Technology has changed the business world in a variety of ways. Due to rapid technological innovations that we’ve been experiencing, it’s safe to say that industries will continue to evolve in the coming years. One thing that technology has changed is the way businesses manage their finances. Back in the day, you just needed experienced accountants and bookkeepers. While such professionals are still essential, businesses today also require additional digital tools like project management software and cloud-based systems.
In this blog, we will discuss how technology has changed financial management. We will also talk about the advantages of staying on top of the latest trends and using the newest technologies.
Importance of real-time data
Newer financial management systems have access to real-time data. This allows businesses to analyse financial information quickly and accurately. For example, they will be able to identify which customer segments are more profitable and immediately make appropriate changes to maximise revenue. To do all of this without real-time data, a business will have to invest into a separate analytics program. Not only does this method cost more money, it is also more time-consuming.
Timely decisions are important in many industries. It becomes even more important if you consider the rapid changes in the digital world. Significant changes to content distribution, SEO, social media and ecommerce are always occuring. These transitions can easily affect your finances. As a business, you need to have the tools to stay on top of everything. Cloud-based financial management systems allow you to check financial performance on your smartphones and laptops. Regardless of where you are, they will be able to get a real-time snapshot of key metrics.
Additionally, this information can be combined with other data such as user behaviour. Through this, your business can gain new insights on your demographic. This, in turn, can lead to the creation of new revenue streams.
Shifting from clerical work
Financial management platforms like Xero reduce the time that your team has to spend on data-entry and frees up time for analysis and strategic planning. This will allow them to focus on improving the financial performance of your business and maximise revenue.
On the more human side of things, it also means your team won’t have to do repetitive clerical tasks. This can improve team morale and gives your colleagues the opportunity to showcase their full set of skills.
What’s exciting is that plenty of financial management programs are now implementing robotics and artificial intelligence for the purpose of data entry. Through machine learning, such programs will be able to evolve, learn how to deal with anomalies and further minimise the need for human intervention.
Additionally, PwC has found that ERP (enterprise resources planning) systems can significantly lower general accounting costs. It allows businesses to streamline their processes and simplify their systems. This is particularly important for small to medium businesses with limited resources.
Forecasting is an important part of financing. Being able to accurately estimate costs and revenues helps businesses avoid budget overruns, significant wastage and overproduction. Luckily, most project management systems have sub-modules that help you with long-term financial estimates.
Such sub-modules analyses various scenarios such as cost escalations and decreasing consumer demand. This will give you a more complete picture of your finances and allows you to prepare for contingencies.
Cloud-based solutions are convenient and versatile. When data is entered into the system, it will be immediately reflected via real-time reporting. This will reduce the time that your team spends generating financial reports.
More importantly, cloud-based systems consolidate different systems into one accessible source. This allows the finance team to work with marketing data, HR systems and other parts of the business. Cloud-based systems also make collaborations between departments easier.
Also, because of the pandemic, many businesses now have entire departments working from home. While this can be a challenge, there are ways to effectively handle it. For example, with an accessible cloud-based system, remote communication and file-sharing become effortless. Even when they’re home, team members will be able to see real-time changes to reports and other relevant documents.
If you want your business to succeed in the modern world, you’ll have to implement modern solutions. Technology has changed the way we handle finances. Plenty of clerical tasks are now automated, freeing up professionals to do more meaningful and exciting tasks. This is not just happening in finance, but also in legal tech and marketing. Stay on top of these trends and you’ll be in great shape. If you don’t, you’ll be left in the dust.