How Modernizing Your Finances Benefits Your Bottom Line
When you’re in the thick of running a company, modernizing your finance operations can seem like an overwhelming task. But the benefits of improving your company’s accounting system can save you time, money, and, ultimately, boost your bottom line.
Step Up Your Software
Most small-to-midsized companies initially headquarter their accounting systems in Excel or with basic accounting software purchased at an early stage of their business. However, as businesses grow, so do their finance needs.
Hidden costs of the status quo: Though doing things how you’ve always done them may feel like the easiest path, using an outdated accounting system comes with many costly risks, including:
1. Lost time. The inefficiency of outdated systems is your biggest concern. If you’re still using spreadsheets, contemplate the dozens of hours it takes employees to input financial data and maintain that information.
2. Potential errors. Nearly 90 percent of Excel spreadsheets contain mistakes, according to several studies.
3. Security breaches. If you’re using outdated desktop software, you’re more prone to security breaches, which cost businesses an average of $38,000 in recovery efforts.
4. Competitive disadvantages. Your older software may have limited capabilities relative to newer versions used by your competitors.
The modern move: Take advantage of technology and your business will reap the benefits, including:
1. A streamlined system that saves time. Your financials will be linked to your bank accounts and can be integrated with other accounting tasks, such as invoicing, inventory, or payroll.
2. Aggregated financials in one easy-to-access place. Your staff won’t waste time pulling up information from several, disparate programs and files.
3. Industry-specific insights. You can find many industry-specific accounting software programs, such as those geared toward construction or nonprofits.
Move to the Cloud
As you investigate upgrading your accounting system, consider the advantages of modern cloud-based software, which allows simple and secure access via web browser or mobile phone and eliminates the burden of installing, hosting, and maintaining software on your own.
Hidden costs of the status quo: You may be postponing a move to the cloud because of the expense of purchasing new software. But desktop and server-based systems have their own hidden costs, including:
1. Fixed software and IT costs. Depending on your software, you may be spending money on staff or contractors to maintain servers and regularly update your hardware and software.
2. Lost records. Does the prospect of a computer or server glitch eliminating your financial records keep you up at night? Outdated desktop and server-based software make this a risk.
3. Staff time. Continually backing up those records and running software updates takes hours each month.
The modern move: While only 33 percent of small businesses have moved their accounting software to the cloud, according to a 2014 PEX Card survey, many more could benefit from making the transition. Consider the advantages:
1. Cost savings. Most cloud-based software is paid for via subscription and comes with IT and backup support. Eighty-eight percent of businesses that move to cloud computing report cost savings, and 56 percent say that cloud services helped boost their profits.
2. Real-time information. Your data is immediately accessible and can be easily linked to your bank accounts, payroll, expenses, invoicing, and more.
3. Mobile access. Cloud computing is made for mobile, meaning you can access your company financials from any device, anywhere.
4. Automatic upgrades. Exercise your due diligence and pick a software vendor that is innovative and has a proven track record. The best software vendors automatically push new updates to their customers, meaning your software will never be outdated.
Streamline Your Expense Process
A traditional expense process involves many people and moving parts. Simplifying the process for employees and involving less of your workforce in approvals can have a big impact.
Hidden costs of the status quo: As your company grows, this traditional process reduces visibility and control of your real-time cash flow and creates a host of inefficiencies. The hidden costs include:
1. Thousands of dollars annually. According to the Aberdeen Group, an average expense report costs $29 to process.
2. Overspending. Four out of five companies provide petty cash advances for travel. Not only is cash at risk of being lost or stolen, but companies often provide more than is necessary.
3. High interest rates. If you provide credit cards to employees, you’re likely paying an average 16 percent interest rate on balances.
4. Employees pay. If employees lose receipts or forget to turn in an expense report, they end up paying for their expenses.
The modern move: Look for a solution that tracks your company expenses in real time and simplifies spending with prepaid debit cards. Businesses can then track that spending or approve and deny expenses immediately, from any device. The benefits include:
1. Time saved. Nearly 75 percent of small businesses say time spent on expense reports prevents them from doing more important activities. Companies using a prepaid card solution saved 12 hours of staff time per month on processing expense reports.
2. Decreased spending. The added control offered by prepaid cards helps businesses decrease expense spending by 25 percent.
3. Increased security. Additionally, 47 percent of businesses using prepaid cards report a decrease in fraudulent expenses.
Your company is growing and your finance technology needs to evolve as well. As technology continues to become more affordable and simpler to implement, making these modern moves will keep your company productive, ahead of the competition, and equipped for growth.