It’s a good idea to produce a cost justification worksheet listing each business issue associated with a shortfall in the current system and the areas it impacts. Estimate the current annual costs associated with this business issue and then estimate the potential savings or benefits derived from replacing your current application. Costs can be calculated by estimating employee time and expense needed to work around the issue, or the expense of external resources to solve the problem. The benefits of change must always outweigh the pain of remaining the same. Not all issues have an easily quantifiable financial value, although the impact of continuing with an inadequate financial application is likely to be significant.
The scope and impact of an organization’s core financial system is likely to be greater than ever. For example, many organizations now need to allow secure, controlled access to non-financial line managers and other remote users.
Through the right, integrated finance system, many organizations are able to inject discipline into the business. Companies can implement the correct purchase order procedure, for example, and measure supplier performance against order fulfilment and invoice accuracy to make quicker, more informed decisions. Often, a significant business requirement is to empower managers to be responsible for the performance of their area of the business. When they can access performance data in real time, they can make the right decisions at the right time to make a significant difference in operational profits as a whole.
When it comes to data visibility and reporting requirements, organizations should be able to quickly track individual vehicle profits and reconcile revenue on distribution. Asset and lease management is also vital for effective control and planning. Being able to see when a piece of equipment is nearing the end of its life, for example, means effective planning and time to consider the best replacements. In general, your staff will be a lot happier when there is less fire fighting and more time to spend on business analysis and future planning.
Lessons from a world-class logistics company
A worldwide logistics company, which trades in multiple countries through multiple subsidiaries, recognized that it needed to unify its financial systems to gain a global, consolidated view of its finance reports.
Previously, each of the company’s subsidiaries used different accounting systems, which made consolidating financial reports very time-consuming and costly. It was nearly impossible to achieve transparency, detailed information and real-time analysis.
The company decided to implement a flexible financial accounting solution that would provide one unified view into financials organization-wide and accommodate the different requirements of its subsidiaries. The new solution was able to easily adjust to local taxation requirements and enabled each subsidiary company to set up its own chart of accounts and cost accounting methods.
The company’s unified approach to reporting has been very beneficial. Now all invoices are accounted for on a worldwide basis, and monthly profit and loss accounting from subsidiaries is shown in one currency, alongside the local currencies. Reports can also be viewed at a detailed level so management has a real-time view of business performance.
Uniform reporting permits analysis which had not been previously possible. Now, financial controllers are able to focus on the future instead of the consolidation of historical data.
By having access to up-to-date consolidated data globally and an increased level of detail, the logistics firm has gained transparency. The team can spot anomalies quicker, so the business can take appropriate and immediate action. As a result, the new finance solution provides peace of mind and improves business-wide risk management.
In today’s fast-paced, changing business environment, it’s critical for logistics and transportation companies to have real-time transparency into their finances. It will not only enable them to cut costs and increase efficiency, but it will also allow them to gain financial control throughout their operations. More importantly, it gives them the competitive advantage of being able to easily identify areas of risk and quickly adapt to changing market conditions.
About the Author: Steve Pugh is CEO of UNIT4 CODA, Inc. in North America, a specialist in best-of-class financial management software. www.unit4coda.com