CFOs Guide to Evaluating Cloud Financial Management Systems

As businesses increasingly move towards modern technology strategies, cloud-based financial management systems are becoming the norm, rather than the exception. For a Chief Financial Officer (CFO), evaluating cloud financial management software is an important decision that can affect everything from the company’s day to day financial operations to generating end-of-financial-year financial statements. In this guide, we will explore all the key financial aspects that accounting professionals, or finance professionals, especially CFOs, need to consider while evaluating cloud financial management systems.

Understanding Modern Financial Management Systems

Before we dive into the evaluation process, let’s first understand what a modern financial management solution is and how it can benefit your organisation.

The best business management solution will provide a suite of tools designed to help manage daily financial operations and plan for the future of a business. Most modern financial systems offer features like accounting, accounts payable and accounts receivable, financial planning and analysis, budgeting, general ledger, forecasting, and risk management. In addition to these features, cloud financial management systems can provide real-time financial data, which can be useful in making business decisions.

The Pros of Cloud Accounting Systems Over On-Premise Solutions

Cloud-based financial management software offers several advantages over traditional, on-premises solutions. One advantage is the ability to access data and reports from anywhere, anytime, and on any device as long as there is an internet connection. This flexibility can enable better collaboration, increased efficiency, and improved decision-making.

Another benefit is the ability to scale quickly; cloud-based solutions can be scaled up or down as per business requirements, making them ideal for businesses with fluctuating needs. Cloud financial management systems also give CFOs the option of paying only for what they use, minimising upfront investment.

Challenges of Cloud Accounting Systems vs On-Premise Solutions

As with any new technology, there can be certain challenges while implementing cloud-based solutions. One of the primary concerns is the security of data. CFOs must ensure that the selected cloud financial management solution has appropriate security measures in place. In addition, cloud-based solutions require reliable and secure internet connectivity, which can be a hurdle in some locations. This being said, most cloud accounting solutions have far more financial, infrastructure and technical resources available to ensure data security when compared with most non-government enterprises.

To overcome these challenges, CFOs can work with their IT team or external vendors to develop robust security systems. They can also partner with ERP providers, like NetSuite who have incredibly sophisticated security protocols in place including multiple data centres, with automated redundancy back-ups to ensure high levels of system availability and data security.

Key Benefits Our Clients Have Highlighted After Implementing the NetSuite’s Financial Management Systems

Cloud financial management systems offer a wide range of benefits for businesses, enabling them to optimise their operations, enhance decision-making processes, and gain a competitive edge in the market. By leveraging the power of cloud technology, organisations can achieve operational efficiency, financial control, and improved agility.

Operational Efficiency Has Been Enhanced

Operations Have Been Streamlined

Cloud-based systems like NetSuite allow businesses to streamline their operations, eliminating manual and time-consuming processes. With automated workflows and integrated functionalities, organisations can achieve greater efficiency in tasks such as data entry, reporting, and transaction processing. By reducing manual intervention, businesses can free up valuable resources and focus on strategic activities.

Enhanced Efficiency Across All Business Units, Not Just Finance

By centralising financial data and providing real-time access to relevant stakeholders, modern financial management systems ensure that information flows seamlessly across the organisation. This eliminates the need for multiple data sources, reduces duplication efforts, and minimises the risk of accounting errors. As a result, businesses can operate more efficiently and make informed decisions based on accurate and up-to-date financial information.

Improvements to Logistical Efficiencies and Performance

Cloud financial management systems provide businesses with improved visibility into their supply chain and inventory management processes. With real-time tracking of stock levels, procurement, and vendor performance insights, organisations can optimise their logistics operations, reduce costs, and ensure timely delivery to meet customer demand. These logistical efficiencies lead to improved customer satisfaction and a stronger competitive position in the market.

Greater Ability to Focus on Cost Optimisation

Cloud financial management systems help businesses optimise costs through better financial control and data-driven decision-making. By closely monitoring expenses, budget adherence, and compliance enforcement, organisations can identify areas of cost savings and take appropriate measures to reduce unnecessary expenditures. Additionally, the system’s forecasting capabilities empower businesses to plan and allocate resources efficiently, maximising cost optimisation across the organisation.

