While the U.S. inflation rate has dropped significantly from a year ago—3.2% for the 12 months ended October 2023 compared to 7.7% in October 2022, companies carry on in their pursuit to remain resilient in the shadows of financial uncertainty.
While several financial ratios exist to assess an organization, a single metric alone cannot identify overall financial health. Combined factors such as liquidity, solvency, efficiency, and profitability, with the former two at the forefront, will assist organizations in determining their overall health. Paramount will be assessing how well an organization can manage through short-term challenges and its ability to cover longer-term debt and obligations.
With so many variables contributing to an organization’s financial wellness, navigating and thriving amidst changing market conditions will heavily rely on the stability of an organization’s finance technology stack. Critical functionality in a finance technology stack includes the ability to manage payments, reporting, planning and other tasks.
A solid finance technology stack enables organizations to automate processes, improve collaboration and connect with valuable data to drive informed and profitable decisions. Through streamlined processes and automation, companies will experience cost savings, improved efficiencies, and successful customer engagements while increasing their overall competitive advantage.
Even with the most well-intentioned plans, the odds are against most organizations when it comes to successfully planning and implementing their technology platforms. Often, implementations fall short of leveraging the full capabilities of the platform, or stakeholders have limited bandwidth to manage the large undertaking of organizational change management. Many organizations seek the expertise of external software consultants specializing in the platform or area of discipline.
In this article, Cherry Bekaert’s Financial Advisory team highlights five critical considerations to recession-proof a company’s finance technology stack using the power of Sage Intacct.
Process Maturity Model
As organizations navigate growth, they will encounter a series of process stages from seed to series A to sale or IPO. While initial stages may require more rudimentary funds, measures, and processes, as the organization matures, it will demand a comprehensive finance technology stack that enables unification of data, automation and visibility. Mission critical for growth will be the organization’s ability to manage complexity and build predictable, profitable and repeatable processes. Evaluating and establishing the proper finance technology stack to expand as the organization matures will ensure minimal disruption and a smooth transition through each growth stage.
The Finance Technology Stack Checklist
Many early-stage companies need help navigating growth, especially those in the seed and series A stages. Relying on growth-prohibitive technology solutions or connecting multiple applications to one system may serve its purpose in the short term but can compromise future performance. Subscription billing and revenue recognition are pressing challenges pushing organizations to modernize their ERP system. Particularly, the pursuit of annual recurring revenue (ARR) growth often leads to a grow-at-all-costs mindset, resulting in diverse contract terms and customer profiles. Likewise, these organizations often experience data entry errors, delays in financial closing, compliance issues and missed billing opportunities.
Establishing a multi-entity and multi-dimensional general ledger with complete data visibility using Sage Intacct will minimize errors and drive informed decision-making. Billing use cases with flexible billing attributes will streamline operations. Establishing accurate revenue recognition practices and compliance measurements will give the organization a clear picture of cash flow and revenue to navigate future operations and investments.
Billing Use Cases
Given the dynamics of competition in capital markets, there is a need for companies to be thoughtful and proactive in their approach to overcoming challenges. Planning and proactively managing billing scenarios will be mission-critical.
While billing may start simple, factors like diverse product offerings, target markets and contract formats can increase billing complexity.
Finance and accounting should be seen as something other than a sales prevention department but rather as a strategic partner equipped with processes and technology to support growth. For companies to successfully meet their growth objectives, finance needs a proactive seat at the table where strategic planning and execution meet.
The Old Way: Manual Integrations
A modernized finance technology platform like Sage Intacct will help to ensure companies effectively manage the pain points that come with sustained growth. Taking a fragmented approach to solving individual problems with separate tools can result in data chaos and the absence of a unified system of record. Excessive integrations that meet the business’s need of the moment will complicate and further entangle processes and systems.
Consolidating processes within a single platform rather than relying on disparate components can facilitate automation and more strategic decision-making. Organizations need a well-defined roadmap of their process and objectives to ensure their finance stack will meet future demands. A more streamlined one-platform approach with fewer integrations can yield better results.
Metrics for Growth: A CEO’s Must Have
In the ever-evolving landscape of financial reporting, organizations are constantly seeking innovative ways to extract meaningful insights from their data. The advent of cloud-based technology has introduced a game-changing approach to financial reporting through advanced dashboards and reporting systems.
Organizations cannot achieve their growth objectives via Excel spreadsheets highlighting short-term cash flow. A robust finance technology platform will offer forward visibility into cash flow, which fuels long-term strategic planning and assists organizations in determining how much capital is needed to meet growth objectives.
For example, in a SaaS organization scenario, crucial metrics such as contracted ARR, ARR per customer, Total Contract Value (TCV), margins, churn, upsell and cost-related metrics will be necessary indicators of performance and require a strong technical infrastructure to deliver these insights.
The right finance technology stack is critical for organizations to achieve peak efficiency and improve customer satisfaction. In today’s highly competitive market, organizational success requires that organizations remain at the top of their game, maximize their efficiency, and, most importantly, ensure the highest standards in terms of customer service. This requires these organizations to evaluate their current technology stack and figure out how the right tools can help them reach their strategic objectives, thereby paving the way for greater success.
Let Us Guide You Forward
We can help you assess your organization’s current state to identify and prioritize strategic opportunities to take your business to the next level. Interested in a finance technology assessment and learning more about Sage Intacct? Reach out to us today to get started!
