Mid-sized businesses in Australia are transforming their financial system so that more real-time financial information is available to them.
This can be beneficial because the sooner the business has information about its financial health, the better the decisions it can make about resource planning such as inventory management.
Getting rid of long information lead times may allow a business to be more responsive and agile in the face of change.
But switching an organisation's financial system over to provide financial information in real-time is an important project that requires careful planning.
A thorough assessment of the way the business collects and collates data is important before anything can be changed.
Once complete then can you design and implement a new system that brings information into the business in real-time.
Planning for change
HLB Mann Judd manager Maria Sfirse lives and breathes this subject. Her role is focused on helping businesses move offline, manual financial systems into the cloud.
A typical client might have numerous disparate accounting and financial processes across multiple systems, both electronic and paper based. Some of these systems would be connected, others not.
Transitioning all this into the cloud requires planning, patience and testing.
“Looking at your accounting software is the first step," Sfirse explains.
Her goal is to move clients to cloud-based software that can be accessed from any computer or device anywhere in the world. This contrasts with other systems that require software to be installed on a computer to operate and therefore often can't be accessed remotely.
CFOs should expect any new financial accounting system to include the capability to take in a live feed from the organisation's bank.
This feed is a key component of a switch from month-end to real-time accounting.
“The data needs to come through every day from your bank and feed automatically into the accounting system so the business can see the transactions that have occurred in the past day. The feed should code each transaction," Sfirse adds.
Putting processes in place
Moving a business' financial information to the cloud has other benefits. For example, introducing more automation can reduce the errors that tend to come with manual data entry. This in turn means financial information the organisation uses to drive strategy and planning is more accurate.
But it's important not to underestimate how much work is involved transferring the business' data into the new system. While some information will come across seamlessly – for instance the live bank feed – other information (such as customer details) may have to be manually entered during the transition. Every business will differ.
“These days most accounting software will allow you to export data from your old software and import it into your new software," says Sfirse.
“We recommend clients assign someone specific, whether internal or external to the business, to be responsible for this aspect of the project. This is because it's quite tedious and it's important to check everything very thoroughly. As such it helps if the person knows the software really well," she explains.
It is important to operate parallel systems until the new system is proven to ensure the integrity of the data.
“We generally run both systems for at least one month. Once you get the results you need from the new system, you don't need to keep both going. If you're getting the same results on both systems it's safe to turn the old one off," she adds.
To get the real benefits from a cloud-based system it's important to move everything into the cloud, rather than operate some process in the old system and some in the new.
Sfirse uses a client in the manufacturing sector to explain.
“Their employees completed manual time sheets to allocate costs for jobs, spending a day a week entering them into the system. We had to stress that to get the best out of their accounting software, time sheets had to be part of the transition to the cloud. It's not just about moving the accounting software into the cloud you have to move all the processes that feed into it as well."
This can be a mammoth task and Sfirse recommends working with cloud-integration partners.
These are specialist consultants who are able to find the right accounting software for a business, taking into consideration its processes.
Many accounting software firms work with aligned businesses that develop apps to integrate with the main software. Cloud-integration specialists are able to recommend the right apps to complement the central system.
“It's important to do the research to find out what's best for you because different software suits different clients," Sfirse says.
“Take a step back, look at your processes and consider why you do what you do. If you're going to change your systems or moving to real-time data, you need to have systems in place to allow that. Going half way is not going to achieve the results you want," she adds.
Finally, she says it's essential to ensure any new software is able to feed back into critical third party systems such as the Australian Taxation Office (ATO). “That's definitely something to consider."
The key to success in an accounting system upgrade is to take the time and meticulously plan for the switch.
It can be an intricate process. But once fully transitioned, the business may reap numerous benefits to help it respond quickly to change and guide management thinking in the future.
- Map out old systems before planning new ones.
- Run parallel systems until the new system is proven.
- Work with cloud transition specialists to identify the right new tools, taking into consideration existing and new processes.