Editor’s Question: How can financial software help an SME?

Editor’s Question: How can financial software help an SME?

Financial software can make a huge difference to the success of an SME. Branden Jenkins, Chief Operating Officer, Medius, said: “Historic inflation levels, a looming recession and the possibility of another black swan event have all heavily impacted the current boardroom mentality of business leaders, particularly when it comes to company finances. Small- and mid-sized enterprises (SMEs) in particular tend to take a disproportionate hit during times of economic instability, so it’s no wonder that finance leaders of smaller businesses feel especially weighed down by decision-making and risk analysis, in order to generate healthy revenue.

“Yet, the sad truth is many finance professionals remain largely unaware of the vulnerabilities within their own businesses, leaving them potentially susceptible to cybercrime and fraud. In fact, the latest Financial Professional Census reveals that the average business – including SMEs – loses more than £295,000 to fraud each year. To add to this alarming revelation, only a quarter (25%) of finance executives surveyed were unable to estimate the financial impact of fraud to their business and/or were unaware of it occurring in the first place!

“It’s clear that the events of the past few years have caused many SME business leaders to focus on potential threats outside of their business, whether it’s improving supply chain processes or deepening customer relationships, for instance. Yet, while this is no doubt a necessary undertaking, it has nonetheless resulted in finance departments dropping the ball on internal systems, especially end-to-end payment processes. This creates a ripe environment for fraudsters, including overlooked employees – to steal crucial business funds, mostly undetected. The good news is that Accounts Payable technology can help businesses detect irregular and potentially fraudulent behaviour, freeing up finance leaders to focus on the macroeconomic challenges facing SMEs today.

“But many businesses need to update their technology to benefit from the increased automation it can provide to finance teams. More than six in ten (62%) of finance professionals perceive their company’s financial software as obsolete, and in an age of rapidly evolving technology, including generative AI, those businesses which fail to fully digitalise their payment processes are much more likely to fall behind and fall prey to human error, outdated technology and defraud attempts.

“Something I see every day in my role as COO is the need for constant technological development. The reality is that no company is safe from fraud, so every business and finance leader bears the responsibility of reducing financial theft. This is especially necessary during times of economic uncertainty where resources are more finite than usual and where employee churn may be lower than the norm – particularly for SMEs. In these times, businesses need to evaluate available resources and seek to improve continuity of process, accountability and transparency through Digital Transformation – particularly across finance functions. Financial software has the power to create a robust system of checks and regulation – from validating important vendor data, anomaly detection and leveraging end-to-end invoices. Automation can help safeguard SMEs from fraudulent activity, which too often passes through unnoticed and drains businesses of unnecessary revenue leakage.”

Nick Williams, UK Product Director, Intuit QuickBooks:

The business landscape at present is incredibly challenging for SMEs. Increased general business costs such as electricity and rent, as well as costs for raw materials and stock, have shown no signs of falling, resulting in many small businesses struggling with tight profit margins and limited cash. Financial management software can help small businesses maintain a healthy cash flow and mitigate the effects of rising costs on business performance.

Being paid late, for example, is a key contributor to unhealthy cash flow and low profit margins. Software that includes designed features such as invoice tracking and automated reminders can help small business owners avoid wasting time on awkward calls and emails to chase late payments – and ultimately, help them get paid on time. 

Financial software also provides small businesses with the latest up to the minute financial information, which in turn enables businesses to have the most accurate data. Accurate data is the backbone to any successful business, as it improves forecasting capabilities and gives business owners a better understanding of discrepancies or unnecessary expenditure. This means issues can be avoided or resolved faster so better decisions can be made going forwards. In fact, our data found that nearly half (48%) of entrepreneurs admit rushing into important business decisions, so it’s ever more important to get as much help as possible from technologies.

Financial software also ensures day-to-day admin is automated and easy. For example, it is possible to clock and record mileage and expense receipts automatically – with a direct link to your bank account. By streamlining back office operations and obtaining accurate insights, small business owners can focus on growing their business in the area they’re most skilled in, rather than getting bogged down in financial admin. The time saved can be spent building face to face client relationships or driving sales.

As well as assisting with objectives such as business performance, financial software can help reduce stress that business owners feel – especially at challenging times of the year, such as the new tax year. Financial reporting is a source of stress for many, with the most challenging jobs proving to be running tax year end reports (44%) and meeting HMRC payroll deadlines (28%). We found that many small business owners report feeling more isolated due to the increased stress around the time of the new tax year (21%), for example, falling behind on the day-to-day running of the business due to increased admin (20%) and even losing sleep due to concerns over potential errors in accounts (16%). 

SMEs already using financial management software can see how much of a difference it makes to their well-being, profits and client relationships from day one.

