In disruptive times, it is more important than ever to have a strong financial management solution in place.
The COVID-19 pandemic solidified what financial decision-makers have known for a long time: Clunky, outdated financial software can drag down a business. Businesses need fast, accurate, and comprehensive information and reporting. March 2020 when the pandemic struck, most SMBs found themselves unable to cope with uncertainty, ill-equipped for the financial impact, and poorly positioned to recover.
The situation was dire for those that were still in business in July. According to the SMB Group’s July 2020 SMBs: Navigating a Path Forward survey:
On top of that, the U.S. Census Bureau reported that 38.1% of small businesses had not received their Paycheck Protection Program (PPP) assistance.
In hindsight, many things could have helped SMBs fare better. A key example of this is in financial management, where SMBs were stuck with spreadsheets and low-end or disconnected financial solutions for far too long. When the pandemic hit, they lacked insights that could have helped them avoid unnecessary risks and the agility to respond to new realities.
Because of this, 19% of SMBs are seeking to modernize their financial and accounting systems to help establish a stronger business foundation for the future.
The backbone of every organization is finance and accounting. You can make better decisions when you have access to accurate, comprehensive, and timely financial information.
Many older, legacy financial applications don’t offer real time visibility into financial information. This makes it tough to make operational decisions day-to-day, such as whether to hire more people or buy new equipment. Forecasting, budgeting, and planning turn into arduous and time-consuming tasks. Too much time is spent on moving data back and forth between applications and spreadsheets, leaving more room for manual errors with each new version. Reports generated through this process are static spreadsheets, becoming outdated as soon as they are created – driving the need to create more updates. This leaves little time to actually analyze and use the data.
Here are some common problems associated with older financial applications:
A brittle and outdated financial approach is a huge disadvantage to SMBs, a fact that the pandemic has driven home. On the flip side, cloud solutions ensure real-time and trustworthy information.
As a result, cloud solutions are becoming a must-have for SMBs across most application categories. Especially during these trying times, cloud computing has more than proven its worth. They allow SMBs to meet new operational, employee, and customer requirements more easily: 83% of survey respondents said cloud-based business applications had been valuable in sustaining their business through the pandemic – and 37% said that the pandemic has made them more likely to pick a cloud solution for new application investments.
Most modern financial solutions, such as Sage Intacct, are born in the cloud. Data in the cloud is up-to-date and trustworthy because it flows into the cloud solutions in real-time. Instead of spending time aggregating data, finance teams can focus on analyzing and communicating insights. There are also vendors that offer integrated planning and budgeting modules to help teams dig deeper to evaluate potential outcomes from different courses of action.
There are also security advantages to moving to a single, secure financial solution. Juggling spreadsheets makes it all too easy for people to share sensitive company and customer data - potentially putting it into the wrong hands. Moving this information out of spreadsheets and into a unified cloud solution limits data with user-level security rules and permissions.
Cloud vendors are also embedding artificial intelligence (AI) and machine learning (ML) capabilities into their solutions. This brings a new level of intelligence to categorizing expenses, flagging policy violations, providing alerts, spotting trends and anomalies, and making recommendations for you. Best of all, cloud financials solutions provide friction-free access to these capabilities via the application and interface you’re already using, so you don’t have to figure out how to bolt these capabilities on.
If there is one lesson we can take from the pandemic, it is that business conditions can change on a dime. SMBs now know this, and many are making major changes to ensure business viability – such as creating additional sales channels, developing new virtual services, and adding no-touch payment and transaction options for customers. It is easier to make these shifts with modern, flexible financial and planning tools.
Relying on older, disjointed solutions can slow down your business and impair decision-making. Businesses need to tap into new opportunities and avoid unnecessary risks for long-term viability. SMBs should closely examine how they can digitize financial processes and harness data more effectively to understand, predict and respond to new employee, market and operational requirements.