Businesses across industries often find themselves bogged down by endless paperwork and tedious manual tasks, wishing there was a better way. Untallied balance sheets, endless waits for payments, or lost vendors slipping through the cracks, many such instances can be marked out in a happening finance scenario.
According to research, 80% of manual financial operations can be automated, with integrated solutions offered by financial technologies. The power of automation is often neglected leading these businesses to fall prey to operational inefficiencies and bottlenecks. Financial think tanks and experts believe that fragmented financial data can be an obstacle for the company’s competitive positioning.
Besides these, the other common challenges faced by businesses, due to fragmented financial data, are:
- Unavailability of Real-Time Data: Timely financial data is essential for accurate planning and for forming a proactive financial management strategy. Traditional financial software does not provide real-time data and has a high chance of errors.
- Cash Flow Monitoring: One of the biggest challenges of managing cash flow is transparency into liquidity factors. Multiple cash flows from operations, delayed customer payments, seasonal variations in sales and costs, loan payment timing and terms, and misalignment with revenue recognition or expense accrual are the derivatives of cash flow challenges. Improving cash flow requires efficient and error-free receivables and payables processes for better decision-making.
- Managing Debt: One of the key responsibilities of decision-makers is to analyze how much debt the company can financially take, which can get complicated with a non-transparent cash flow system.
- Complex Operations: Operational complexity is not unusual at large, global enterprises, but the actual challenge comes in when the financial processes mirror the complexity and add on to it, as they function in silos.
- Lack of Business Insights: Lack of actionable insights limits decision-making, and precision planning, Timeliness of data insights is crucial and the financial data managed in silos hinders the accuracy. As long as the company is maintaining a traditional and manual form of finance, getting accurate business insights becomes an inevitable hurdle, costing the business many growth opportunities.
- Disconnected Systems: With a disintegrated financial system, When core systems are unable to effectively communicate and share data, work becomes more manual and insights become less accurate and timely.
These challenges necessitate a solution that would provide ultimate integration to all the business financial data floating across in silos, which would pave the way for balancing profit with growth.
One such new concept in the finance industry is Connected finance which would integrate all your financial data, from invoicing to tracking expenses to payroll and much more. Over the course of the technological revolution, many accounting software have advanced and are offering more than one solution to their financial partners. However, connected finance covers the loopholes and makes the database integrated and secure, all at once.
The advantages of connected finance:
With Connected Finance, you can manage your finances a lot better and easier, as it provides-
- Centralized Financial Management and data integration: Connected finance centralizes financial management by integrating ERP, accounting, and banking systems into one platform. Connected Finance also ensures streamlined data flow, automates processes, and minimizes errors. This unified access to financial data enhances decision-making, scalability, and adaptability to organizational changes, fostering strategic planning and growth.
- Real-time visibility and control over cash flow, expenses, and overall financial performance: Connected finance offers real-time visibility and control over cash flow and expenses by enabling businesses to monitor inflows and outflows instantly. Connected Finance provides instant access to financial data for timely analysis and decision-making, along with automated alerts for unusual spending patterns. Predictive analytics anticipate cash flow trends and identify risks, while real-time spending controls enforce budget limits, ensuring financial stability and agility.
- Improved collaboration and communication across teams with a single source of truth: Connected finance fosters improved collaboration and communication across teams by providing a single source of truth for financial data. This central repository of connected finance ensures that all stakeholders have access to accurate and up-to-date information, facilitating better teamwork, alignment, and decision-making.
Key Areas for Finance Automation:
As automation revolutionizes financial services, businesses are embracing streamlined management of their financial processes, encompassing both Accounts Payable and Accounts Receivable.
From simplifying data entry to the complexities of invoice coding and vendor payments, automation presents a spectrum of opportunities for Accounts Payable.
Based on research conducted by Ardent Partners, the implementation of automation can lead to an impressive 80% reduction in invoice processing times.
Similarly, Levvel Research has revealed that leveraging automated accounts receivable (AR) processes can result in a notable reduction of invoice processing costs, with potential savings of up to 60%. Automated Accounts Receivable can accelerate invoice generation, facilitate payment reminders, enhance customer management, and streamline payment reconciliation and verification.
