Wednesday, June 24, 2020

Why is a modern financial management system important to an organization?How are cloud-based financial management systems different?

A changing world requires new ways of working-ways that are smarter, faster, and more agile. Nowhere is normally this more important than in finance. Fueled by rich data and ever-more powerful artificial intelligence, machine learning, and analytics capabilities, finance organizations are being transformed and making more informed business decisions.

In this blog post, we offer a quick guide to the changing demands of the finance function, what you ought to find out about financial management systems, and how the right system might help companies adapt to a changing world and identify new business opportunities.

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How does technology impact a financial system or process?
A great financial system starts with what you can’t see-underlying technology to take care of transactions, reporting, and analytics, preferably in a single place which means that your finance team can plan, transact, analyze, and report on data without leaving the machine. A cloud-based financial management system makes all this possible.

Consider this: With automated business process workflows included in the system, you can quickly create new or modify delivered processes to adjust to industry adjustments or regulations. Proper security needs to be set up for data, transactions, processing, and applications, thereby making it easy to monitor access and changes.

Having transactions and analytics unified within a system, where all data is stored in-memory, enables real-time transaction processing, consolidation, and reporting of financial data in a single place. The moment a transaction occurs with accounting impact, it is instantly open to report on and analyze within the same system. Finance can create consolidated reports on a daily basis if needed, across multiple legal entities and currencies, significantly reducing the amount of time it takes to close the books. For instance, with a unified system, City Year increased its monthly and quarterly close by 40 percent, while AAA Northern California, Nevada & Utah decreased its quarterly close from 10 days to five days.

In a nutshell, a financial management system for today’s ever-changing world should:

Give a complete, accurate, and real-time picture of your business.

Equip your leaders with relevant, contextual business insights.

Enable you to embrace organizational, procedure, and reporting changes without business disruption.

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What specific challenges do finance teams face today?
Finance needs to deliver insight that goes beyond the overall ledger information that legacy systems were made to produce. With a broader set of stakeholders and a business landscape that is continually evolving, finance is being asked to supply the enterprise with insight that may actively influence decision-making.

Many finance teams are struggling with that mission. They’re still occupied with traditional, transactional tasks and spend most of their time gathering data instead of analyzing it and becoming the strategic partner their organization truly needs. Fragmented or outdated finance systems make it difficult if not impossible to get the data they need, when they need it. For many organizations, valuable data is definitely trapped in legacy systems-or even spreadsheets-and organizational silos. Organizations cannot access that data and easily combine it with external data sources, to build the info models and make the predictions needed to take their organizations in to the future.

Around the world, finance leaders face heightened risks given the pace of technology change, the impact of digital disruption, growing regulatory scrutiny, data privacy and cybersecurity concerns, uncertain fiscal conditions, and financial market volatility. Finance teams have to be able to act faster with real-time information from across the organization to better manage risk in a changing world.

Finance teams have to be in a position to act faster with real-time information from over the organization to better manage risk in a changing world.

Just how do traditional financial management systems work?
Legacy solutions were designed to automate and simplify the accounting to support financial reporting. This process offers traditionally been rigid and linear, you start with capturing subledger transactions and ending with posting to the overall ledger. As transactions make their way through the accounting process, subledger details are stripped away, resulting in summarized journal entries that update ledger balances. Systems designed in this manner are only in a position to support financial reporting predicated on the way the accounting segments were configured through the initial implementation.

To supply richer business insight and management reporting, organizations require data marts or warehouses, business intelligence solutions, and reporting tools furthermore to these systems. This “bolt-on” approach means creating and maintaining costly integrations, requiring more effort for data reconciliation, and potentially exposing businesses to unnecessary errors. And, this solution ultimately results in stagnant silos of disconnected data.

With disparate systems for accounting, consolidation, reconciliation, purchasing, revenue, compliance, and other functions, your financial management environment becomes a lot more complex. Fragmented systems make it hard to provide real-time insights to the business and maintain pace with growth and change. Scaling or changing these systems to meet the needs of a growing, changing business can be slow, costly, and in some cases, virtually impossible.

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