In our previous blog, we discussed a few of the must-have features of an efficient financial management system, and we are back again to take that discussion forward in this second part. If you missed out on the previous blog, just click here to read it!
Support for Governance, Risk, and Compliance (GRC)
In today’s complex business climate, all businesses are facing issues that historically were associated with large multi-national corporations. These contemporary fast-pace risks need organizations to be more responsive and agile in their approach to Governance, Risk, and Compliance (GRC). Moreever, increasing growth and margin expectations, along with changing regulations and technological advancements, have intensified the business landscape.
Industry-specific compliance, regulations like the Sarbanes-Oxley Act, and globalization and outsourcing have raised expectations from the GRC capabilities of an ERP / financial management system. A cloud-based GRC solution brings many advantages, such as the reduction of many IT risk mitigation activities typically required for on-premise software. Additionally, the financial management system should be compliant with basic accounting standards, it should have built-in internal controls and auditability, and it should provide tools for security and control management with permissions and management approvals. Flexible workflows are another element that is a must in a robust financial management system.
Experts claim that no solution is likely to completely meet a companies’ GRC needs. However, NetSuite provides its clients with a host of options focusing on developing, maintaining, and monitoring the control framework from within the system.
Multi-Company and Global Business Management
Reporting currency, taxation, changing exchange rates, and different legal and compliance requirements become a major concern for companies that are expanding across different geographical regions, with several subsidiaries and international sites. Visibility is another challenge when companies are operating on regional and global levels.
Your financial management system should readily handle local taxes across subsidiaries through an integrated tax engine that allows for multiple tax schedules. The system should also handle country-specific accounting standards and deliver multicurrency management in all financial areas along with multi-currency consolidation across accounts receivable, accounts payable, payroll, inventory, billing, invoicing, and order fulfillment—from local in-country operations to the regional office to global headquarters.
Streamlined Order-to-Cash Process
To control your bottom line efficiently, you need to manage and scale your business processes along with the company growth. With business growth, you will feel some “growing pains” in the order-to-cash process. An efficient order-to-cash process allows companies to process the order management fulfillment, update the accounting information, populate customer records, and calculate and pay commissions efficiently. This means that you can record data in your accounting systems in time for the close of the quarter, resulting in accurate reporting, increased revenue, and happy sales reps!
An efficient financial system aligns front-and-back office procedures and incorporates built-in order management. This allows companies to decrease excessive paperwork and expenses. It also empowers finance and executive teams with data-driven, timely, efficient and accurate insights into the company’s performance. By reorganizing and accelerating the order-to-cash procedure, companies can eradicate manual blockages and inaccuracies. They can create an effortless surge from sales quote to approved order, effective order to fulfillment, and well-timed invoicing to payment processes.
Integrated Inventory Management, Fulfillment and Shipping
A key factor of cost control is making sure that the inventory is restocked at proper times. If you have additional inventory on hand than necessary, your inventory value will rise which has a negative effect on the inventory turnover ratio. This will harm the profit margins of your product lines. Therefore, your financial management system should be well-equipped to handle each product’s margins with a clear view of inventory costs, turn rates, and inventory profitability. It should have strong inventory management controls that provide you with complete real-time visibility into demand, supply, costs, and fulfillment trends.
Additionally, some basic capabilities of inventory management consist of bin and lot management, landed cost, demand-based replenishment, customer and volume pricing, and multi-location inventory. Your financial management/ERP system should keep track of performance around these capabilities so that your company has control inventory management.
Complete Procure-to-Pay Process
Buying services and equipment without a precise purchasing and approval process, organizations run the risk of employees engaging in maverick expenditures that can potentially be damaging towards the bottom line. A robust financial management system will solve these problems by providing a complete procure-to-pay process that gives organization visibility into spending. This will allow them to instantly recognize and resolve any out-of-control expenses and discover prospects for savings. The financial management system thus needs to have efficient purchasing workflows, policies, approvals, and audit trails to provide complete control and ensure accountability. An added benefit of these features is the savings and the elimination of errors through automation of the entire process through purchasing, receiving, and account payables.
Furthermore, any new purchase orders will be automatically generated once re-order points have been reached for goods or raw material. This will significantly and positively impact time efficiency as your finance would be able to focus on critical financial processes and operations.
In this second blog post of the Financial Management series, we discussed a few additional must-have features of an efficient financial management system and how these features facilitate your business. Stay tuned for the third and final blog of this series to explore further features that can help you gain a competitive advantage in the industry. As always, we are happy to answer any comments or questions you have! Just leave them in the comment box below! Till next time!