading FinTech companies to dig much deeper into what the figures mean.
There are a wide array of budgeting and analytical solutions available, and your specific choice will depend on the nature of your business. But you need to ensure that you can use it to analyze your data, create real-time dashboards and run reports that answer the questions highlighted at the top of this article.
You need to understand which processes are driving growth, and you need to eliminate those that are draining financial resources without any significant ROI. You may have been wondering how a financial system can help in business development. Well, hopefully you can now begin to understand its role.
Using accurate data reporting and analysis, you can uncover damaging clients that require substantial financial investment upfront, constant employee expenditure to maintain the business relationship and meager invoicing totals that don’t justify the costs.
By contrast, you can uncover customers in a specific industry segment that require no upkeep, cost very little to acquire and provide high recurring revenues. It’s discoveries like these (e.g.., a small pivot in the target market for your services) that can transform a business’s fortunes.
But without a fully-integrated financial system and the analytical tools in place, you can’t make the intelligent, data-driven decisions needed to secure continued business growth.
Another issue holding you back from rapidly scaling your business is the time you spend on the wrong financial tasks. As mentioned earlier, even modern FinTech companies spend far too much time on manual tasks such as paying bills and chasing invoices, rather than performing intelligent financial analysis.
But bills do have to be paid. Otherwise, soon you won’t have a business at all. What’s the solution? Automation. Accenture predicts that automation will quickly eliminate up to 40% of transactional accounting work undertaken today. By automating many of the manual tasks that add no value to your company, you can free up personnel to work on high-value financial tasks such as forecasting, analysis, and strategic planning. Automation can help here too.
To make these high-level data-driven decisions, data has to be collected and collated from a myriad of sources. POS, CRM and ERP systems provide reams of rich structured data, whereas social media, website analytics, apps, and IoT devices offer plenty of additional unstructured data to sift through.
But manually collecting and collating this data is too labor-intensive. Spreadsheets aren’t a viable option. Instead, it’s best to let your integrated financial system do the heavy lifting for you and utilize AI programs to sift through terabytes of data to discern patterns and deliver actionable financial and business insights.
So often, we witness our clients at Cider investing significant time and resources on integrations for internal and external software systems. But the financial system is often an afterthought.
The problem with this approach is that financial technology is the most vital piece of the puzzle for commercial success. It’s the only system that delivers the information you need to answer your business’s critical questions.
How much profit you make per customer, how much it costs you to acquire a customer, the average return on investment for marketing campaigns. These are all business-defining metrics derived from intelligent financial analysis.
But if your financial system isn’t integrated with your technical infrastructure, the data you’re using to perform such analysis is probably inaccurate and out-of-date. And without automation, you’ll never find the time to spend on the highest-value tasks.
Thus, make sure to integrate your financial system company-wide to give your company a much better chance of succeeding.
©All Rights Reserved. December, 2020. DailyDACTM, LLC d/b/a/ Financial PoiseTM
Ilya is a seasoned professional with over 20 years of experience in the fields of operations and finance. In 2015 Ilya founded an innovative software development company, Cider, located in the San Francisco Bay Area. He built a team of highly talented developers, SFDC engineers, designers, and PMs. Cider helps US-based companies release high-quality software…
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