The accounting and finance industry has experienced a rapid digital transformation over the last 10 years. What began as custom software programs built for the accounting departments of giant corporations evolved into an entire ecosystem of accounting and finance software available to businesses of all sizes. By ecosystem we mean it’s no longer software just for generating financial statements — profit and loss, balance sheets, and cash flow statements. Now there is a software program for just about any business area involving dollars.
There are software programs for payroll, expense tracking and reporting, accounts receivable, and accounts payable — this list goes on. When this accounting and finance software ecosystem is leveraged properly for your business, the insights it produces are quite impressive.
Let’s examine four of these insights more closely.
1. Ability to Identify Growth Drivers
According to Business.com, “Cloud accounting software can streamline your business processes and help you identify growth drivers.” Since your financial data is stored within software programs, you are able to slice and dice your financial metrics with much greater flexibility to uncover a deeper level of analysis than you previously could.
For example, you may now be able to attribute an explosive jump in sales to a small operational change you made last quarter. Previously, this level of insight was most likely unattainable because it would have been too cumbersome to run the analysis with data housed in Microsoft Excel.
With a cutting-edge accounting and financial software ecosystem, it’s all about the granularity of insights. Prior to accounting software, key insights were much more high level. Stakeholders of businesses and private equity firms relied mostly on quarterly profit and loss statements, balance sheets and statements of cash flows to glean top-level insights into the business.
With the advanced cloud-based software ecosystems, owners and stakeholders can now drill down to a far deeper level of financial insight. Have a deeper, more detailed level of insight allows owners and stakeholders to make more intelligent and beneficial decisions for the future of the business.
2. Avoiding Costly Business Decisions
All too often business owners of high-growth companies are so busy moving up their growth curves that they have to make educated guesses as to the financial state of their businesses. They then use those educated guesses to make critical business decisions. Without the use of cutting-edge financial software, actual financial data may not be reported until 30-60 days after an important business decision is made. In many of these cases, those decisions end up being extremely costly.
For example, if a manufacturing plant experiences a fire resulting in 14 days of downtime, business owners need to know the financial impact of that downtime immediately. Without accounting and financial software in place, business owners will be making critical decisions based on last quarter’s financial data that does not account for the fire that took place at the plant.
By using appropriately selected accounting and financial software, business owners and private equity firms have real-time access to their financial performance data. This real-time access allows business owners to make accurate forecasts and highly informed business decisions that lead to further growth and success of the company.
3. Unlock The Power of Integrated Financial Insights
Here at Lavoie CPA, we are experts at building powerful accounting and finance software ecosystems for our clients. We study your business operations and goals and then select software programs that will allow your business to get the maximum value.
By selecting appropriate cloud-based software that encompasses financial reporting, payroll, accounts payable, accounts receivable, and expense tracking we are able to integrate these software programs and unlock powerful 360-degree insights about your business. Your accounting and financial data will no longer be isolated in its respective areas.
For example, you will now be able to understand exactly how accounts receivable defaults are impacting cash flow and your profit and loss statement. Knowing exactly how the financial performance of one area of your business impacts the others gives you a much more powerful and integrated financial analysis. This results in you being able to make more educated, high-quality business decisions.
4. Enhanced data visualization
According to Harvard Business School, “A company can have all of the data it needs to be successful and still fail if no one knows how to understand or leverage it.” As the leader of a private equity firm or high-growth start-up perhaps you can relate to this sentiment. Maybe you have spent considerable amounts of time and resources training employees to track as much data as possible so that you can conduct analyses to benefit your operation.
However, when push comes to shove and it’s time to analyze you may find it difficult to put together all the pieces of the financial data puzzle. At Lavoie, we don’t just build a sophisticated accounting software ecosystem for our clients. We also continually run this ecosystem and optimize it to maximize the benefit for our clients. One of the most important ways we accomplish this is by implementing integrated data visualization dashboards so that our clients can see their financial performance in real-time.
There is no more sifting through Microsoft Excel files and manually comparing profit and loss statements to expense report trends. Now all of your accounting and financial data is integrated into one centralized performance dashboard when you can check in anytime and see the real-time financial insights on your business or portfolio of businesses in the case of private equity firms.
The ability to visualize these key financial insights in one centralized dashboard allows you to finally leverage all of your diligence and efforts to track and store robust amounts of business and financial data. With our powerful dashboards, harvesting key financial insights on your business has never been easier or more convenient.
Start Building Your Software Ecosystem
Perhaps you are a little overwhelmed by the many different accounting and financial software platforms on the market today. Here at Lavoie CPA, we are your trusted experts when it comes to navigating these programs. We have the experience to know which software platforms will be a good fit based on your unique business and your growth goals. To learn more about how Lavoie can build and run a next-generation accounting and financial software ecosystem for your high-growth business, contact us today!