Running a business without financial software today is virtually unthinkable. These tools have become so fundamental to how businesses operate that it’s easy to take them for granted. But when they fail to function properly, the costs can quickly pile up as dangers can arise from regulatory compliance, data privacy, and basic efficiency.
So what are the key benefits financial software offers and which should you look for when choosing one?
What is financial software?
Financial software encompasses a range of tools which help handle accounting, strategic planning, and anything else connected with managing and processing financial information. This means financial software is crucial for both compliance and planning alike. Businesses can use either off-the-shelf solutions or hire a vendor for custom financial software development built around their needs.
Top 5 benefits of financial software
With the understanding that financial software can be used for a variety of strategic purposes, what are the key benefits you should look for?
Automation of processes
When financial software first began being used in the 1970s and 1980s, the big advantage it offered was automation. That benefit remains powerful today. Often this means skipping the laborious and error-prone process of manually entering and exporting data.
Instead, by using integrations and algorithms to automatically gather, analyze, and organize data, financial software can create substantial time and cost savings. That’s also without mentioning the advantages to employees who no longer need to spend their valuable time with tedious work like manual data entry.
Easily adhere to financial reporting guidelines
Most financial software is capable of automatically generating professional-looking reports that match reporting guidelines from all kinds of stakeholders. These can also be customized, so if you have a particular investor who likes to see a monthly statement with specific metrics, you can ensure that gets generated automatically.
This is also extremely valuable when tax season rolls around, as it enables you to streamline your reporting and maximize your returns. If your business taxes are relatively straightforward, this can even mean avoiding the need to hire a tax specialist at all.
Facilitate consistency
Whether you’re submitting financial reports or ensuring your company’s financial records are accessible internally, it’s vital to make sure your data is consistent. Financial software is capable of highlighting inconsistencies and flagging them for review, ensuring that potential problems are identified and corrected before they create greater issues.
Put another way, financial software creates a “single source of truth” that stakeholders can refer to. This makes it easier for everyone to build alignment, avoid confusion, and operate more effectively.
Easily accessible financial information
Siloed information costs the average business around $15 million per year. This can translate into as much as a 30% loss in annual revenue. Preventing your employees from accessing the information they need to make better decisions will always carry enormous costs.
That said, data security and regulatory compliance often mean businesses need to be very careful about who has access to what data. In other words, you need financial software to ensure the right people have access to the right data and no one else.
Facilitate strategic planning
Strategic planning always involves finding a balance between looking ahead and looking back. The right financial software can facilitate both. By enabling you to both analyze past financial data to draw robust and actionable conclusions and use that data to forecast, financial software makes strategic planning far easier and more powerful.
However, the way your financial software does this is also crucial. Data needs to be made comprehensible and visual for it to have the greatest impact. So it’s worth considering how a piece of software is able to display information as well.
How to choose the best financial software
With all these benefits in mind, how should you go about choosing a solution that works for you? This process begins with understanding your own needs: who are your stakeholders, what are your regulatory challenges, who is going to be using the software, etc. These questions should provide you with a foundation of features you will need.
From that point, you can look into whether an off-the-shelf solution will meet your needs or whether it’s worth investing in a custom piece of financial software. Here, you’ll want to think about scalability, security, ongoing support, and generally how you can ensure whatever software you use is ready to grow and change with your business.
Just be sure whatever solution you choose is one you can trust and rely on. Few tools are more important than financial software because of how foundational it is to the running of any business, so make sure you’re working with a trusted partner.
