Sound finances and proper accounting practices are paramount to the successful running of a business. Any seasoned money manager will know how critical the work they carry out is, but if you’re somewhat on the outside of the day-to-day financial management of an organisation, you may be surprised just how far-reaching its influence is.
This is especially true when it comes to making informed business decisions. Turning visions and goals into reality takes financial backing, and sometimes the only data that really matters when it comes to plotting a path ahead is money related.
From budgets and resourcing to future growth plans, here’s a look at how your finance and accounting software can directly inform your future decision making.
Operations and profitability
Your procedures, supply chains and resourcing all depend on sound financial data.
Accounting information can inform on any potential cash flow issues relating to stock orders, as well as which divisions of your company are the most profitable.
A granular understanding of how each division of your organisation is running from a cost and profitability perspective is critical to long-term strategic growth.
For example, having data to show which stores are more profitable than others can inform closure of expansion plans. Meanwhile, knowing which part of the supply chain is proving the biggest burden to margins is critical knowledge.
Without the right financial information, business leaders can end up taking decisions based on gut or what they can directly see – often with poor outcomes.
Loans and investment
Your finance and accounting software can help inform the loans and investments in two ways.
First, is whether you need a loan at all. Cash flow forecasting and balance sheet data can help you understand whether the financial position of the business right now is strong enough to back the plans you have without the need for outside investment.
However, if extra capital is required, then any bank or investor is going to need to understand (and trust) the finances of your organisation.
Lenders need your accounting information to assess your income trends, outgoings, any debts, missed payments and creditors. Without this information, they can’t properly assess your organisation’s suitability for credit.
Great finance and accounting software that’s properly integrated with the rest of your business operations allows the easy access and reporting on the data that a lender needs, speeding up the investment process.
Sales and marketing
What channels and campaigns are driving the most profitable return?
Siloed departments, especially sales and marketing, can lead to decision making that only benefits that division. For example, a marketing team ploughing budget into one campaign that’s driving the lowest cost-per-lead, even if a quick call to sales would see those leads aren’t delivering promising conversations.
And what of those leads that do convert into customers? Finance working in partnership with sales and marketing teams can begin to understand the lifetime value of every customer, relate it back to a marketing source or activity, and direct efforts and spend accordingly.
Financial data of this sort is extremely useful for leaders when viewing macro trends too. For example, when marketing spend increased in years X and Y, did you see a sales boost? How much lag was there between advertising campaigns and revenue generation? All in, what was the lifetime profitability of each sales and marketing initiative?
Essential further reading:
- Does your finance system need a health check? (opens in new tab)
- How software can enhance your company’s financial forecasting
- Important features to look for when researching new finance and accounting software
Finding the right finance and accounting software
Understanding the benefits that great accounting and finance software can deliver is one thing. Finding the right platform that meets all your needs and challenges right now (and in the future) is another.
Download now: Choosing the right finance software for your business
At Phase 3, we help organisations just like yours with this challenge every day. Our specialist teams work to understand your specific requirements, from the different software capabilities and its integrations, to the specific reports it needs to be able to run to help inform your business decisions.
Once the best solution has been found, we then take care of set-up and implementation, reducing your own internal resource cost that holds back so many businesses from upgrading their existing systems.
Learn more about our system selection services right here.
