The Importance of the Finance Team while Reviewing your Business Management Software
The sad reality of most business management software is that it’s is not built with longevity in mind. As your business grows in size, adapts processes, or tweaks its structure, questioning your existing software’s capability is imperative.
Can your existing business software support the direction you are headed?
Given the high-impact nature of this decision, most companies in 2022 tend to have a dedicated process for managing system reviews. This process can be different for each business. For example, a Project/Review team can set meetings with Heads of Departments and key users to understand their system use, as well as any existing issues.
Beyond a designated review team, it is critical to have your Finance department involved in the reviewing process. Why? because Financial data is the most important set of metrics any business can acquire. Whether that be ROI, profit/loss, and everything else in between, your financial team will know better than anyone else what financial capabilities are available and missing.
To put into perspective the criticality of Financial department involvement (particularly CFOs) in the business system review process, here’s some information they can shed a light on:
Financial Processes & Reporting
Finance is the backbone of most businesses. The financial success and longevity of your company is impacted significantly by your system’s capability.
Specifically, can your existing software support and report on the following?:
General ledger
Cash management
Accounts receivable
Accounts payable
Tax management
Close management
Fixed asset management
Payment management
Ask your Finance team which features are not supported in your existing system. Even if there are features that are supported, are they advanced enough to support where your company is headed? If there are gaps in your current financial reporting processes, the likelihood is that your business has outgrown its existing system.
How a business handles its financial processes, forecasting, profitability, and analytics, is absolutely crucial for the success and further growth of a company. With that being said, it is of utmost importance that the finance team have a system that allows them to not only follow financial processes but accurately report on your business’s current financial standing to allow the C-Level/Management team to make accurate business decisions.
Holistic View
Keeping the above in mind, having a system that provides your entire company with a real-time, holistic view of data is imperative for decision making. Effective budgeting and financial planning can only come into effect when you have full visibility across all departments.
How much capital are we injecting into departments? How much revenue is each department generating? How do our sales compare to this time last month?
These are examples of some questions Finance teams will ask themselves when making key decisions. Therefore, during your system review process, the Finance department should help you identify gaps in data collection. Analysing the data in a ‘here and now’ manner.
Having systems that entail sales forecasting, current sales, current expenditure, human resources, and much more, enables the team to not only catch any potential issues quickly but allows informed decisions on when to push forward and when to pause, keeping your business financial health in check.
This is key to long-term success! Data is king.
Efficiencies
29% of businesses fail because they run out of cash. When it comes to running and investing in business management software, cost management is critical for sustaining a healthy level of cash flow. And surprise - this is another activity the Finance department is responsible for!
Beyond the cost of your system, there are costs across every component of your business. Fixed costs, variable costs, opportunity costs; the list goes on.
The ultimate question is: how much does it cost to operate your business and what is the breakdown of these costs?
However, this is broadly one-half of making sure your business is profitable. Cost-saving doesn’t only mean the physical amount of money going out the door, but also: how efficient are your processes? Are you spending unnecessary time and money on certain operations? How can your system allow your business to run as efficiently as possible?
The Finance team will be able to pinpoint areas where you can reallocate, or reduce, your business cost, and this could potentially have an impact on changing your systems in-house.
We know that the finance team of any business has key skill sets to making the operation tick, and there are many more areas where they could be helpful when reviewing your operations and business systems, but one thing we do know for sure is that it is of utmost importance that they are involved, not only to sign the dotted line on a potential new system purchase, but also to analyse on how that system is going to help reduce cost, reduce risk, and hopefully, in turn, increase operations and revenue.