To succeed in today’s competitive landscape, small- and medium-sized businesses (SMBs) must become more strategic in their forecasting, cash flow management, business intelligence efforts and overall decision-making.
Essentially, they must eliminate waste, streamline all operations and outsource everything that isn’t a part of the core business. While there are obviously many facets to becoming more strategic, a key first step is to invest in the right financial accounting software. These tools enable decision makers to get more value from their employees and financial data.
Here are four immediate benefits that powerful financial accounting software has on business strategy.
- Reporting, business intelligence (BI) and analytics capabilities: These are key elements in software that companies need to thrive in today’s market. BI and advanced reporting give you more value out of your data and let you make better decisions. The key here is to turn this information into a competitive edge. With spreadsheets, it’s hard to get valuable BI because Excel is just not designed to do this. Cloud ERP systems, however, have BI built into the design. Analytics helps businesses to better understand the financial data by transforming it into easy-to-understand graphs and charts. This helps businesses gain a clearer picture of what’s happening in the company.
- Collections management applications: These functions can reduce accounts receivable (AR) substantially, thus generating sufficient cash flow to actually pay for the project in its entirety. When an account hits its threshold — typically 30 to 90 days — it goes into collection. With an automated system, these bills are moved to collections much faster than if someone needs to go into the financial records every month and see what’s due. By then, the bill may be 45 days late. These features take some of the manual labor and human element out of the process, which saves time and money.
- Advanced planning: Financial accounting software helps SMBs elevate their financial management from monitoring AR and accounts payable (AP) to high-level planning. With quality historical financial data, businesses can use predictive analytics to estimate future revenues based on risks and opportunities. They’re able to calculate the expense side of their budget and forecast for one or multiple years forward. With, say, five years’ worth of sales data, analytics capabilities allows you to find trends you may not have seen with a spreadsheet. What part of business is doing really well? What’s failing? What do you need to phase out? What are you wasting time on? These are questions that simple spreadsheets aren’t good at answering.
- Streamlining capabilities: By making everyday practices such as AR/AP and month-end closes streamlined and automated, this frees up time and personnel for more valuable tasks that benefit the business. As companies grow, these processes often bog down personnel with time-consuming and tedious tasks. Streamlining these tasks reduces the amount of time needed and increases accuracy for payables and receivables. This results in better cash flow and more time for personnel to focus on higher-value tasks. Many SMBs lack cash and as a result they perform these tasks manually. But that is expensive because people are potentially more expensive than technology. If you’re paying someone to type for eight hours a day, you’re spending a lot of money on data entry. If you can streamline this and integrate it using technology to enter data multiple times, you’ll be able to re-purpose that individual to perform more valuable tasks. Plus, technology is more accurate than people.
SMBs must become more strategic in all of their business practices. It’s simply not possible to push forward without streamlining operations and embracing analytics and BI capabilities. It’s time to invest in powerful financial accounting software to pull ahead of the competition.