Charlie Wood, CEO, Wiise:

From 2021 to 2022, more than 160,000 new businesses were established in Australia. There are around 2.4 million small- and medium-sized enterprises in the country, contributing over US$700 billion to the economy as of 2021. These organisations predominantly utilise Microsoft Excel spreadsheets and basic accounting software to operate their businesses.

However, as businesses grow, they become more complex, with additional staff, stock keeping units (SKUs), product lines and expenses. Managing this increased complexity gets harder as employees spend more time on administrative tasks like manually transferring data between systems, while the finance team struggles to determine the costs of creating and delivering products, leading to guesswork and slow processes.

Everyone is time poor, and outdated systems that lack visibility and connectivity cause tasks to take longer, reduce profit margins and impede growth.

Enterprise resource planning (ERP) software solves these problems. With ERP, all aspects of your business are integrated into one single system, connecting your accounting, payroll, inventory, service management, CRM and more. This means seamless workflows from start to finish, better management of complex operations and real-time access to see exactly what is happening in your business at any time. ERP enables SMEs to make smarter and faster decisions, improve productivity and scale operations without being restricted by clunky software or manual processes.

For example, warehouse managers can track and process inventory in real-time, preventing issues of over or under-buying of stock. Similarly, field service staff can provide quotes and receive payments while on-site, improving cash flow. Business owners and finance managers can also easily see exactly where improvements can be made, helping them to make faster and smarter decisions.

Unfortunately, there is still a lingering assumption that adopting an ERP solution is costly and painful. This perception arose because ERP systems were initially designed for larger organisations, requiring significant upfront investments and maintenance of on-site servers.

However, with the rise of cloud-based technology and subscription-based business models in recent years, small- and medium-sized enterprises can now easily access ERP solutions at a much lower cost. By investing in ERP platforms, SMEs can gain significant operational advantages for less than half the cost of an employee’s wages.

Similarly, for teams used to working with spreadsheets, the shift to ERP software is far less daunting than one might think. Our ERP solution is built on the Microsoft Dynamics 365 Business Central platform, equipping your staff to continue using the tools they’re familiar with. Invoices can be generated and sent through Microsoft Outlook, and data can be exported to Microsoft Excel, updated and imported with just a few clicks.

There is no doubt that building a company brings enormous challenges, but with the right software, SMEs can be empowered to work faster, make smarter decisions and move their businesses forward.

Neh Thaker, Co-founder, HedgeFlows:

In today’s global economy, small- and medium-sized enterprises (SMEs) face challenges when expanding internationally due to a lack of tech infrastructure and concerns about managing foreign cash flows. Our SME Empowerment Report found that 68% of businesses lack the necessary tech infrastructure for operating in other markets, and the same percentage has concerns about managing foreign cash flows. However, financial software solutions like HedgeFlows are transforming how SMEs navigate international trade. These affordable and user-friendly toolkits streamline financial operations, empowering SMEs to unlock the full potential of international expansion plans.

Enhancing visibility

Financial software such as HedgeFlows enhances visibility by providing a centralised platform for managing financial operations in different currencies. It consolidates financial data from various sources, giving SMEs a comprehensive view of their international finances. Real-time insights enable SMEs to track key performance indicators (KPIs), monitor financial trends and make informed decisions based on accurate information. Increased visibility gives SMEs a competitive edge, enabling them to seize opportunities and address challenges effectively.

Streamlining operations through automation

Time-consuming manual tasks and processes hinder SME growth. Financial software solutions like HedgeFlows introduce automation features, reducing manual data entry and minimising errors. By automating routine tasks such as international bulk payments and reconciliations, SMEs can allocate resources efficiently and focus on strategic initiatives. Streamlined operations improve productivity, reduce costs and enhance customer satisfaction. Acting as a digital assistant, financial software elevates efficiency levels, helping SMEs thrive in the international marketplace.

Mitigating financial risks for sustainable growth

Currency swings, market fluctuations or fraud pose risks for SMEs engaged in international trade. The unpredictable nature of foreign exchange rates and economic conditions can jeopardise financial stability. Financial software solutions like HedgeFlows offer risk management tools designed for SMEs. By automating risk analysis, monitoring market conditions, currency exchange rates and relevant factors, these platforms empower SMEs to proactively identify, assess and mitigate risks. Our SME Empowerment Report revealed that 73% of SME owners consider currency swings a major concern for international expansion. HedgeFlows provides SMEs with peace of mind to navigate the volatile international financial landscape, ensuring sustainable growth.

Through increased visibility, streamlined operations and proactive risk management, SMEs can make better-informed decisions, optimise resources and navigate the complexities of the global marketplace with confidence. Affordable financial software solutions will continue to be vital tools for SMEs as the international trade landscape evolves. It is time for SMEs to embrace the transformative power of financial software and embark on their journey towards international growth and prosperity.

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