Forget inflation – the real threat to your business may be your finance function’s software
Inflation has dominated business news over the past two years. While the latest figures show the inflation rate has surprisingly fallen below the Bank of England’s target of 2% – currently sitting at 1.7% – interest rates remain high and economic growth relatively stagnant.
Business and finance leaders can point to this macro effect as the reason for their company’s current performance. There is of course some truth to this but it has also revealed how prepared finance functions are to deal with such a turbulent economic climate.
With the latest cloud technology, automation tools and insights, finance teams should be set up to deal with any abrupt changes to financial performance and mitigate risk in line with market trends. Yet many teams are hindered by disparate legacy systems and a reliance on traditional, manual methods. The consequences? Organisations suffer from data silos, slow and error-prone processes and lack adequate adaptability and scalability.
So regardless of inflation, the real threat posed to businesses often lies in their finance function’s software, or lack thereof. However, with the right investments and strategy, this same function can also be their most valuable asset, ensuring they remain resilient against the ever-changing inflation rate.
The real challenge, hindrance to growth
In times of economic uncertainty, businesses face a significant challenge: the inability to access real-time financial data. Without clear, up-to-date insights into financial performance, decision-makers may struggle to react swiftly to sudden changes in business conditions. This lack of visibility can make it harder to pivot effectively or reallocate resources as needed, potentially impacting growth and stability.
Inefficient finance systems often exacerbate this challenge. Automation capabilities are essential for freeing up the finance team to focus on interpreting and analysing data, rather than being bogged down by time-consuming and error-prone manual processes. For example, having to input data manually into accounts payable or expense management platforms not only drains resources but also increases the risk of mistakes.
However, automation is just one part of the puzzle. Ensuring that finance systems are suited to a business’s size and needs is equally crucial. Companies often face difficulties when their software either lacks the necessary features or is too complex for their requirements. For instance, a growing company might need to consolidate accounts across multiple entities operating in different regions and currencies, but their system may lack multi-entity accounting capabilities. On the other hand, a mid-sized business might find itself using an ERP system designed for much larger enterprises, leading to higher costs, unnecessary complexity and usability challenges.
Misaligned systems, whether due to insufficient features or overwhelming complexity, can reduce scalability and flexibility. For businesses navigating uncertain economic conditions, this can result in inefficiencies, wasted resources, and slower decision-making when it matters most.
Software that grows with you
So, how do companies turn their software into their most valuable asset? It starts with understanding the pain points in their finance function.
Are finance teams struggling with rekeying data between systems? Do they lack access to real-time data across the business and its entities? Or do they need granular reporting by department or location? Thinking ahead is also key: consider needs like multi-currency accounting as the company grows. The right cloud financial management system (FMS) can address these issues, aligning software with both current and future business demands.
They offer automation capabilities that can, for example, automatically extract and input data from expenses, send recurring invoices and carry out month-end reporting. Not only does this save time but it increases the accuracy of data and reporting. Even more importantly, these cloud FMSs can integrate with a wide range of existing business applications to provide a central hub of real-time financial data.
From this foundation, it becomes far easier for finance functions to manage more entities and scale sustainably. With more time to focus on strategic activities coupled with real-time oversight of the company’s financial health, they can maximise growth while swiftly protecting the business from any macroeconomic changes.
A tech-empowered approach
In today’s landscape, building tech-empowered finance functions has become a key business requirement. This transformation allows companies to adopt innovative tools more effortlessly and access the latest technology. With the rapid advancement of AI models, this approach is becoming increasingly crucial for short and long-term strategy.
AI is delivering transformative enhancements to data processing, reporting and analysis. For example, finance teams can instantly retrieve reports in different formats or access predictive data analysis for activities such as cash flow forecasting and P&L statements. This means they can work faster and forecast business performance more accurately.
There is still much hype and a lack of governance around AI, so companies might be hesitant to fully explore its potential. However, these objective data processing, analysis, and formatting tasks are the areas where it works well.
However, if companies don’t have the appropriate cloud technology and automation capabilities in place, it becomes far harder to integrate AI or use it effectively – it’s only as good as the data it has to work with.
Inflation-proof finance functions
The last couple of years have shown that finance functions can face just as many threats internally as they do externally, notably from their finance software. A lack of automation, integration and adaptability means they are impeded in their ability to understand real-time financial performance and have the time to strategise effectively.
With an accurate understanding of their finance function’s requirements, businesses can adopt a suitable cloud FMS to transform their finance function’s processes while mitigating risk. This puts them in a position to scale effectively and integrate the latest technology such as AI to keep pace with the competition. Ultimately, the right finance software goes a long way to building inflation-proof finance functions.
Meet the AccountsIQ team on stand 790 at Accountex London, taking place at Excel London on the 14-15 May, 2025.
