To be successful, a business needs to strive for profitability and growth. An important element of this is the need to regularly review internal processes and functions. The finance function should be included in that process.
The finance function of any business needs to encapsulate the right tools, systems and processes to provide management with relevant, timely and accurate information to enable effective decision making.
Too often a business’s finance function is ignored because the business continues to operate as it always has. But what may have served your business well when you had 10 customers per month, will not necessarily be fit for purpose if you now have 400 – let alone if you aspire to have 1,000.
For some, current systems may be suitable, for others an investment may be required and this may range from small changes to a major overhaul. In this process it is important to take stock of what is working well and consider what could be improved. Examples to consider include your general ledger and payroll packages and whether your finance related staff still meet your business’s requirements. It may sound harsh, but the bookkeeper you hired 10 years ago (with his abacus) may no longer possess the skills you need as your business has outgrown him.
One of the biggest areas for potential improvement are ‘manual’ operations. Moving from manual processing to automated systems has many benefits. In this day and age, electronic cashbooks, Excel models and add-on’s (examples are inventory management and customer relationship management) need to be considered.
There is no ‘one-size-fits-all’, so there should be a process of identifying the needs of your business, and preparing a wish list of information taking into account its size, turnover, growth and complexity. Different tools can then be designed to perform different functions, some more comprehensive and complex than others.
There are many tools in the market that offer plenty of bells and whistles, so it is important to check that their cost does not outweigh the benefits they provide. Getting the right fit is essential.
Just as you get a regular warrant of fitness for your car, your finance function should be no different.