According to results from a CFO Magazine survey, organizations need a little over six calendar days to close out a month’s books on average. Tom Kelly, Director of Product Management at NetSuite, says that it should take you one day to close your books if you’re using your software optimally. That’s right, one day.

If your financial close takes a week or longer, your software system may be a big part of the problem. Examples of system roadblocks can include data inaccuracies, in which time and effort is required to scrub data, as well as duplicate data entry requirements for multiple systems and poor data governance stemming from inconsistent processes across employees, locations, business units and companies.

“Previously, it took our company 14 days to close the monthly financial statements in QuickBooks. Now we do it in 5 business days, and we should get to a point where we will be able to do it in 2 days.”

-- Glenn Pearson, CFO R.A.S. Logistics, on Acumatica

System instability can be a symptom of a variety of problems. Company growth, for example, can lead to an increase in transactional data volumes that can strain databases. As systems are maxed out, instability can take the shape of reboots, lost data and long wait times to generate and/or alter reports.

A poor business software system experience can also contribute to reduced employee productivity, as users form an aversion to performing certain tasks in the system and workarounds become commonplace. The Corporate Finance Institute goes so far to say that lost or corrupted data can destroy business functions, damage your organization’s reputation and negatively impact employee productivity. And those damages can really add up: organizations surveyed by research firm Gartner believe poor data quality to be responsible for an average of $15 million per year in losses.

Teams that need to retrieve data from three, four or more systems or involve paper processes in order to consolidate results for monthly close build unnecessary time and energy into processes to manually copy, link and edit data – and that translates into costs. Strategic Finance Magazine reports, “Manual processes present too high a cost for accounting teams, CFOs, the broader business, and investor confidence. They sap time and resources, elevate risk, place a shadow over audit and compliance processes, and burn out talent.”

There’s also a greater likelihood of errors the more manual manipulation is involved, says Nelson Tepfer, co-founder and president of ProCFO Partners, a provider of expert CFO services to SMBs and Net at Work Alliance Partner. “Organizations that have several systems to pull data from and then perform manual operations, will experience inaccuracies,” cautions Tepfer.

Cloud-based financial management and accounting implementations deliver 4.01 times the return on investment (ROI) versus on-premise software, according to Nucleus Research, largely because capital investments in equipment and operating expenses can be avoided. In addition, the advances in technology, like "today’s AI can cut costs and errors in invoice processing by up to 85%,” says Forbes. “The result? It’s possible to gain improved productivity, optimized resources, accelerated growth, enhanced financial agility and increased financial control.”

Advertising agency Adtegrity experienced this firsthand after replacing their QuickBooks® instance with NetSuite. The firm went on to recognize a two-fold increase in revenue, more reliable data and an incredible decrease in invoicing time from 3-5 days to five minutes. Adtegrity also avoided the high costs of having to hire the five-to-ten personnel that would be required to run an on-premise solution.

Disconnected systems can prevent teams from getting an accurate picture of the organization’s financial condition until month-end close is complete. This can force teams to create spreadsheets to keep track of their monthly results, ultimately leading to a cycle of reconciliation between accounting and various departments - causing teams to work long hours to complete low-value work. “If IT needs to get involved to create reports, this is a warning sign,” says ProCFO Partners co-founder and president Nelson Tepfer.

The integration of financial operations into a single Next Generation ERP solution, particularly as part of a full-scale Digital Operations Platform (DOP), allows leaders to rely on real-time financial reporting to track and manage results. After making a Next Generation ERP switch, The Boston Globe eliminated its nearly two-week wait time for report requests to be fulfilled, and is now able to generate reports and analytics in real time.

Quite simply, a manual approval process increases the probability of errors. Samsung summarizes the issue: “Cumulatively, hours are lost completing routine manual tasks like printing documents, ensuring [they’re] fill[ed] them out, scanning the completed forms, attaching those files to digital records and then filing those papers away. That busywork takes your team away from higher-value interactions.”

Without automation, clerks and leadership must depend on the approver’s ability to choose the right code, write it correctly and legibly on the document, and then trust that the reviewer will forward that document to the right personnel in accounting. There is no control of that document as it moves through the organization, accumulating risk of damage, loss and penalties along the way.

Research firm Ardent Partners found that invoices that are not touched by humans travel through the receipt, approval and payment process far quicker. This allows organizations to lower costs, improve efficiency and create opportunities to improve working capital management. Best-in-Class organizations, defined as the 20% of enterprises with the lowest average invoice processing costs and the shortest average invoice cycle times, have been found to process a single invoice three times faster.

As companies allocate overhead expenses across multiple departments, requiring the tracking of depreciation and amortization expenses, the offshoot involves tedious manual journal entries. Accounting teams have to manage and track all of these data sources required to create the adjustments, usually on complex spreadsheets.

Automated transactions within Next Generation ERP solutions, by contrast, replace the need for manual tracking, recording and posting – thus allowing for an update to be made once for all companies across the organization. There are tangible impacts as a result of automation, too.

