As a business leader in today’s digital-first era, you need to be constantly seeking innovative ways to improve operational efficiency and build financial intelligence. A recent study shared by SMB Group notes that SMBs that have accelerated technology adoption and investments are 42% more likely to have increased their revenues than SMBs that have decelerated in this area. They are also 36% more likely to forecast a rise in revenue for the next six months. Clearly, there is an imminent need for all SMB finance leaders to recognize technology’s importance and guide their companies to adopting the right technologies.
In this blog, we share 3 key reasons why you should embrace automation and transform your company’s financial performance while gaining a competitive advantage.
- Develop Financial Intelligence
Financial intelligence helps create value beyond just reporting on business performance. By automating financial systems, the finance team can access the accurate and up-to-date information it needs for data analysis and insights. The finance team becomes insightful, proactive and empowered to have strategic impact on the business. Financial intelligence powered by real-time and precise data can help you optimize your plans, identify trends, and uncover growth opportunities.
In fact, financial intelligence positively impacts several areas of your business:
- Costing and pricing
An automated and well implemented job costing function can help you price jobs based upon real production and labor costs. Automation integrates various business functions critical to job costing such as finance, time tracking and payroll systems – eliminating time and expense leakage that can go undetected and unbilled. When costs and expenses are not tracked in real time and are manually managed in spreadsheets, by the time the missed expenses are discovered by your finance team, it’s too late to factor them in the costing. Moreover, tracking time and automatically allocating labor costs can kickstart the process for improved cash flow.
- Cash flow
A recent research report by Preferred CFO shares that of the small businesses that fail, 82% fail due to poor or negative cash flow–and outstanding payments are one of the main causes. By automating aspects of the financial operations, you can optimize both productivity and efficiency while improving your cash flow.
You’ll be able to automatically send out invoices and payment reminders, and accept payments through multiple channels–not only enabling faster payment from customers, but also significantly reducing payment friction and overdue balances. With the deeper and real-time visibility that automation tools bring, there is also less risk of premature account closures when expenses are still outstanding. These reimbursements are hard to chase. However, with approved expenses getting into the system timely, you can be assured of your payments and also shrink the time between your outlay and getting paid by the client.
Sound cash flow management and practices also enable cash flow forecasting–an essential component driving the success of your business. Cash flow forecasting encourages proactive planning, insight, and confidence in the financial strategies. And it can help ensure that your business stays on track toward its strategic goals, while being able to maneuver tactically along the way.
- Decision making
Financial automation also enables real-time reporting and queries. Data can be updated in real-time, giving you round-the-clock access to accurate and up-to-date information and reports. With this information at your fingertips, you can easily gain insight into emerging trends and take actions to improve outcomes, instead of waiting for end-of-month reports or relying on error-prone data entries.
As your financial systems get more intelligent, you’ll be able to make strategic decisions based on the data. For instance, you’ll be able to predict cash flow for the business over a given period of time, or take preventative action to reduce potential negative cash flow.
- Build Operational Efficiency When you move away from legacy practices and adopt automated processes, you gain operational efficiencies that clearly reduce the cost of people-time. With more efficient and optimized processes, it takes less time to capture the data, less time to process transactions, and even less time to do the work since much requires just a click.
You build operational efficiencies by optimizing the following processes:
- Expense management
With automation, you can save time and money by speeding up the approval process, eliminating duplicate data entry and not having to continuously update spreadsheets. Additionally, your company’s unique expense management policies are stored and the system automatically determines which expenses require a manager’s review and which can get programmed approval.
- Invoice management
Automating the invoicing process can be a game changer for your small or medium business. It helps to eliminate mistakes caused by manual entries and helps save your accounting team’s time by automating the billing, collections, and cash application.
- Collections
Close-in on your revenue cycle and lower your DSO (Days Sales Outstanding) by knowing exactly which bills are outstanding and who owes you money–all from a single dashboard. With all of your outstanding accounts receivables living in a single place, your accounting team can follow up with debtors more effectively.
- Unleash the power of your data
Data can be a business’ greatest asset for growth. It can be the strongest force driving and guiding your decisions pertaining to boosting revenue, profit, efficiency and customer satisfaction. However, without consolidated, standardized and up-to-date data across the enterprise, you can’t get clear and accurate business analytics or optimized performance in your workflows. Well implemented intersystem data management, consolidated reporting and data integrations can help drive your business forward. Automating data integration is also strategically vital to your SMBs productivity and business intelligence. By automating the tedious, repetitive tasks associated with data integration, ingestion, migration, and extraction across the enterprise, you can significantly improve operational efficiency. Automated data integration eliminates error-prone manual processes and lets you combine, manage, and obtain insight from an array of financial data assets more efficiently. Turn on the power of your data by automating data integration and ensure your data’s integrity and quality, so that you can find the information you need, analyze it, report on it, and trust that it’s accurate.
The key benefits of automating data integration include:
- Data manageability
There is a wealth of data available to businesses and if harnessed properly can help you accelerate your business success. There is structured data that ERP and CRM systems can provide, such as data about customers, employees, products and sales. There is also a barrage of unstructured data available from non-standard sources like social media, search, mobile technologies, IOT and other potential sources. With all this data flooding in, your finance teams can struggle to keep up using spreadsheets and manual methods. Without automation, your finance teams would have to spend invaluable hours collecting data and ensuring data quality, while analysis, reporting and strategic recommendations take a back seat.
- Instant forecasting
If you want to determine the turnover of a business unit in your organization, you would need data from sales, marketing, product manufacturing, quality assurance, etc. For data visualizations to be possible, all this data needs to be in your data warehouse. Without automating data integration, it would take days for data preparation. However, with data integration automation, data is automatically loaded with all applicable transformations.
- Simplified reporting and use of AI
With automation, siloed manual finance processes can now give way to cloud-based solutions to help you simplify reporting, planning, forecasting and analytics. Moreover, self-service dashboards can give other departments access to the data they need instantly without taking up the finance department’s time and resources. Even artificial intelligence can be deployed to find patterns across complex data sets to uncover insights. In this digital-first, data-driven business landscape, as you are paving way for your company’s digital transformation, data automation is a crucial step.
For a volatile, uncertain, and hypercompetitive digital world, automation is critical. Finance leaders who do not modernize their order-to-cash processes with solutions like that will increasingly find it challenging to survive and compete in a business environment in which new business models are emerging. With evolving customer needs, legacy systems are unable to handle complex billing and multi-dimensional contracts. Do not sit and wait while your competitors implement automation into mission-critical operations and expand their market share at your expense.
Today, your business needs an agile and flexible financial system that will automate your processes, reduce costs and grow with you.
[To share your fintech insights, please write to us at sghosh@martechseries.com]