NetSuite’s Financial Management Software Lead to Better Decision-Making Capabilities

Improved Decision-Making for Managers

Cloud financial management systems provide decision-makers with real-time visibility and access to critical financial data. By having accurate and up-to-date information at their fingertips, business leaders can make informed decisions regarding investments, accounts receivable optimisation and enterprise resource planning and allocation, and strategic business planning. The system’s advanced analytics capabilities and forecasting tools empower decision-makers to evaluate different scenarios, assess potential risks, and identify growth opportunities.

Real-Time Visibility of Critical Data, KPIs and Reports

Cloud finance systems offer real-time visibility into key financial metrics, such as cash position, revenue, managing accounts payable, managing accounts receivable management, general ledger, financial accounts consolidation, payments management and expense management. This allows decision-makers to monitor the financial health of the organisation at any given moment and respond promptly to changing market conditions. Real-time visibility also allows for proactive decision-making, as businesses can quickly identify potential issues or trends and take corrective actions to mitigate risks and capitalise on opportunities.

Forecasting Capabilities

With built-in forecasting capabilities, cloud financial management systems help businesses project future financial outcomes based on historical data and current trends. This allows decision-makers to anticipate market fluctuations, plan for growth, and set realistic financial goals. By leveraging accurate and reliable forecasts, organisations can make data-driven decisions and allocate resources effectively, ensuring long-term sustainability and profitability.

Ability to Make Smarter Financial Decisions

A good cloud financial software package helps businesses to make smarter financial decisions by providing comprehensive insights and analysis. The system’s reporting and data visualisation capabilities help decision-makers gain a deeper understanding of financial performance, profitability, and cost drivers. Armed with this information, organisations can identify areas for improvement, optimise financial strategies, and make informed decisions that drive business success.

Enhanced and More Granular Financial Control

More Accurate Reporting

Cloud financial management software ensures accurate and timely reports through automated processes and real-time data synchronisation. By eliminating manual data entry and reducing the risk of human error, businesses can generate accurate financial statements and reports. This accuracy enhances transparency and supports compliance with regulatory requirements.

Increased Levels of Budget Adherence & Compliance

With cloud financial management systems, businesses can effectively manage budgets and track expenses in real-time. A complete financial management solution will provide comprehensive budgeting features that enable businesses to set financial targets, allocate resources, and monitor actual spending against planned budgets. By closely monitoring budget adherence, organisations can identify deviations and take corrective actions promptly.

Easier and More Strategic Compliance Enforcement

Compliance with financial regulations and internal policies is critical for businesses. A good Cloud financial management system will offer built-in compliance features and controls, ensuring adherence to applicable accounting standards, tax regulations, and industry-specific requirements. With automated compliance checks and audit trails, businesses can mitigate the risk of non-compliance and avoid potential penalties.

Greater Visibility Over Cash Flow Management

Managing cash flow is essential for the financial stability of any business. Cloud financial management applications provide businesses with real-time visibility into cash inflows and outflows. By monitoring cash positions, analysing cash flow patterns, and forecasting future cash flows, organisations can optimise yearly cash flow management strategies and ensure sufficient liquidity for operations and growth.

Enhanced Financial Analysis Capabilities

Your cloud financial management system should offer robust financial analysis capabilities, allowing businesses to gain deeper insights into their financial performance and identify areas for cost savings. With advanced reporting and analytics features, businesses can analyse expenses, revenue streams, and cost drivers, enabling them to make data-driven decisions to optimise operations and reduce unnecessary expenditures.

Instant Competitive Advantage by Implementing a Modern Financial Management Solution

Vendor Performance Insights

The best financial management system will help businesses to assess vendor performance based on accurate and real-time data. By tracking key performance indicators (KPIs) such as delivery times, quality of goods or services, and pricing, organisations can make informed decisions regarding vendor relationships. This allows businesses to optimise their supply chain, reduce costs, and enhance operational efficiency.

Customer Demand Fulfilment

Your financial management system should provide businesses with insights into customer demand patterns and purchasing behaviour. By analysing sales data and forecasting customer demand, organisations can align their production, stock management, and distribution strategies to meet customer expectations. This ensures timely order fulfilment, improves customer satisfaction, and strengthens customer loyalty.

