What are financial processes?
Financial processes refer to the methods and procedures completed by the Office of Finance. They include, but aren’t limited to:
- Data collection
- Budgeting
- Planning (strategic planning, P&L and balance sheet planning, HR planning, capital planning, project planning, production and capacity planning, sales and operational planning, etc.)
- Forecasting (long-range forecasting, rolling forecasts, cash flow forecasting, etc.)
- Modeling
- Financial close
- Consolidation
- Reporting (management, statutory, disclosure)
Why are financial processes important?
Sound financial processes are the backbone of a financially viable organization. The results that financial processes produce should underlie every decision, every budget line item and every direction change.
Sound financial processes equate to a clearer insight into the fiscal reality of your organization. If you can easily see a 360-degree view of your organization, you can shape the direction of your company based on what the numbers tell you, not just speculation.
Streamlined financial processes result in business decisions based on that financial reality.
When you produce business models and forecasts based on a single source of information, the plans, budgets and strategic decisions you make will be more informed and accurate as a result.
Optimized financial processes lead to effective use of your human resources. There’s nothing worse than having highly qualified financial professionals bogged down in menial tasks like data entry when they could be adding value to your company through analysis.
Centralized financial processes give you more confidence in what the numbers are telling you.
If you’ve instituted financial processes using a centralized system, you’ll get the benefit of increased confidence. When you aggregate corporate data into a single source, there’s no risk of overlap or miskeyed information when multiple contributors are filling in reports. With data control and validation, you’ll be able to define accountability, track revenues and expenditures more accurately. When financial processes are decentralized or siloed, errors due to overlap or simple misinformation are more likely to occur. How could you ever be sure you’re using the right numbers?
How to improve financial processes?
- Unify financial processes. Connect all finance processes in a unified software system that handles all processes from close through to disclosure.
- Get a single version of the truth. When a software system automatically populates and refreshes data, the risk of human error is removed.
- Streamline collaboration. Once you connect all financial processes, the next step is to connect the people that complete them. Enable users to collaborate by choosing a solution that facilitates, tracks and streamlines communication within the same single environment where other financial processes are completed.