Wednesday, June 24, 2020

How is the finance function in companies being redefined?How is the finance function in companies being redefined?

A changing world requires new ways of working-ways that are smarter, faster, and more agile. Nowhere can be this more important than in finance. Fueled by rich data and ever-more powerful artificial intelligence, machine learning, and analytics capabilities, finance organizations are being transformed and making more informed business decisions.

In this blog post, we provide a quick guide to the changing demands of the finance function, what you ought to know about financial management systems, and the way the right system can help companies adapt to a changing world and identify home based business opportunities.

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How does technology impact a financial system or process?
A great financial system starts using what you can’t see-underlying technology to take care of transactions, reporting, and analytics, preferably in one place which means that your finance team can plan, transact, analyze, and report on data without leaving the machine. A cloud-based financial management system helps make all this possible.

Think about this: With automated business process workflows included in the system, you can quickly create new or modify delivered processes to adapt to industry adjustments or regulations. Proper security needs to be in place for data, transactions, processing, and applications, thereby rendering it easy to monitor access and changes.

Having transactions and analytics unified in a single system, where all data is stored in-memory, enables real-time transaction processing, consolidation, and reporting of financial data in one place. The moment a transaction occurs with accounting impact, it really is instantly available to report on and analyze within the same system. Finance can create consolidated reports on a daily basis if needed, across multiple legal entities and currencies, significantly reducing the amount of time it takes to close the books. For example, with a unified system, City Year sped up its monthly and quarterly close by 40 percent, while AAA Northern California, Nevada & Utah reduced its quarterly close from 10 days to five days.

In a nutshell, a financial management system for today’s ever-changing world should:

Give a complete, accurate, and real-time picture of your business.

Equip your leaders with relevant, contextual business insights.

Enable you to embrace organizational, procedure, and reporting changes without business disruption.

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What specific challenges do finance teams face today?
Finance must deliver insight that goes beyond the overall ledger info that legacy systems were designed to produce. With a broader group of stakeholders and a business landscape that is continually evolving, finance has been asked to provide the enterprise with insight that can actively influence decision-making.

Many finance teams are struggling with that mission. They’re still occupied with traditional, transactional tasks and spend most of their period gathering data rather than analyzing it and becoming the strategic partner their organization truly needs. Fragmented or outdated finance systems make it difficult if not impossible to have the data they want, when they require it. For most organizations, valuable data is certainly trapped in legacy systems-or even spreadsheets-and organizational silos. Organizations cannot access that data and easily combine it with external data sources, to build the data models and make the predictions needed to consider their organizations in to the future.

Around the world, finance leaders face heightened risks given the pace of technology change, the impact of digital disruption, growing regulatory scrutiny, data privacy and cybersecurity concerns, uncertain economic conditions, and financial market volatility. Finance teams have to be able to act faster with real-time information from across the organization to better manage risk in a changing world.

Finance teams need to be able to act faster with real-time information from over the organization to raised manage risk in a changing world.

Just how do traditional financial management systems work?
Legacy solutions were designed to automate and simplify the accounting to support financial reporting. This technique offers traditionally been rigid and linear, starting with capturing subledger transactions and ending with posting to the overall ledger. As transactions make their way through the accounting process, subledger details are stripped away, resulting in summarized journal entries that update ledger balances. Systems designed this way are only able to support financial reporting based on how the accounting segments were configured during the initial implementation.

To provide richer business insight and management reporting, organizations require data marts or warehouses, business intelligence solutions, and reporting tools in addition to these systems. This “bolt-on” approach means creating and maintaining costly integrations, requiring more effort for data reconciliation, and potentially exposing businesses to unnecessary errors. And, this solution ultimately results in stagnant silos of disconnected data.

With disparate systems for accounting, consolidation, reconciliation, purchasing, revenue, compliance, and other functions, your financial management environment becomes a lot more complex. Fragmented systems make it hard to deliver real-time insights to the business and maintain pace with growth and change. Scaling or changing these systems to meet the needs of a growing, changing business is usually slow, costly, and in some cases, virtually impossible.

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