Strengthened Data Integrity & Security

Your ERP Software should offer robust solutions to maintain data integrity throughout the financial management process. Here’s how these systems can help businesses achieve and preserve data integrity:

Access to Centralised Data for Reporting

Cloud financial management systems provide a single platform for storing and managing financial data on a single general ledger. By consolidating data in a single source of truth, businesses can minimise the risk of data fragmentation and ensure consistency across different processes. This centralised approach enhances data integrity by eliminating data silos and enabling real-time access to accurate and up-to-date financial information.

Easier Data Validation and Auditing

The leading Cloud accounting software, NetSuite, offers built-in data validation and auditing capabilities. These features allow businesses to validate financial data against predefined rules and perform regular audits to identify any discrepancies or anomalies. Data validation ensures that the entered information meets specific criteria, reducing the likelihood of errors and enhancing data integrity. Regular audits provide an additional layer of scrutiny, ensuring that financial data aligns with regulatory requirements and internal controls.

Automated Data Backups and Recovery

A good financial management system will typically offer automated data backup and recovery mechanisms. Regular backups help businesses protect against data loss due to system failures, human errors, or cyber threats. In the event of data corruption or accidental deletion, businesses can restore previous versions or retrieve lost data, maintaining data integrity and minimising disruptions.

Evaluating NetSuite’s Financial Management Modules and Key Features

Advanced Inventory Management

Optimised Stock Management Leads to Increased Profitability

Efficient materials and product management is crucial for businesses to maintain optimal stock levels, meet customer demands, and minimise carrying costs. By leveraging the right tools and strategies, businesses can streamline their warehouse operations and enhance profitability. 

Tracking in Real-Time

Inventory tracking is a fundamental aspect of managing a product business that allows businesses to monitor stock levels, locations, and movement. With advanced tracking systems, businesses can access real-time information about their stock levels, ensuring accurate inventory counts, reducing stock-outs, and optimising replenishment strategies. By leveraging technology solutions such as barcode scanning and RFID tagging, businesses can streamline their tracking processes and improve inventory accuracy.

Optimising Purchasing Processes with a Modern Procurement Management Solution

Efficient procurement management is vital for businesses to ensure the timely availability of stock while minimising costs. By implementing streamlined procurement processes, businesses can automate purchase orders, supplier communication, and order tracking. This automation reduces manual errors, enhances order accuracy, and allows businesses to negotiate favourable terms with suppliers. By leveraging procurement management tools and integrating them with materials management systems, businesses can achieve seamless coordination between purchasing and materials control, optimising their procurement processes.

Enhanced Vendor Performance Tracking

Vendor performance tracking is essential for businesses to evaluate and manage their relationships with suppliers. By monitoring key performance indicators (KPIs) such as on-time delivery, quality of goods, and pricing, businesses can assess supplier performance objectively. By leveraging a complete ERP system, businesses can automate the tracking of supplier metrics, generate performance reports, and identify areas for improvement. This enables businesses to make data-driven decisions regarding supplier selection, negotiate better terms, and maintain strong supplier relationships.

Budgeting and Forecasting

Budgeting and forecasting are essential components of strategic planning that helps businesses to set financial goals, allocate resources effectively, and make informed decisions. By implementing robust budgeting and forecasting practices and leveraging technology solutions, businesses can enhance their planning processes. 

Achieving Financial Goals with Advanced Budgeting and Forecasting

Budgeting involves creating a comprehensive plan for allocating financial resources to achieve specific goals and objectives. It provides businesses with a framework for managing their finances, tracking performance, and making necessary adjustments. Forecasting, on the other hand, involves predicting future financial outcomes based on historical data, market trends, and other relevant factors. By combining budgeting and forecasting, businesses can establish realistic financial targets, assess potential risks and opportunities, and develop strategies to achieve their financial goals.

Streamlining the Process with Automated Budget Approvals

Budget approvals play a crucial role in the budgeting and financial forecasting process by ensuring that financial plans are reviewed and approved by relevant stakeholders. By implementing streamlined approval workflows, businesses can expedite the budget approval process, enhance transparency, and improve accountability. Modern financial management systems, like NetSuite, provide features for creating custom approval workflows, facilitating seamless collaboration, and reducing the time and effort required for budget approvals.

