Accounting technologies often celebrate their ability to collect all financial data in one place and make instant access available to every number cruncher on the team. But what if those advantages were actually limitations?
The practice of financial planning and analysis is evolving quickly and moving far outside the scope of budgets and balances alone. Decision makers are increasingly incorporating operational data with financial data, including sales and marketing figures.
Finance and accounting are just one piece of business planning generally. This holistic approach has a lot of benefits. But the bigger concern is what happens when businesses fail to keep pace with others in the industry.
The Hazards of a Shortsighted Approach
Conducting financial planning and analysis using financial data alone encourages a shortsighted focus on immediate goals and objectives. Ultimately, that sacrifices long-term success for short-term stability.
Limiting the focus to financials also leads to contradictory efforts. For instance, accountants might recommend slashing marketing costs to balance the budget at a time when a big ad push could be a strategic asset. A shortsighted approach forces the right and left hands to work against each other.
Finally, and most consequentially, financial data alone does not tell the full story of finance. In fact, numbers can be notoriously subjective and misleading. When reporting is based on some but not all of the data, there is more room for manipulation and distortion. The details do not add up to the truth.
Luckily, integrating financial and operational data is achievable with today's technology.
Transforming Information into Insights
The traditional view of a business as a set of discrete departments has evolved to acknowledge that these departments are interconnected and interdependent. So, if marketing and finance are influencing and impacting each other, why are they working separately?
Using all available data to create reports upgrades the process in every way. Decision makers can forecast the future rather than archiving the past. Efforts and inputs are streamlined to achieve common strategic objectives. And the true health of the business is illustrated in accurate, up-to-date detail.
Implementing a common platform for all data, all users, and all analysis might sound like an overwhelming obstacle. But with tools like Sage Intacct and Adaptive Insights it can be simple and seamless. Getting these solutions off the ground is easier thanks to the cloud. And their features and functions make true business planning accessible to organizations of all types.
When you're ready to learn more about the new standards for finance and accounting, reach out to AcctTwo.