According to a Deloitte survey, a significant 89% of businesses encounter obstacles when it comes to cash flow forecasting and management. This highlights a widespread challenge within the business landscape regarding the accurate prediction and effective oversight of cash flow dynamics. Connected finance solutions leverage advanced algorithms enabling cash flow forecasting and reporting processes, saving time. By analyzing historical data, market trends, and other relevant factors, connected finance solutions generate accurate forecasts of future cash flows- all this comes with the power of automation.
Evaluating Your Finance Processes for Automation:
- Identifying pain points and inefficiencies in the current processes followed: To identify pain points and inefficiencies, conduct interviews and surveys with finance team members to pinpoint challenges in AP, AR, expense management, and cash flow. Analyze historical data for bottlenecks and seek feedback from other departments to gain a comprehensive understanding of organization-wide pain points.
- Assessing the level of manual intervention and potential for automation: Assess manual intervention levels by mapping out AP, AR, expense, and cash flow workflows to identify tasks ripe for automation. Quantify time and resources devoted to manual versus automated processes. Evaluate automation technologies’ suitability and scalability for tasks such as data entry and invoice processing, considering cost-effectiveness.
- Evaluate the readiness of current finance systems for automation: Evaluate the status of your current financial platforms, for integration with a Connected Finance solution by inventorying ERP, accounting, banking, and expense management tools. Assess compatibility, interoperability, and data integrity to ensure seamless integration. Identify any system gaps or limitations that may impede data exchange and assess the organization’s technical expertise and support for facilitating integration and data migration.
Implementing Connected Finance Solutions:
When selecting and implementing a Connected Finance solution, priorities should be given to these set of criteria:
- Scalability and Flexibility: Ensure that the chosen solution can scale seamlessly to accommodate business growth and evolving needs. Look for features and capabilities that support expansion into new markets, product lines, or business models. Additionally, flexibility in customization and configuration allows the solution to adapt to changing regulatory requirements and operational processes.
- Integration Capabilities: Assess the solution’s integration capabilities with existing systems and data sources, such as ERP, accounting software, banking platforms, and CRM systems. Look for pre-built connectors, APIs, and compatibility with industry-standard data formats to simplify integration efforts. Seamless integration facilitates the flow of data across departments ensuring a unified view of financial information.
- User Adoption Strategies: Implement user adoption strategies and change management best practices to ensure the successful adoption of the Connected Finance solution across the organization. This may include providing comprehensive training and support resources, and engaging key stakeholders early in the process. Encourage feedback and address concerns proactively to mitigate resistance to change.
- Change Management Best Practices: Develop a comprehensive change management plan to address organizational workflows impacted by the implementation of the Connected Finance solution. Clearly communicate the benefits of the new system and how it aligns with the organization’s strategic objectives
Provide tips and best practices for successful implementations:
- Define clear goals: Define clear goals aligned with strategic priorities, addressing finance process inefficiencies, with measurable objectives, achievable within set timelines, and tied to KPIs. Communicate goals comprehensively to stakeholders to ensure alignment and commitment to project success.
- Involve Cross-functional teams: Engage stakeholders from diverse teams impacted by the finance solution, including finance, IT, procurement, and operations. Gather input to understand their needs and concerns, integrating their perspectives into project planning for buy-in and ownership.
- Leveraging professional services or consulting for guidance and support: Consider tapping into professional services or consulting expertise for guidance during implementation. These experts offer insights, best practices, and technical know-how to ensure a successful deployment. Collaborate closely to develop a comprehensive plan, optimize workflows, and train end-users effectively.
By embracing Connected Finance solutions, many Enterprises have transformed their finance operations, achieving tangible results in terms of efficiency, cost savings, cash flow management, and decision-making capabilities. The implementation not only improved internal processes but also positioned the company for future growth and success in a competitive market landscape.
Ready to revolutionize your finance operations? Discover OPEN’s Connected Finance solutions today and experience the power of streamlined financial management. Visit us now at www.openmoney.in
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