Automating Financial Processes

Streamlining Financial processes with Automations

Automation is revolutionising financial management by streamlining repetitive tasks, reducing manual errors, and enhancing financial and operational data efficiency. Many core accounting processes can be automated, such as data entry, invoice processing, and reporting, businesses can free up valuable time and resources, allowing finance teams to focus on strategic initiatives. An effective financial management system will offer automation features that lets businesses streamline their operations, improve accuracy, and save time.

Ensuring Consistency and Compliance with Accounting Standards

Approval workflows are an integral part of the accounting process that ensures proper authorisation of sales and purchase transactions and adherence to internal controls and policies. By implementing automated approval workflows, businesses can create professional invoices, standardise approval processes, minimise delays, and ensure consistency in decision-making. An effective financial management system will provide tools for creating customisable approval workflows, enabling businesses to establish clear approval hierarchies, track approvals in real-time, and maintain compliance with regulatory requirements.

Cash Flow Management

Maximising Liquidity and Financial Control Through Transparent Cash Management Reporting

Effective cash management is vital for businesses to maintain liquidity, meet financial obligations, and make informed financial decisions. By implementing robust cash management practices, businesses can optimise their cash position, enhance financial control, and improve overall financial stability. 

Accurate Cash Flow Forecasting

Cash statements provide businesses with a comprehensive view of their cash inflows and outflows, enabling them to assess their liquidity position. By accurately tracking and categorising cash flows, businesses can analyse their sources of cash and identify potential areas for improvement. Cloud-based financial management systems offer advanced features for generating cash flow statements, automating cash flow tracking, and providing real-time visibility into cash positions. This empowers businesses to make informed decisions regarding cash allocation, investment opportunities, and managing working capital effectively.

Integration with Banking Systems

Integrating cash management systems with banking systems allows businesses to streamline operations and enhance efficiency. By connecting their financial management systems directly to their bank accounts, businesses can automate processes such as bank accounts management, bank reconciliation, payment processing, and cash transfers. This integration ensures accuracy, reduces manual errors, eliminates manual processes and provides real-time visibility into cash balances.

Digital Payment Processing

Efficient payment processing is crucial for businesses to ensure timely receipt of payments and maintain strong relationships with customers and suppliers. By implementing secure and reliable payment processing solutions, businesses can expedite payment collection, automate invoicing, and offer convenient payment options to customers. Cloud-based financial management systems often include integrated payment processing capabilities, enabling businesses to streamline their payment workflows and reduce the time and effort required for manual payment handling.

Expense Management

Optimising Cost Control and Efficiency

Effective expense management is crucial for businesses to maintain financial control, help with tracking expenses, and ensure compliance with internal policies and regulations. By implementing streamlined expense management processes, businesses can reduce costs, enforce expense policies, and improve overall financial efficiency. 

Accurate Expense Tracking

Accurate record keeping is the foundation of effective expense management. By implementing expense management systems, businesses can capture and categorise expenses in real time, ensuring accurate and up-to-date accounting records. Automated expense tracking tools and mobile applications allow employees to submit expenses easily and provide supporting documentation. This simplifies the reimbursement process, reduces the risk of errors, and provides businesses with a comprehensive view of their expenses.

Expense Policy Enforcement

Enforcing expense policies is crucial for businesses to maintain control over spending and ensure compliance with internal guidelines and regulations. Cloud-based expense management systems help businesses to define and enforce expense policies, automatically flagging policy violations and providing real-time notifications. By implementing automated policy enforcement, businesses can reduce the risk of fraudulent or excessive expenses, improve cost control, and maintain compliance with financial regulations.

Financial Management System Reporting

Accurate and timely financial reporting is essential for businesses to monitor their financial performance, meet regulatory requirements, and make informed business decisions. By implementing a robust reporting system, businesses can generate comprehensive reports, consolidate data, and gain valuable insights into their financial health. From income statements and cash position statements to consolidated balance sheet reporting, cloud accounting systems like NetSuite, a global software provider, provide instant access to reporting to help CFOs gain confidence in the accuracy of their reports. 

