Although most companies are looking to preserve cash at the moment, it seems that there’s one area where new investment can be so beneficial that it can save you money in the long run. And that’s in upgrading your financial technology.
Typically, the Finance Director is the one asking the hard questions of the departments that want to spend more. But now is the right time for them to be the ones making the case for improved financial technology.
A need for precise data and meaningful KPIs
Back in the first quarter of 2020, when your company was in great financial shape, you probably gave little thought to modernising or upgrading your financial systems. You had everything in hand, business was good and the country wasn’t in the midst of a recession.
But now, COVID has made the C-suite – and especially finance directors – acutely aware of the need to focus more clearly on the numbers. Businesses are scrambling to make sure costs are minimised and sales maximised. And with that comes a new requirement for the hard data to support some swingeing decisions.
It might be the case that having the precise information that shows how you can make an extra percentage point of margin on each sale could be the difference between survival and business ruin. And, last year you perhaps didn’t think about tracking your DSO (days sales outstanding) ratio, but as we head into Q4 of 2020, that metric could suddenly be a vital indicator of the health of your cash flow.
Finance directors and CFOs are always keen to ensure ROI. Right now, those calculations are simple and make sense. Expenditure on new financial technology that can give you the sort of precise data you desperately need can bring greater efficiency, improve customer service and ultimately maximise profitability.
Providing justification for investment
Are you beginning to run out of cash? With a clear view of your finances, it’s easier to make a convincing case for additional funding. To be able to make a considered decision, lenders and investors want to see an accurate information on your cash burn, direct expenses (cost of goods sold), operating expense ratio and so on.
And they want to see these metrics on a real-time basis. Not having this information puts you in danger of not securing the funding you need – and running out of money.
Enabling working from home
COVID has meant that we’ve all been working from home much more. But this has made it difficult for finance teams in companies that don’t have access to the systems they need.
Not only have many people expressed an interest in continuing to work remotely, it’s likely that government legislation and company policy will continue to make it necessary for many employees – at least until a vaccine or a successful treatment is found.
Companies without on-premise financial software, or those that relied – pre-COVID – on spreadsheet accounting methods, have struggled to work effectively and collaboratively over the past six months. For their finance teams to continue to be productive and valuable, there is a very strong case for upgrading financial systems to those that operate in the cloud and which can easily be accessed remotely and via mobile devices.
Making the case
Technology should not be viewed as just a cost. Instead, it can make your business more profitable, ensuring its continuation and even contributing to its future growth.
As a CFO or finance director, you need to be able to demonstrate the value of upgrading your financial technology. In these precarious times, any expenditure is going to be hard to justify. So, for a greater chance of success, when you make the case to your board colleagues for new technology, ensure that you demonstrate and explain:
- How it can make the business more profitable
- How it can improve efficiency for customers – and improve acquisition or retention
- How it supports the company’s strategic long-term goals
- How it enables better cross-functional collaboration
- How it reduces risk and improves cybersecurity
- That it can be implemented in a limited fashion at first, if required, then scaled up later
If you can’t clearly demonstrate the ROI of upgrading your financial software like this, then lean on your supplier for help. A good vendor will be able to provide you with detailed substantiating evidence to prove your case.
If you want any help with selling the importance of modern financial technology to your sceptical colleagues, then one of NoBlue’s experienced consultants would be delighted to help you – book an appointment today.
And you can see the benefits of financial innovation for yourself by joining our upcoming webinar on reconciliation in NetSuite. It takes place on 8th September at 2pm. To register for your place, click here.