Controllers Council shares an example: “When Coca-Cola reviewed its manual reconciliation processes across 500 ledgers, it was observed that associates were spending 14,000 hours on reconciliation alone which prompted a switch from manual processes to automation. After the switch, Coca-Cola could reallocate 40% of the team in manual reconciliation. The reallocated teams could focus on other activities like reporting, IT control, and metrics. The shift to automation helped them recover millions of dollars in efficiency that were invented back into accounting functions.”

Legacy systems and other business software systems often build financial reports from a rigid chart of accounts structure, which can crack when change occurs, like the addition of new departments, products, services or companies. Spreadsheets can quickly become the workaround, further entrenching organizations into data quality, data governance and duplicate data entry issues. Likewise, external reporting tools that lack seamless integration with your single financial source of truth will require multiple data entry and, once again, spreadsheets become the fallback resource.

Alteris Group, an employee training and marketing communications firm with locations in both Canada and the United States, found this to be the case with their former Microsoft Dynamics SL instance. Each office had sits own separate timesheet system, but invoicing was performed in the U.S. office. “We had to re-enter all the timesheet data from the Canadian system into the U.S. system and then export the whole thing to Excel to create the invoices, and then re-enter the invoice data into Dynamics,” explains Hannah Rees, Senior Project Manager at Alteris Group. “It sounds confusing because it was. Lots of duplicate data entry, lots of time wasted, and of course, more potential for human error.” With the company’s new Next Generation ERP solution, they’ve been able to speed up the billing cycle and gain nearly four full days of billable time each month.

Perhaps one of the biggest risks of running older business software systems is application instability and security. As software publishers look to discontinue support of systems, such as versions of Microsoft AX and NAV in 2023, it’s important for users to lean on their technology advisor, like Net at Work, to factor in the lifecycle of their software into their overall technology roadmap and stay ahead of the curve.

One building materials distributor was running Sage 100 for twenty years when concerns that a complete loss of data could be imminent as daily server resets became the norm. Executives turned to Net at Work for a Business Health Assessment. “They recommended back then that we move to the cloud,” recalls the Chief Executive Officer. “We stalled, thinking we could continue to get by. It took us a few years, but we came around. Now we all wish we would have made the move sooner since it’s been so successful.”

Aging software systems place less emphasis on development and more on bug fixes, customer support and access rights to charge 18-40 percent of total software license values annually, says IndustryWeek. Without a forward-thinking technology strategy and vision in place, software publishers lean heavily on dated tools, development processes and platforms to maintain profitable maintenance contracts.

Next Generation ERP solutions lead with new technology, building continuous improvement into their core development framework. Sage Intacct, for example, uses its AI-powered outlier detection to evaluate transactions against the historical norm. A notification is generated for every transaction that appears to be outside of the norm, then AI folds in the activity conducted after the transaction was flagged to better predict future outliers. The AI/ML tools within the Advanced Expense Management function of Acumatica automate expense receipt creation from bank feeds, incorporating rule-based assignments of financial accounts to streamline employee reimbursements and corporate credit card reconciliation.

Bottom line: if you’re not able to access, let alone expand usage of, the latest developments in business software technology, your company is missing opportunities to increase productivity and efficiency faster than the competition.

Security vulnerabilities that can result from software upgrade delays, lack of governance surrounding the most sensitive data and role access and integration “holes,” among others, leave your department – as well as your entire company, customers, suppliers and vendors – more susceptible to potentially devastating threats. Tyler Bower, Practice Director for Sage cloud hosting provider Cloud at Work, lists the proliferation of ransomware variants among the top risks to small-to-medium sized businesses. “In 2021 alone we saw 69 ransomware variants, with the average ransomware transaction per month hitting $102.3M," says Bower. “And there were over 140 million ransomware attacks globally that same year. Those numbers are not expected to trend downward over time.”

Accounting and finance teams that utilize a Next Generation ERP system in the cloud can expect their applications to have built-in multi-factor authentication or IP whitelisting capabilities, role-based access controls and encryption technologies. Even more so, their hosting services should be externally audited to SOC 1 Type 1 and SOC 2 Type 2 (SSAE18 and ISAE 3402) standard while maintaining ISO 27001 and 27018, PCI DSS and PA-DSS compliance.

Customizations are changes to the source code of your business management system. As the software publisher makes updates and upgrades to its system, these new issuances may affect a user’s customizations to accounting and other functional features. Add in the maintenance of customizations to the mandatory upgrade and testing process over time, and organizations find themselves incurring large IT costs – and time - to support necessary applications. If you experience holdups and dependencies on IT teams to carry out accounting tasks or plan for new improvements, this could be a sign that your existing software system is the culprit.

For wholesale distributor NES Group, that realization took form when their accounting software, QuickBooks®, and highly customized legacy application used for ordering, shipping and EDI collectively presented roadblocks to gleaning the financial insight needed to remain profitable and successful. “It required a lot of work just to keep the two systems up-to-date and accurate,” recalls Yosi Arish, Director of Operations for The NES Group.