Financial Data Consolidation

Financial consolidation is a critical step in generating accurate and comprehensive financial reports. Most financial management systems allow businesses to centralise accounting data from various sources, eliminating business data silos and ensuring data consistency. By integrating data from different departments and systems, businesses can generate consolidated financial reports that provide a holistic view of their financial performance.

Finance Department Data Analytics

Data analytics plays a pivotal role in finance management by transforming raw data into meaningful insights. Good financial management solutions often include advanced analytics capabilities that allow businesses to analyse accounting data, identify trends, and generate visual reports and dashboards. By leveraging data analytics, businesses can uncover actionable insights, make informed decisions, and identify opportunities for cost savings and revenue growth.

Financial Auditing

Financial auditing is essential for businesses to validate the accuracy and integrity of their financial records. The best financial management systems provide robust auditing features, such as audit trails and data tracking, that ensures businesses are able to maintain compliance with regulatory requirements and internal controls. These systems facilitate efficient and accurate audits, ensuring transparency.

Supply Chain Management

A good finance system will offer procurement functionality, which is vital for businesses to optimise their operations, reduce costs, and deliver products and services to customers in a timely manner. By implementing smart procurement practices and leveraging technology solutions, businesses can streamline their supply chain processes and gain a competitive edge. 

Procurement Optimisation

Procurement optimisation is a critical function that focuses on achieving the best value for money when sourcing goods and services. By strategically selecting suppliers, negotiating favourable terms, and managing supplier relationships effectively, businesses can significantly improve their procurement processes. Cloud-based procurement systems provide tools for automating procurement processes, managing supplier information, and tracking performance. By leveraging these systems, businesses can streamline their procurement operations, reduce costs, and ensure a reliable supply of goods and services.

Budgeting and Forecasting

Budgeting and forecasting are essential components of strategic financial planning that empower businesses to set financial goals, allocate resources effectively, and make informed decisions. By implementing robust budgeting and forecasting practices and leveraging technology solutions, businesses can enhance their planning processes.

Budget Approvals

Approvals play a crucial role in the budgeting and forecasting process by ensuring that finance teams are able to review and approve financial transactions before processing. By implementing streamlined approval workflows, businesses can expedite the budget approval process, enhance transparency, and improve accountability. Automation tools and cloud-based financial management systems provide features for creating custom approval workflows, facilitating seamless collaboration, and reducing the time and effort required for budget approvals.

Industry-Specific Considerations: Tailoring Your Financial Management System to Meet the Needs of Your Industry

Choosing a Financial management Software is not a one-size-fits-all task. Different industries have unique characteristics and requirements that demand specialised considerations in their financial management practices. We will now explore some industry-specific considerations for an effective financial management system and how businesses in manufacturing, fintech, medium businesses, fast-growing businesses, financial services, procurement, production management, business intelligence, and commerce business systems can tailor their financial management strategies to meet their specific needs.

Manufacturing: Managing Complex Operations

The manufacturing industry often faces complex financial management challenges due to the nature of its operations. Manufacturers need to manage costs across the entire production process, handle materials efficiently, and optimise purchasing operations. An integrated system for the manufacturing industry should include features such as cost accounting, production cost tracking, and materials management. These tools help manufacturers monitor costs, track production expenses, and maintain accurate inventory records to ensure profitability and operational efficiency.

Fintech: Navigating Regulatory Compliance

In the rapidly evolving fintech industry, businesses must navigate stringent regulatory requirements and ensure compliance with financial regulations. A business management software tailored for fintech companies should have robust compliance features, such as automated reporting and regulatory monitoring. These systems can help fintech businesses stay compliant, mitigate risk, and provide accurate financial management reporting required by regulatory authorities.

Medium Sized Businesses: Balancing Growth and Stability

Midsize businesses face the challenge of managing growth while maintaining financial stability. The best financial management systems for medium businesses offer scalability, providing the flexibility to adapt to changing needs and support expansion. These systems should include features such as scalability, multi-entity management, and customisable reporting. By leveraging these capabilities, medium-sized businesses can gain business insights into their business performance, and support their growth trajectory.

