Electronic financial management increases efficiency
What is electronic financial management?
The current crisis has definitely affected every one of us. Our office was closed during my holiday and the return to work happened from a home office. This was probably the most difficult return to regular weekdays, as the weekday life was not the same as before going on holiday. Effective remote working and being on top of the situation took their own time. Still the return to work was a lot easier with the technology that enables working with electronic financial management.
I work with electronic financial management using several different financial management software. But what is electronic financial management? To my knowledge there isn’t any official definition. The term is used widely and there are some generally accepted factors that separate it from the traditional financial management. The list of factors is certainly longer, but in my writing, I will discuss three features that in my opinion are the most important ones.
Features and advantages of electronic financial management
Independence from time and place
The first feature is independence from time and place. When returned to work, all I needed (in addition to electricity) was a computer and an internet connection to have exactly the same possibilities to work from home as I did from the office. The same goes for electronic financial management. All your company’s financial information is available despite of where or when you need it. The materials required are generally delivered or generated directly to the financial management software, whether it is sales invoices, purchase invoices, travel invoices, payroll statements or bank statements.
Real-time information to support decision making
This leads to the second feature: timeliness. Because all materials are generated and delivered to the same place digitally, with a reasonable delay, financial management is more up-to-date. Timeliness is a term you should be a little careful with. Typically, a company’s financial reality is so complex that it would be wrong to assume that timeliness means perfect financial management that is updated at the speed of light. However, electronic financial management achieves timeliness that is not possible with traditional financial management.
Transparency creates security and enables more efficient processes
The third feature is transparency. Electronic financial management gives the company a better view of its financial management. And correspondingly to us, the financial management professionals, a better view of the company’s operations. It’s easier to follow and steer things in the right direction when the views are almost the same for everyone. It also leaves a reasonably good imprint on what the users have done and when. Such transparency creates security and provides better opportunities to more efficient processes.
Electronic financial management is more than software
Transparency, timeliness and independence from time and place. We know we are doing electronic financial management when these three factors come true. However, there is another core factor related to electronic financial management which encapsulates most of the problems, counter-arguments and suspicions I have faced. Efficient financial management requires adequately competent software, but electronic financial management does not equal software.
Electronic financial management only takes place when users commit to operate in accordance with the software. There are many variables involved and things are often linked to each other. Even in a highly automated process, a single purchase invoice can include several different steps: putting a different person to circulation, auditing and editing done by multiple people, payments done by a different person and other person’s statement to posting. It is important that everyone knows their role and works for the benefit of the overall process. This requires that critical matters are taken into account, planned and implemented in a controlled manner. Otherwise, we might find ourselves in a mess that the Grimm’s fairy tales are made out of.
Avoid the risks with careful implementation
Electronic financial management is not perfect and it has challenges, but its opportunities are far greater than its challenges. Typically, the biggest challenges can already be tackled in the beginning through a careful implementation process. At Gallant, we help your company to overcome these challenges and achieve the benefits, whether it is implementation, enhancement or ongoing partnership.
Jere Värri | Financial Advisor
An advocate for financial management and everything digital.