Essential Changes That Will Modernize & Simplify Finance Systems

6 mins read

7 February 2023

Businesses need to understand that this transition is unavoidable and that they must act now to be competitive in order to avoid falling victim to the difficulties that the uncertain market will present.

It is more important than ever to anticipate change, act quickly to address global developments, and adjust to changes in consumer and market expectations in the economic and corporate climate of today. The huge task of managing corporate assets and ensuring their proper flow rests with finance departments. But these days, chief financial officers (CFOs) and their staff shoulder more responsibilities in financial companies.

Finance is currently viewed less as a support function and more as a factor in overall strategic development. This implies that other CEOs frequently turn to CFOs for financial and business advice that can actually determine the strategic course of their own firms. It goes without saying that when a business expands, its processes become more intricate. They start to manage more finances, more clients and staff, and more big and small company decisions all at once. The quantity and complexity of the accounting tasks that a company must perform will definitely rise as it grows.

It might be time for businesses to think about investing in finance modernization especially when more people are looking to the business to lead. Automation technology can be used by businesses to simplify their accounting processes, save operating costs, and provide a single, uniform data source for all accounting data.

Transforming Dated Financial Core Systems

Businesses must adopt comprehensive, business-driven modernization that is aware. Although mainframes are heavily utilized by financial organizations, they are unable to keep up with the constant development of rules and high consumer expectations. Remaining stationary is the single thing the sector cannot afford to do. Companies in the financial services and sector must embrace modernity while being risk-aware.

Waiting till the last minute or organizing every step independently simply will not work. Instead, businesses must organize and carry out the full modernisation process as a comprehensive trip based on both technology and business aspects. By using this strategy, it is possible to maintain decades of crucial business logic and benefit from huge amounts of historical data while achieving industry-leading customer experience (CX) and security.

Despite their immense capacity, mainframes hinder financial resources, creativity, and agility. Finding substitutes is a significant concern as mainframe professionals are getting older and retire. Despite the fact that cloud platforms are a crucial part of modernization, it is clear that mainframes have prevented important financial sector organizations from converting to an agile, cloud-based development system.

Due to the risk of damaging crucial business operations, many financial institutions only access the mainframe when strictly essential. However, as the mainframe continues to lag, the company’s CX and security procedures become more obsolete, and the disparity with vanguards widens. Executives must have a thorough plan to embrace the contemporary era and create a gradual and iterative approach to build financial platforms of the future in order to reduce risk while remaining nimble and keeping up with challenges and laws that are always evolving.

Major issues can be swiftly resolved by finding a partner who can manage a mainframe well. Because many mainframe specialists are choosing early retirement or quitting the profession due to the pandemic, there is a substantial risk of talent shortages in sectors including capital markets, banking, and insurance that largely rely on mainframes. The organization will be far less likely to lose seasoned mainframe developers and engineers who are getting harder and harder to replace if the aforementioned partner can give access to qualified mainframe resources.

Business executives can also benefit from the economies of scale and mainframe-as-a-service model offered by their partner, using the savings to fund the following stage of the modernization process. These three pillars will serve as the framework for a conscious modernization program throughout the transformation process. This is a genuine win-win strategy with partners that will let businesses take use of the ecosystem’s value as well as its scale, influence, and approaches for managing costs and risks.

Moving Financial Processes To The Cloud

Adopting the new target cloud-based infrastructures and relocating the mainframe off-site are the next steps. Providers ought to provide a private cloud infrastructure of their own, or they will collaborate with a hyperscaler like AWS, Azure, or Google. The company can move to high-availability zones for ultra-low-latency connections between mainframe and cloud applications if its partner has a good working relationship with the hyperscalers. Operations may be significantly impacted by migration but moving to a cloud system has the ability to lower infrastructure costs, as well as energy use and result in significant performance gains.

Although the idea of “migrating to the cloud” may seem frightening, cloud-based solutions are widely accessible and quite simple to set up. Software systems that operate in the cloud are growing in popularity. These platforms are typically provided using the software-as-a-service (SaaS) model, in which the cost is based on a subscription. Businesses are moving away from using software that is installed in their on-premises server and toward using cloud-based technologies for finance operations. As a result, the business is exempt from the requirement to buy software upgrades.

Cloud-based workflows make it much easier for the finance staff and the entire business to interact. The cloud platform allows for the access and sharing of documents. The request-and-approval procedures that are so prevalent in financial operations can also be carried out online. Steps in those procedures can be carried out by employees from any place. As a result, procedures that were previously complex and time-consuming, like requests for capital expenditures and vendor approvals, can be carried out more quickly.

The effectiveness of finance procedures will inevitably improve with increasing collaboration and digitization efforts. Increased accuracy is a further benefit, which is unquestionably crucial for finance teams working with real money. Automated workflows can reduce or even completely remove human errors brought on by repetition or calculation error.

A process that is automated can guarantee internal control compliance, which is equally crucial. So, the cloud-based platform may automatically carry out those tasks if a particular request has to be moved to a higher level for approval or if approvers need to be notified of pending requests. This is another example of how cloud computing improves accuracy and efficiency without the trade-off between the two that characterizes manual processes and server-based software.

Simplify Accounting Systems

To achieve expansion, small firms, like medium- and large-scale organizations, must streamline their accounting processes. Failure to establish systems for managing funds might cause unnecessary strain on the company’s revenue and prevent growth. Small firms typically have a small team and may not have the resources to pay for pricey accounting services. Owners of small businesses generally manage everything, from offering services or producing goods to shipping. Nonetheless, compared to other business duties, accounting for businesses is more unique and difficult. You may be headed for failure if you don’t manage your finances well and stick to your budget.

  • Instead of saving paper receipts from each order and customer, think about automating the expenditure tracking process. Scan the receipts and enter them into a database. This way small business owners will not run the risk of losing them once they start scanning and storing each receipt. Losing paper receipts is one thing but falling behind in financial management is quite another.
  • Develop systems that will help the company’s workflow. Businesses will feel more mentally at ease the more systematic their payment and cost tracking is. Reminding every customer to pay on time takes time and could damage relationships. Invest in an invoicing system that automatically sends each client a reminder at the beginning of the billing cycle rather than contacting or mailing each client manually.

The use of technology in financial management will help firms increase their effectiveness, performance, and efficiency in the face of new disruptions and hostilities. Additionally, it will simplify complex transactions, which will enhance contemporary economic activity in terms of number and quality. Moreover, it will improve the security of corporate information and other data that might get exploited. Businesses need to understand that this transition is unavoidable and that they must act now to be competitive in order to avoid falling victim to the difficulties that the uncertain market will present.

Financial executives and business leaders who are interested to find out more about how they can further modify and simplify their financial processes, you can register for DigitalCFO Asia’s Executive Roundtable in partnership with LucaNet here.

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