Every business owner understands that cash flow is the lifeblood of his business. It follows that maintaining a healthy business means ensuring that cash flow is not interrupted because, interruption spells the death of the enterprise.
Sound financial management is the key to maintain optimum cash flows. However, as businesses grow, customer relations become paramount, supply chains and vendor relations wax more complex and back office chores suffer as the focus is drawn to other areas of concern, such as improving products or services and meeting the challenges of competition.
If the business fails to come to terms with its financial management needs through inattention and/or reliance on financial systems that have been outpaced by the business’ growth, one or more of these 7 afflictions may result.
Disorganized and Rambling Reports
This is a symptom of financial management’s failure to ensure that systems and processes keep pace with the growth of the business. It is clear evidence that proper integration of financial data has been lost due to a systemic inability to collect meaningful data in an organized and timely manner from all relevant segments of the business. This often results in many additional man hours of work to simply close out the monthly books.
Never allow departments to become compartments. The financial management people must have clear lines of communication with all departments to speed and streamline financial processes. Departmental silos are counter to the achievement of these goals.
Over Reliance on Spreadsheets
The proliferation of spreadsheets in your business is the most visible red flag you can encounter, short of outright business failure. Excessive use of spreadsheets is the telltale hallmark of a failed or failing financial management system.
Careless Expense Tracking
One key responsibility of the financial management team is accurate and effective monitoring of the business’ expenses. Careless expense tracking results in inaccurate financial projections, lost opportunities for efficiency and increased potential to bleed revenue.
Outdated Financial Data
Businesses require up-to-date financial information to make prudent decisions. Poor record keeping and/or outdated systems increase the time necessary to gather information. More to the point, the information, once gathered, may be of questionable value.
No business is free from the regulatory burdens imposed by local, state and federal government. Failure to meet these governmental mandates can have severe financial consequences. Taxes, for example, are entirely monetary, but many other regulations have a monetary component. It is imperative that financial management and compliance be seamlessly integrated with respect to their overlapping responsibilities. Failure to do so places the enterprise at risk.
Technology is the best friend of your finance management team, and consequently your business, can have. Time is the enemy of all technology used for the operation of your business. I am always amazed that delivery vehicles and other equipment are upgraded with little or no debate, while financial management software and IT infrastructure hardly receive a second glance when they become outdated.
What Is the Cure?
Disorganized and rambling reports might be addressed by uploading data to a cloud-based system. This would allow everyone access to the most current data available, reduce confusion and speed up reporting functions.
Compartmentalization can be averted by employing a financial system that includes enterprise social technologies. This improves communication by removing boundaries to collaboration. This results in greater productivity and a full participation with the financial management team.
Undue reliance on spreadsheets can be eliminated by migrating to a financial management system that automates workflows. This results in a streamlined workflow and reporting that is almost error free.
Eliminate careless expense tracking by entering time and expense data to the cloud. This allows everyone that needs access to have it and makes the process of linking time and expense data to specific projects, accounts and individuals almost seamless.
Overcome outdated financial data by moving to a system that provides real time data.
Mitigate non-compliance by implementing a cloud-based solution that centralizes and automates the revenue management process.
Wrapping it Up
Outmoded financial management technology must be replaced in much the same way you would replace an aging delivery vehicle or an inefficient, outmoded piece of production equipment. In some instances, your outmoded technology may be Excel spreadsheets, in others, it might be a patchwork of software applications that do not integrate properly and demand the constant intervention of IT personnel. Investing in technologically current financial management systems, in concert with other cloud-based options as suggested here, can enhance the overall efficiency of your enterprise. This means greater profitability, enhanced cash flow, and opportunities for scalability that may have been beyond the grasp of the business.
The benefits of a fully integrated, cloud-based financial management system for business cannot be overstated. If your enterprise is suffering from two or more of the chronic illnesses described her, the time is right to take corrective action.
Andrew Cravenho is the CEO of CBAC – an innovative invoice finance company. As a serial entrepreneur, Andrew focuses on helping both small and medium sized businesses take control of their cash flow.