5 January 2022
Growth initiatives depend on cross-departmental cooperation, and CEOs are turning to CFOs for more strategic assistance to make a difference for their companies.
Is your company’s finance department prepared to serve as its strategic arm? We frequently hear that the “details,” such as having to consolidate daily enterprise-wide transactions from many systems into a single system, are what hinder finance teams. Even though the details are crucial, they are a major deterrent from the bigger, more strategic objectives of your finance team, especially when your company is expanding or changing.
Growth initiatives depend on cross-departmental cooperation, and CEOs are turning to CFOs for more strategic assistance. As a result, there has never been a better opportunity for CFOs to make a difference for their companies. However, it’s critical to consider if the current system can serve the company’s goals both now and in the future before a finance organization undertakes that work. The following four objectives should be understood by finance leaders when considering a cloud-based financial management solution. By doing this, the firm can advance from merely managing financial controls and transactions to actually offering real knowledge that can change the organization.
1. Gain True Business Insight
Financial reporting was automated and made simple by legacy solutions. For the purpose of financial reporting, they condense transactional data, leaving little or no information about the original transaction. Traditionally rigid and sequential, this process begins with the subledger’s capture of transaction data and ends with the general ledger’s posting, finally producing the data needed to generate financial statements. However, as the accounting process condenses the data, it eliminates transactional specifics, leaving only the balances to be kept in an accounting key.
The only purpose of the systems built using this methodology was to facilitate financial reporting. Organizations require data marts or warehouses, business intelligence solutions, and reporting tools in addition to these systems in order to provide comprehensive business information and management reporting. Businesses can streamline their financial operations using a cloud financial management system, removing unnecessary data to make everything easier to track for any audits.
2. Consolidate and Close with Confidence
In order to prepare for financial reporting, the consolidation and close procedure compiles data from across the organization. Though it seems easy in principle, it’s not at all so in practice. To create consolidated financial statements using traditional accounting systems, the finance team must gather, consolidate, map, translate, transport, and reconcile all data into a single location. This procedure requires a considerable amount of time, personnel, and systems, and the cycle is repeated every month, quarter, and year’s end. Restarting the entire process is necessary for adjustments resulting from material changes. Errors are inevitable given the number of processes that demand human involvement. How fast and simply can employees identify and correct these mistakes is the key question.
Financial closing solutions that are cloud-based may scale quickly serve thousands of users as well as allow agility through the regular addition of new product capabilities. This is achievable since the majority of cloud solutions do not have the server support restrictions frequently encountered in a data center. They can accommodate both complex consolidation models and scenarios as well as more straightforward ones for lower levels of the organization. Additionally, they can support various management hierarchies for management and financial consolidation, as well as various disclosure areas.
3. Proactively and Effectively Reduce Risk
The financial crisis significantly narrowed the scope of control. Companies now place a lot of emphasis on investing in governance, risk, and compliance (GRC) to safeguard themselves from market risk. However, the majority of legacy financial systems were created years before Basel II, Solvency II, Sarbanes-Oxley, and other standards were indispensable to corporate operations. In order to manage the separation of roles and monitor transactions, workflows, and configurations, businesses have been obliged to invest in pricey specialty or point solutions.
Additionally, many conventional legacy solutions provide a “audit trail” that records every action that takes place in the system. Due to its negative effect on system performance, this is ultimately disabled, making tracking and monitoring optional. But is safeguarding your firm against fraud or unacceptable business practices truly optional? How will the company be protected if you can’t keep track of payments, approvals, and changes to those crucial business components?
4. Embrace Change
Even though we are aware that change is a constant, there are several downstream impacts that can make it difficult for the finance department to effectively respond to, manage, and incorporate change into business operations. When new policies or guidelines are acquired or introduced, superusers or IT-type personnel are frequently needed to handle the configuration and deployment across systems. For the finance team, this means that there is a delay in bringing about that change—a delay of days, weeks, or even months. Instead of seizing new opportunities, the company wastes important time and resources attempting to keep up with change. Businesses with a cloud financial management system will enable them to react pro-actively and strategically, allowing them to not just adjust to change but actually flourish and expand throughout change.
By offering top-notch tools, removing busywork, and enhancing corporate mobility, cloud financial management software and systems contribute to the success of the company. Additionally, it helps in the accurate daily decision-making necessary for CFOs to guide the organization in the right direction. Finance teams can automate procedures to successfully manage and properly aggregate reports utilizing a cloud system, since CFOs today have a crucial role to play as organizations become more dependent on extracting value from the enormous amount of data that is generated.
