Financial management is a very crucial part of any business. The financial arm of the business is perhaps the most important because the financial health of a business largely determines whether it’s going to thrive, survive or die. The purpose of organizing resources and designing operations and structures to provide goods and services for customers is to make a profit. All the money coming in and going out has to be accounted for. Thus, the importance of finance and accounting.
However, running a business often comes with challenges and problems. Roadblocks are barriers to effective business finance and accounting management. As a business owner, it is vital to make sure your finances are in order. If you lose control of the financial arm of your business, you may put your business at risk.
That being said, here are a few business finances and accounting roadblocks that your businesses may encounter and how you can resolve them:
- Insufficient Accounting Controls
Usually, every business has an accounting process it follows. There isn’t a one-size-fits-all approach to accounting. How they account for the money coming in and going out is determined by the policies the company follows. Therefore, the accuracy of recording transactions and statements depends on the preciseness of these accounting policies and processes. If these policies and processes fail, it could create a roadblock to effective accounting. This could then cause the management to make ill-advised decisions because of financial misinformation.
A good way to deal with this roadblock is to use cloud-based computing. Working with a cloud system improves information accessibility and allows data to be stored safely. You’ll be able to track any changes more effectively, too. Cloud systems are safer and more convenient compared to legacy systems, which have rigid architectures. An added advantage of migrating to the cloud is that of reducing the cost of auditing. Since you’ll be able to get reports on demand, you won’t need to do audits as frequently.
Aside from this, having good accounting processes is significant. If you’re considering having improved accounting strategies for your business, you can check out: https://www.michigancfo.com/virtual-cfo/ for more information.
- Lack of Automation Tools
Automation is a good hack for improving business management efficiency. If any processes are automatable, automate them. Fortunately, accounting has a lot of opportunities for automation. Organizations that still use legacy systems are not as efficient at gathering data or calculating relevant metrics and key performance indicators (KPIs) because they have not automated their processes.
A great example is implementing an automated payroll management system. Legacy systems require accountants to manually calculate the number of hours worked per person. But automating the process by which the payroll is handled frees up time and makes work easier for the accounting and finance departments. This could include a system whereby workers can sign in and out by themselves, and the system automatically records the hours worked.
Automation leads to efficiency because it helps decision-makers decide faster. They’ll also be able to make more accurate decisions. Plus, it decreases the risks of human error to a large degree. This is significant since human error is common in accounting.
- Lack of Internal Integration
Ideally, every business department has to go through the finance department. Finance and accounting departments are essentially the heart of a business. Therefore, for the accounting arm to function as optimally as it should, the business should be integrated as much as possible. This means that a system should be in place which connects different parts of the business. This allows data to flow seamlessly throughout the organization. It also allows accountants to generate more accurate statements with greater efficiency. But if integration lacks in the business’s design and structure, there’s a fair chance that productivity will be adversely affected.
What a business can do is use enterprise resource planning systems (ERP) together with other technologies, such as artificial intelligence (AI), to integrate all the parts of the business. This will help in terms of financial accountability. They can record transactions on the cloud as they occur.
- Resistance To Change
It could very well be the case that employees are skeptical of your proposal. No one likes change. If you’re asking your employees to transition from using one system to another system, they may find it hard to use. So, in such an instance, you could try by all means necessary to provide training to help employees to get used to the new system. Help them to embrace change.
How people think about the significance of their work determines their attitude towards it. As an organization, you want your employees in finance and accounting to buy into the culture of change as a necessary means to better business performance. This is especially true concerning the automation of accounting processes. If you don’t train them on how to use the technology properly, they won’t be confident in using it and will likely resist the change. The transition period may be protracted because of such a setback. This time wasted may then translate to lost productivity. So, as much as possible, it’s important to plan for any changes. However, you must remember to inform them before the changes to give them some time to prepare.
Conclusion
Mostly, challenges that modern businesses face usually have a technological solution. This is great because now businesses can simply invest in automation, or cloud computing to solve some of their problems. Automation allows the accounting process to be done much more efficiently, therefore overcoming the various roadblocks businesses may encounter. As a business, try to look into solutions and find the one that works for your business.
