Financial Operations Management: Challenges, and How To Overcome Them
Defining Financial Operations
The term financial operations management (FOM) refers to the processes and procedures a company uses to record and handle financial transactions. In other words, managing financial operations entails efficiently stewarding a company’s bookkeeping processes. It is a broad term that can mean various things, particularly in the digital business world.
Challenges In Handling Financial Operations Management
Financial operations unite various financial and accounting responsibilities under a single structure. Financial operations are accountable for overseeing and managing this vital part of a business to ensure consistent revenues and keep budgets in check.
A business may, for instance, have a team responsible for managing accounts receivable, credit management, and intercompany accounting. Unfortunately, these separate entities create data silos, making an already complicated process even more complex.
All the diverse functionalities pertaining to the company’s financial activities are interrelated and must ultimately be merged. They cannot work independently. In many instances, one function feeds into or supports another. This would enable you to generate in-depth analytical reports, which is critical for your business.
How Financial Operations Management (FOM) Helps Businesses Stay Ahead Of The Curve
FOM is the practice of monitoring the various aspects of an organisation by adopting any finance and accounting (F&A) solution to automate and perform essential accounting tasks.
Keys To Achieve Financial Operational Excellence
Key processes such as approvals, financial reporting and analysis, and other workflow bottlenecks can significantly impact operational expenses and productivity.
As more businesses emerge from their conventional cocoon to implement new technologies to streamline, expedite, and improve their F&A processes, the onus is on you to fix and improve your F&A processes.
Here is how you can achieve financial operations excellence
Automation Through Cutting-Edge Cloud F&A Solutions
Solutions such as cloud enterprise resource planning (ERP) systems have significantly brought about operational efficiencies and accelerated cash flow for businesses.
However, there still remain a few critical F&A processes that are handled manually. Take bank reconciliation, or transaction matching, for instance. These tedious, time-consuming processes can be riddled with human errors and data duplication.
Cloud solutions such as BlackLine automate bank reconciliation, transaction matching and many other accounting processes critical to the financial close process. What’s more, solutions like these can be easily integrated with your cloud ERP, giving you cutting-edge features when it comes to managing your back-office F&A processes.
Businesses mired in the manual logjam were found to have accounting operation costs that are three times higher than those who automate these processes. Tech behemoth, Google announced recently that it plans to automate every financial process it can. Kristin Reinke the vice president of Alphabet Inc, the parent company of Google was quoted as saying “flux analysis required for closing the books was once a very manual process” which can now be completed in “one to two hours” using latest cloud accounting software.
Through automation, you can view how the period it takes for customers to pay affects cash flow, collection goals, and the cost of financing. This will help you maximise the entire order-to-cash cycle. AR Intelligence demonstrates the impact of extending payment periods on cash flow. If your company examines the predictability of customer payments, it will have a clearer path to achieving its days sales outstanding (DSO) goals.
Streamline Your Financial Operations Management
Businesses with multiple subsidiaries often find themselves trying to untie the gordian knot when it comes to consolidating the accounts. Different entities within an organisation may have different methods of financial process management.
However, it is imperative for big businesses with sister companies and other entities to streamline their accounting process to enable the swift consolidation of their accounts before financial close. An industry-leading cloud accounting software like BlackLine enables the frictionless streamlining of F&A processes across the board, facilitating a seamless financial close process.
How BlackLine Helps You Achieve Financial Operations Management?
Accelerate Financial Close, While Reducing Risk And Increasing Analysis Time
As a business expands, its accounting procedures change. Therefore, you need a comprehensive accounting system that can adapt to your changing needs and would allow you to select and configure things to suit your business needs.
BlackLine is a comprehensive solution that will assist you with tasks beyond your month-end closing checklist and bank reconciliation. As an integrated cloud platform, BlackLine handles tasks such as high-volume ticking and tying, journal entries, variance analysis, and the closing checklist, which depend on reconciliation and the whole record-to-report process.
And what makes BlackLine unique is that it may be used independently to tackle one problem but it also has built-in functionality to assist with other problems.
Obtain Intercompany Excellence in Operations
Increasing numbers of businesses are automating the intercompany reconciliation process to ensure all of their accounting procedures are streamlined and are in adherence to regulatory requirements. Eliminating human labour reduces the likelihood of error, and standardising this vital part of the accounting process makes companies competitive.
By automating this process, your F&A team will be able to focus on atypical situations rather than manually checking each account. For example, they can evaluate summaries of inconsistencies between entities and then fix any expenses that were double-recorded, delivered to the wrong company, or otherwise improperly allocated.
Conclusion
In a post-pandemic, digital business environment, there has been a surge in the number of companies undertaking digital transformation efforts. While these initiatives are welcome, tedious yet crucially important back-office processes such as FOM remain manually managed.
In a volatile business environment, and with frequently changing or recalibrated regulatory frameworks, businesses have the twin threat of staying competitive and profitable, while complying to updated rules.
Cloud accounting solutions such as BlackLine help businesses lift the massive burden that comes with the aforementioned threats and requirements, allowing organisations to focus on what they do best, doing business.
