Best practice for any finance department
Ensuring finance departments – and the subject matter experts within – are being leveraged to the best of their ability is key to good financial management. And the systems that are being used underpin this whole business function.
According to Accenture, in February 2021, 79% of CFOs surveyed said that the effects of COVID-19 have compelled them to ramp up their finance transformation efforts.
So, what does finance best practice look like in 2022 and into the future? In this blog, we discuss the best practices a top finance team should follow, what makes a good finance team and why switching your financial management software could empower and enable your team to make a more significant contribution to overall business goals.
What makes a good finance department?
The role of a finance department within a company has rapidly evolved from number crunching (managing cash flow, payroll and reporting past financial figures), to being relied upon to advise the business on everything from budget allocations, to performance and forecasting to help steer the company for towards expected growth, and prepare for scenarios that might derail the plan.
Reaching the goal of creating effective financial management means assessing the existing tools and processes in the business, as well as attitudes and behaviours of the team and their areas of expertise.
The best CFOs are strategic in the way they lead, thereby enabling everyone in the team to look at the bigger picture. Being responsible for everything from transactions to invoicing to overall business performance, a modern finance department must be able to unravel and understand the financial and business data at their fingertips. And the right software is key to having this sweeping single view of the business.
Automated reporting tools are crucial to enabling finance teams to find the right data at the right time to inform important business decisions. This enables finance teams to be agile, underpinned and supported in their everyday tasks by the right tools. Outdated financial management software could be the difference between a finance team performing in line with what is considered best practice, or simply doping the bare minimum.
3 financial management practices for every finance
Every finance team is unique, and their business’ needs and goals are different too. But there are some practices that will make a difference, no matter the business you’re in.
Planning is key
If the last two years have taught us anything it’s that businesses need to be prepared for the unexpected. Contingency and scenario planning is central to this, and a key element of any plan is knowing where budgets and spending are being allocated to ensure maximum return. The right software solutions can ensure your finance team have fast access to accurate data that can help inform the best decisions in an increasingly agile business environment. Real-time reporting and access to data is key.
Read our New CFO Checklist: your strategic 90-day plan
Financial and business forecasting is central to any good plan – both short and long-term. The COVID-19 pandemic has encouraged financial professionals to be ready to predict the unpredictable. Breaking down reporting from yearly to monthly, to even daily, means finance teams can help a company plan in much more detail and be ready to handle any situation that may arise.
A key element of being able to plan to this degree, is having visibility and clarity over the data that existis in the business...
Visibility and clarity
Whilst finance teams do not own every piece of data in a business, they should have full visibility of data – especially as it relates to financials – across the entire business in order to deliver maximum value. This includes ensuring all data gathered, reports built, and budgets created and consolidated are concise, accurate and up-to-date at all times.
If a report is compiled using manual systems and processes, as the data changes and builds, these reports will quickly become outdated and prone to human error. This could eventually lead to senior teams presenting outdated information and potentially providing inaccurate advice that guides the business in a wrong or misinformed direction.
If automated accounting software is used, there can be a reduction in administrative tasks such as manually updating the data. Information including company and employee expenses, payments and general spending can automatically update and predict future budgets and forecast how the company may perform in the coming months and even years.
Senior teams will then have the comfort of knowing the information they are viewing is current and they can make informed decisions based on this. Meaning the information shared from the finance team provides clarity to decision makers.
Download our guide to automating your finance and accounting processes.
Get automated financial systems
Automated accounting and financial management software is the closest thing to a crystal ball you can find in the world of business. It can be the difference between good financial management and great financial management that also informs and prepares the business for what’s coming.
Finance professionals shouldn’t be afraid of relying on software to carry out tasks. Although it may seem there is already a trusted process within their company, embracing the change will allow everyone to focus on utilising their expertise and experience where it’s needed most.
Automating key elements of a financial management process has a two-fold advantage: finance teams will deliver faster, more accurate reporting, while also embedding processes that can help identify future challenges and opportunities in a more agile data environment.
Automation makes it much easier to integrate your systems and improve performance across your entire organisation. Streamlining repetitive and mundane financial tasks will give your teams more time to work on high value contributions – and we all know that time is the most valuable currency we have. More time means more capacity to work on the tasks that will have real material and commercial impact on your business.
Download our eBook on the benefits of automating your finance and accounting practices.
Why switching your accounting software could empower a finance team
Over time and as your business grows and expands, you’ll likely notice your original software struggling to keep up. This issue is magnified if data is held in separate spreadsheets and systems - there is no single source of truth for your teams to operate from; information must be transferred between systems, which leaves you open to human error; and work is often duplicated, which is a recipe for inefficiency.
Cloud-based accounting software enables the integration of all departments and information sources into one efficient system. It means you are able to customise and automate complex processing, allowing people across your organisation to input data, action approvals and view reports. This helps to eliminate duplication, improve controls and increase business-wide productivity.
To understand why a switch from your current system to something with greater speed, functionality and overall power might be the right path for your business read our blog ‘Is it time to switch your financial management or accounting system?’
