By Paul Sparkes, Commercial Director of award-winning accounting software developer, iplicit.
In a recession, everybody becomes more conscious of costs. It’s only sensible to scrutinise all an organisation’s outgoings.
But there’s a danger that caution can turn into spending resistance – even when wise investment would increase revenue and cut costs, this is often the case when considering digital transformation and upgrading from a legacy system to a modern-day cloud offering.
Have you added up the cost of doing nothing?
To fully understand what the system is costing, there are many factors to be considered and some are easier to quantify than others.
But what else are you paying out for? There are costs which can be easily accounted for, which might be overlooked. If the current system is ‘on-premise’ – where data and storage are on servers within the organisation’s own property – then there will be times when money needs to be spent upgrading and maintaining those servers.
What are the costs of inefficiencies in the current system?
Are there manual processes that could be automated? Are staff spending valuable time every month on data entry because the information in one part of the system doesn’t automatically appear where it is needed?
If so, that’s a significant waste of time and money that could be eliminated.
What is the cost of not having real-time information? If there are lags in a system which is supposed to tell managers how a department or the organisation is performing, that can add to costs in time spent trying to find key business information.
The key question organisations should be asking not just their finance teams, but the wider workforce, is how long does it take to find a piece of information in your current finance system?
If departments require timely information but can’t get it, or have to wait for the finance team to provide it, then there is clearly scope for a return on some judicious spending.
Where will you see the return on investment straight away?
Long-term payoffs are fine, but in times of recession, organisations will naturally be happier if their investment shows obvious returns from day one.
A wise investment in accounting software which helps to automate processes should reap immediate benefits.
If your finance team have been spending a lot of their time on routine tasks because your software doesn’t automate those actions, then they should be freed up straight away to concentrate on higher-value work.
It should also be possible to see some quick wins if the new system integrates with your other software through an open Application Programming Interface (API). The software can pull information from the different systems that handle such tasks as invoicing, time sheets or expenses.
The benefits of real-time information should also become clear quickly. A manager who has up-to-date data at their fingertips is able to take action to promptly manage costs and improve performance in their department.
Some of the longer-term returns
All the above benefits will continue – and multiply – as the months and years go on.
For example, the process of report writing in an organisation can go from taking weeks to taking hours, giving a typical organisation up to four weeks a month back and saving the cost of at least one person who no longer has to be focused on mundane duties. Allowing them to be deployed to something more useful and valuable.
That investment in automation and integration should pay off when audit time comes around.
If an organisation can demonstrate the controls that are in place to ensure accuracy in a group’s accounts, that could halve the amount of expensive auditor time necessary for the process.
In addition, smart investment can see longer-term benefits in areas such as:
- Staff satisfaction/well-being – it costs a lot to replace a member of the finance team who has become exasperated at having to use software that’s not up to the job.
Software that works for the user, rather than the other way round, will make a lot of people’s working lives less stressful by taking care of many of the more mundane tasks, it should make people happier by releasing them to do more interesting work.
- Debt collection – this becomes all the more important in times of recession and is greatly aided by good software. The right software can deliver accurate, real-time information to the credit control team, and in a group of companies, it makes clear how exposed the organisation is to any one customer.
The system can automatically send reminders to debtors, and even take different approaches with different kinds of customers.
- Supporting growth – as the organisation grows, the returns on investment accumulate.
If a business doubles in size over the next few years, through organic growth or acquisition, that should not mean the finance team has to double in size as well. A scalable finance system can take that strain instead.
Having a finance system that can deal with currencies and entities in other countries will also bring substantial payoffs for international growth.
Adding up the returns on investment
Whether you want to look at the short-term or long-term, the returns on investment in accountancy software should be clear and worthwhile.
Some are easy to quantify, while some are much harder. In fact, those unquantifiable returns on investment – improved morale, reduced turnover and a more outward-looking organisation – can be the biggest returns of them all.
