Forward-looking organizations need to go beyond what online finance and accounting applications such as QuickBooks etc. offer. Standard reporting features are not empowering enough. How forward-looking SMEs can provide more options and considerable versatility in customizing reports that will empower and enable effective executive leadership.
Two Different Approaches
There are two kinds of business owners when it comes to placing expectations on the accounting function. The first kind employs accountants to primarily ensure that their businesses are compliant with regulations and tax laws. The second kind sees compliance as basic hygiene and is happy only when financial data analysis leads to various business insights. Those insights are then acted upon to help grow the business in an increasingly complex environment.
This mindset is evident in the way finance and accounting applications are used. Today, online accounting software packages are commonplace and user-friendly. Technology has advanced to levels where the rule sets of double-entry bookkeeping are incorporated in the software itself. Basic accounting is no longer a mystery for non-financial folk. And accounting entries now can be posted intuitively with little training. Bank feeds flow into the system and automatically reconcile with your accounting records with little manual assistance. Standard reports are available at the click of a button if you are confident that all information is updated. If business leadership does not look beyond the financial statements and cash flow, the work becomes cyclic and mundane.
The Need for Deeper Insights
But if business leadership wants deeper insights from their financial data, they need to answer the following key questions.
- From your finance and accounting function, what are 3 or 4 inputs that will have the highest impact on your business?
- Does the current reporting from the software you use to provide these inputs?
Keeping a close watch on cash flow and profitability is an essential management discipline for any business. But leaders need to go beyond this and ensure that the main drivers for insightful decision-making are exclusively ascertained. It involves categorizing strategic initiatives, business units, or functions and tracking financial performance across each of them. It may be within one business entity or across multiple entities.
Example
In the example of an SME we serve, they have a parent entity with three strategic business units and a wholly-owned subsidiary. For the shareholders, a comprehensive report on overall business performance involves consolidated financial statements for the parent and the subsidiary. But for the executive leaders, regular performance reports of the business units and functions are required as they strive to grow the business.
The Future Empowering Realm
The good news is that even SMEs can assemble this capability without incurring hefty costs. While their accounting platforms may not provide much beyond standard reports and minimal customization, a clever choice of apps that can integrate with it can do the job. Along with this employing a business intelligence tool like Power BI can provide more options and considerable versatility in customizing reports that will empower and enable effective executive leadership.
Innovate Now
While technology easily enables such an efficient approach today, organizations are stuck with the inertia that hampers their movement forward. The existing finance organization (or accounting function) is often short of bandwidth and the diversity of skills required to achieve this. Cost-effective solutions are possible when such organizations engage with service providers like Insight Consultants to engage with their finance organization (or accounting function) and work together to accomplish desired outcomes.
We are just a call away. Click here to make a contact.