Fast-Growing Businesses: Agility and Scalability

Fast-growing businesses require modern financial management software that can keep pace with their rapid expansion. These systems should offer agility, scalability, and the ability to handle increased transaction volumes. Cloud-based accounting software is particularly beneficial for fast-growing businesses as they provide the flexibility to scale resources as needed, support remote work, keeping the business on track. With these systems, fast-growing businesses can maintain financial control, and support their growth trajectory.

Financial Services: Meeting Reporting Obligations

The financial services industry operates within a highly regulated environment, requiring businesses to meet stringent compliance requirements relating to accounting standards. Financial management systems for the financial services sector should include features such as automated regulatory reporting, robust security measures, and integration with banking systems. These systems help financial services businesses ensure data security, maintain compliance with regulatory frameworks, and streamline accounting processes.

Supply Chain: Optimising Operations and Costs

Businesses in the supply chain industry need financial management software that can effectively track and manage costs across the entire procurement chain. These systems should provide visibility into expenses related to procurement, logistics, and transportation. By leveraging procurement focused accounting software, businesses can optimise their operations, reduce costs, and make informed decisions regarding supplier selection and logistics management.

Critical Steps in Evaluating Cloud Financial Management Systems

As the CFO of a company, evaluating cloud financial management software is a critical task. The right system can improve decision-making, but choosing the wrong one can lead to costly mistakes. Here are the critical steps for CFOs evaluating cloud financial management software solutions:

1. Determine Your Business Needs

To find the best financial management system, it’s essential to determine your business needs. Consider factors such as the size of your company, the complexity of your business, and your budget. This information will help you narrow down your options and choose a system that is the best fit for your business.

Your business needs should include the type of financial activities you need to manage. This may include accounts receivable and accounts payable, invoicing, taxes, payroll, budgeting, reporting, forecasting, project management and more. Knowing exactly what you need to do with the system will help you evaluate possible systems for features such as scalability and automation.

2. Research Cloud Financial Management Systems

Once you have identified your business needs, it’s time to start researching cloud financial management software. Look for features such as scalability, security, integrations, analytics, and automation capabilities. Make sure the system is compatible with your business’s existing financial software and systems. Consider the vendor’s customer service and support offerings as well.

3. Evaluate Costs and Benefits

The cost of cloud financial management solutions is an important factor to consider, but it should not be the only one. The system should offer a return on investment (ROI) by streamlining business processes, providing real-time data and insights, and improving decision-making. Consider the cost of the system in comparison to the value it will bring to your business.

4. Assess Security and Compliance Controls

Cloud financial management systems store sensitive data, so it’s crucial to assess the security and compliance controls of any system you’re considering. Look for systems that are compliant with industry standards and have robust security measures in place to protect your data from cyber attacks.

5. Evaluate Integration Capabilities

The best accounting system will be able to integrate seamlessly or replace your existing systems, such as your legacy complex ERP software and disparate CRMs. Evaluate the integration capabilities of any system you’re considering to ensure a smooth transition and avoid any disruptions to your business operations.

6. Consider User Interface and Ease of Use

Any accounting system should be user-friendly and easy to navigate. Consider the user interface of any system you’re considering and ensure that it’s intuitive and easy to use. A system that is difficult to use can lead to frustration and errors, which can ultimately impact your business’s financial performance.

7. Calculate Total Cost of Ownership

When evaluating cloud financial management software, it’s essential to consider the total cost of ownership. This includes not only the upfront costs but also ongoing maintenance and support costs. Look for systems that offer flexible pricing models and provide transparent pricing information.

8. Read Reviews and Talk to Other Users

Before making a final decision, read reviews of the cloud financial management solutions you’re considering. Additionally, talk to other users who have experience with the system. They can provide valuable insights and help you make an informed decision.

The Wrap Up

In conclusion, evaluating and selecting the right cloud financial management system is a critical decision for CFOs, one that can shape the financial landscape and success of an organisation. By considering the factors highlighted in this guide, CFOs can confidently navigate the evaluation process, making informed decisions that drive operational efficiency, cost savings, and improved financial control.

Embracing the power of cloud technology, integrated systems, and industry-specific considerations, CFOs have the opportunity to transform their organisation’s financial operations and unlock new levels of productivity and profitability. Stay ahead of the curve and seize the opportunity to propel your organisation towards a brighter financial future.