The demands and expectations of markets have witnessed a complete transformation ever since the pandemic changed the way business operations are conducted. COVID-19 made leaders realize that the entire workforce can go remote, and the company can continue to grow at a rapid pace.
But this change has posed a challenge for traditional finance teams who are still caught up in periodic reporting and are using outdated solutions. Without financial modeling software integrated with the existing systems, such teams would struggle to make sense of available data. Consequently, the future prospects of the company would be at stake.
Five warning signs that show you need financial modeling software
Businesses require a steady cash flow to continue funding their growth, and running out of cash at any stage would spell disaster for the enterprise.
This is where the role of financial modeling software comes to the fore by empowering rapidly growing companies to make precise financial forecasts from the huge volumes of data collected from multiple sources. Hence, they are better prepared for future financial requirements and can formulate informed strategies to drive growth.
Here are some important signs that indicate that your team is ready for financial modeling software:
Too Much Data Being Ignored
As your business grows, you add multiple sources of data to the existing list. With huge volumes of data being generated from various sources, it is simply not possible to continue with outdated solutions like Excel. Otherwise, you might end up ignoring huge volumes of data just because of the inability (or lack of resources) to process it.
Almost 47% of leaders consider data as a valuable business asset.
With an increasing number of people contributing to the data stream, the chances of errors also increase manifolds. Additionally, leadership requires you to track numerous metrics in a quick time and provide informed answers to crucial questions.
But in the absence of financial modeling software, finance teams are left with traditional solutions like spreadsheets. With every department and team having their own spreadsheets, finance teams struggle to reconcile all the data and draw meaningful insights to drive growth decisions.
The problem is further aggravated due to multiple back-and-forth emails between different departments to cobble-up spreadsheets that make sense to leaders. Such a broken model impedes the transition to a data-driven decision-making process, which can prove disastrous in ultra-competitive markets.
Standard accounting software platforms will not solve the problem your finance teams are facing. What you and your finance teams need is comprehensive financial modeling software that can be scaled to be in sync with the needs of your growing operations.
Struggling with Source of Truth Issues
As your enterprise grows, it is likely that the data concerning various operations of the company will reside with the systems employed to drive those aspects. While this is a universal phenomenon, it presents an ominous challenge in the form of silos in which these departments operate.
As different sources of truth are created, subpar data is available for departmental leadership leading to subpar decisions. In the end, this impedes the operational efficiency of the organization, which can be catastrophic in competitive markets.
To address these issues, it is imperative for your company to create a single source of truth. In short, you sync data from existing applications in real-time and create a central data repository that acts as a single source of truth for all departments.
As this transition is not possible manually, financial modeling software can integrate with your existing tech stack. This integration would break the silos and ensure all your systems are working in perfect synchronization.
Ultimately, your finance teams would get freedom from data transfer and consolidation errors, leading to an improved decision-making process.
Becoming a Data Gatekeeper
While your organization is relatively small, your finance team can be the data gatekeeper who controls access to data for different individuals.
However, as the size of your operations grows, and new teams are being added regularly, it is not possible for you or the finance team to continue monitoring data access for different departments without automation. This would cause unnecessary delays in the decision-making process leading to lost growth opportunities.
Creating a single source of truth will not yield the desired results unless you provide concerned leaders and departments with easy access to the data.
With the addition of financial modeling software to the existing tech stack, you can easily achieve this goal. As departments and concerned decision-makers will have easy access to the central data repository, they will be easily able to create accurate reports based on real-time data.
The meaningful insights thus drawn are more likely to help achieve the desired organizational goals.
Needing Better Security Standards
In hyper-competitive markets, data is gold.
Hence, you need to ensure that your critical data is secure from any leaks to keep your company on track to achieve business goals. Your traditional accounting software solutions are unlikely to offer the desired enterprise-level data security.
If you want to ensure the security and integrity of business data, you need to integrate robust financial modeling software with your tech stack.
Financial modeling software works on several aspects to improve your data management practices and ensure better safety standards.
- Manage Access Rights: You will be able to define which individuals or teams can access particular aspects of data. Moreover, you will also be able to define permissions that would determine what actions the users can perform with the data. A financial modeling software will let you assign specific access rights to users to ensure better data security.
- Secure Identity Management: Certain financial software solutions allow you to leverage identity providers through SAMLv2, which is one of the most secure identity protocols presently. You will also have the option to ensure that all passwords confirm the desired security standards and are safe from password-related attacks.
- Data Snapshots: Financial modeling software automatically takes data snapshots to enable historical data analysis. You can also restore access rights to the level they were at when the snapshot was taken.
Becoming a Finance Business Partner
Another important sign that indicates the readiness of your team to transition to financial modeling software is the desire to become a finance business partner.
As a strategic finance business partner, your finance team takes ownership of the financial setup of the company and is ready to make an impact on long-term strategy. This would require access to real-time data to create accurate and timely financial models.
Your finance team would be able to connect multiple business cases across the enterprise to create accurate reports and forecasts based on the 360-degree picture of the business. You will be able to run multiple what-if scenarios in a matter of minutes by easily updating the assumptions on which the decisions are based.
In competitive industries, the cost of ill-informed decisions based on outdated data can turn into millions, if not billions, for growing enterprises. To break this cycle of chaos, your company must take policy-level decisions based on real-time data. By integrating financial modeling software with your existing systems, you can enhance the efficiency of your finance teams by manifolds and lay the roadmap for future growth.