As digital transformation of businesses accelerates, they must be able to rely on an efficient finance department in order to face the challenges of tomorrow. In this context, absolute modernization of financial information systems is necessary, with the objective of making the budgetary process and management more efficient. The development of financial indicators and dashboards, in particular, must be completely rethought to help the finance department become more efficient.
Optimizing financial reporting: a priority
Presenting financial information is one of the main responsibilities of the finance department. However, the efficiency of financial reporting is still lacking in many structures which spend a lot of time and resources on this task. To remedy this, it is necessary to activate three main levers.
Automate financial indicators and dashboards
Too often, finance teams still perform their missions using manual methods, which have several drawbacks. In addition to being time-consuming, they are a source of errors and prevent employees from focusing on more important tasks.
Thus, in order to modernize financial management, it is necessary to go beyond the automation of reports. Companies can no longer be satisfied with a simple spreadsheet with limited features.
Centralize systems
In most businesses, the production of financial indicators and dashboards involves many different systems. This results in errors not only in data processing, but also in data interpretation.
In addition, it is not always possible to view all the necessary information from a report. The presence of disparate systems is therefore detrimental to the monitoring of investment projects, and also to the preparation of budget estimates, as the data is less reliable and less usable.
Enhance communication
Financial reporting involves not only the finance department, but also other departments in the company. However, the various departments are not always aware of the role of others due to lack of communication.
Furthermore, the parties involved do not always follow the same rules and requirements for financial indicators and dashboards.
Need for new tools to improve budget management
To address these issues, the CFO must be able to rely on solutions that can automate and facilitate the control of processes, while giving more autonomy to users.
From forecasting to reporting, through budgeting, the implementation of new tools is essential to modernizing the finance department.
Data visualization
Data visualization is a major challenge for the finance department, as it enables more effective communication with management. Thanks to the dashboard software, it is possible to summarize the key success factors of the company, and also to contextualize and adapt the data according to the target audience.
As a result, finance teams can speak ‘the same language’ as managers to help them understand all the challenges related to budget management, thus improving their decision-making.
Analytics
Every day, a mass of data is collected in financial information systems : valuable information to support managers in their strategic decisions. However, to exploit their full potential, it is necessary to analyze them in detail.
Analytics helps to identify growth opportunities for the company, and also the risks it faces. Modernizing financial management, therefore, inevitably entails improving data analysis.
ERP
ERP is a major finance management tool, as it makes organization and information exchange more efficient, while automating financial flows in compliance with IFRS standards.
At the same time, we are witnessing a trend of cloud migration of this type of software: infrastructure-related constraints are therefore less critical. In addition, ERP systems are becoming more and more specialized by business line, which makes it possible to take advantage of their full potential, for example in the finance department.
BI software: a formidable solution
To make the budget process more efficient, it is essential to integrate a BI (Business Intelligence) tool. This type of platform combines data visualization and data analysis, making it possible to collect large volumes of disparate data, then consolidate and homogenize them. These data can be of various kinds: activity, payroll, staff, accounting, etc…
The BI software is also distinguished by its high level of granularity in data analysis. At the point where finance meets operations, it enables the creation of financial indicators, dashboards and reports adapted to specific needs. It is also a great asset as regards developing the company’s budget. In short, the BI tool makes life easier on a daily basis for the CFO.
Modernizing financial information systems: 4 main steps
To modernize the finance department, the company must adopt new tools in order to improve its efficiency and optimize financial reporting. It must also put in place a firm transition plan to meet this major challenge.
1) Determine information system requirements
In order to improve its efficiency, the finance department must strive to automate, as much as possible, certain tasks that are still often performed manually. To achieve this, the company must start by assessing its current systems, which are often outdated.
You can replace these systems with cloud computing that offers very interesting options. This technology allows for the deployment of high-performance solutions at a lower cost since it does not require any major infrastructure, within a short time frame.
2) Determine the needs related to budgeting processes
The automation of processes requires a great deal of prior preparation. Indeed, this transition entails several challenges: while it is necessary to improve the efficiency of the finance department, it is important to avoid duplicating tasks.
Thus, these new automated budgeting processes must be consistently and seamlessly integrated into teams. In addition, it is important to establish straightforward procedures, supported by documentation, to replace ad hoc approaches.
3) Support change within teams
Modernizing the finance department brings about changes in the roles and responsibilities of the various collaborators. Teams must therefore be critically assessed in order to develop appropriate training and development systems.
This change management approach is essential to speeding up the adoption of new processes and tools, such as the BI software.
4) Streamline financial reporting
Once these steps have been completed, the company can focus on the core issue of reporting. By leveraging business intelligence, automation, and new ways of working, the finance department is able to collect large amounts of information easily and while handling more reliable data.
In addition, it saves precious time for data analysis. Thus, the production of financial indicators and dashboards becomes much more efficient. Ultimately, the company benefits from clear and usable information about its financial situation, daily operations and cash flows.
Modernizing the finance department inevitably involves increasing its efficiency. How? Firstly, by automating processes and manual tasks. But also by adopting a Business Intelligence tool that makes it possible to obtain more reliable and relevant information. As a result, managers are able to make more informed decisions, while finance teams can focus on more complex, high-value tasks.