Whether for start-ups, SMEs, or large corporations, integrated financial processes are not yet standard practice in many areas. It doesn't really matter how large or small a company is and how its finance department is structured – whether it's a large team with specialist areas or a small team with two accountants handling everything to do with finance. Whatever the setup: disjointed financial processes and manual financial consolidation – often using Excel spreadsheets – waste a significant amount of time and results in a high error rate you could do without.
A financial management solution can significantly streamline financial processes in your company. But what are the specific benefits of this kind of software? And what challenges can it help you to overcome? In this article, you will discover how integrated financial processes can help you save time and prevent pesky errors.
The challenges of disjointed financial processes
The traditional process of closing the financial year starts with entering an invoice into the accounting software. Followed by transferring the data to the ERP system, preparing trial balance and general ledger reports, and finally attempting to interpret the financial data for management reviews.
At this point, finance teams start to see the uncertainty creep up. Answering questions like "Where did you get that number from?", "How does that stack up against last year?", or "Can you explain why this number's different?" often requires you to sift through multiple Excel sheets. The consequences of unintegrated financial processes are particularly clear here: Different ERP systems and inconsistent financial reports are a barrier to performing efficient management reviews and making crucial business decisions.
The quality of business insights is directly dependent on the quality of the underlying data. This is where financial management solutions come into play: By integrating financial processes, these simplify the process of preparing financial statements, planning, and reports, ensure valid and transparent financial data, and provide a platform to confidently address questions from management.
The benefits of integrated financial processes
Benefit 1: Reliable financial data
Manual processes run the risk of transfer errors, especially when data is copied and pasted by multiple employees across various financial reports. The challenges hit harder when several teams operate from various locations. Financial management solutions pull data directly from sources such as accounting software, identify incorrect information, and ensure sound financial data.
Benefit 2: Comprehensive planning
Companies dream of a holistic financial planning solution that includes the profit and loss (P&L) statement, balance sheet, and cash flow statement. Many focus primarily on the P&L, because these figures are the easiest to obtain from the exported ERP data. But a financial management solution brings integration across all financial statement components. It can assign relevant transactions not only to the general ledger accounts, but also to subledgers and the corresponding transaction types. All three financial statement components can be automatically populated based on the transactions. This makes planning significantly more straightforward for finance teams.
Benefit 3: Transparency over data sources
An integrated system provides detailed insights down to the posting level. By directly connecting your financial management solution to your ERP solution, you can retrieve invoices in real time as and when you need them. Now you can refer to underlying calculations as a source, helping you to provide detailed answers to management inquiries like "Where did you get that number from?".
Benefit 4: Efficient reporting
Integrated financial processes slash tedious manual tasks. Group accountants know too well what it's like to wait around for subsidiary reports to come in and then the countless hours spent consolidating them, only to come across a mountain of mistakes. With direct integration into your ERP system, you can retrieve information yourself as needed. No more going back and fore with Excel spreadsheets and waiting ages for email responses.
