How to Futureproof Your Financial Systems
Jan 15, 2025
Financial systems are a major investment in time and funds, from the moment they are purchased, planned, and implemented. Futureproofing these systems is the safest way to protect your financial management infrastructure, ensuring that all platforms are robust, scalable, adaptable, and secure.
In this post, we will cover how to assess your current financial systems, how to understand challenges that businesses of all sizes may encounter with rigid or outdated systems, and how to effectively overcome these obstacles. A plan for continuous improvement will also ensure that your employees are confident stewards of your financial systems, and that this infrastructure can grow and adapt at the pace of your business.
Assess Your Current Financial Infrastructure
The first step in futureproofing your financial systems is understanding your landscape as it stands today. Enterprise resource planning (ERP) systems, treasury management systems (TMS), financial consolidation and reporting systems, bookkeeping platforms, and point-of-sale (POS) systems are all examples of platforms which tie into the financial infrastructure.
After taking inventory of all systems, it is time to identify potential vulnerabilities, such as delayed maintenance, broken integrations, outdated security, and end user knowledge gaps. Your business may also identify pain points such as data silos, limited or difficult-to-use functionality, and cumbersome manual processes.
Take time to also engage stakeholders from finance, IT, and procurement, as well as other departments and functions. For small businesses, this could also mean collecting feedback from external partners and accountants. As users or administrators of your financial systems, this “boots on the ground” feedback can expose firsthand insight to any operational challenges and unmet business needs.
Lastly, it is best practice to evaluate the scalability of your firm’s financial systems. Is the present infrastructure equipped to scale in lockstep with your growth plans and potential? If entering a new market, an acquisition, or a higher transaction volume is on the horizon, capacity becomes a critical piece of your systems’ health and longevity.
Common Challenges Facing Financial Systems
Once a thorough picture is generated of your financial systems’ present state, it can be daunting to create an improvement strategy. Both small business and enterprise-level companies face common challenges at this stage, having identified issues within their respective financial infrastructure but facing barriers to futureproofing it.
A CFO’s job is to address these challenges and prevent similar issues from occurring in the future. This effort includes gaining buy-in where change management and additional resources are needed to enact this change. Now we will discuss themes and roadblocks your company may have encountered, followed by several methods to overcome them.
Challenges for Small Businesses
- Limited Resources: Small businesses often lack the budget and personnel needed to implement and maintain sophisticated financial systems.
- Manual Processes: Many small businesses rely heavily on manual workflows, which can lead to human error and inefficiencies.
- Scalability Issues: As small businesses grow, their existing systems may struggle to handle growing complexity and transaction volumes.
- Compliance Risks: Keeping up with tax laws and regulatory requirements can be overwhelming without dedicated support.
Challenges for Enterprises
- System Complexity: Large organizations often operate multiple financial systems across departments and regions, leading to data silos and integration issues.
- Legacy Systems: Many enterprises rely on outdated technology that lacks modern features and is costly to update. An enterprise may have also adopted a new solution but relies on the old one for certain data, straddling the current and the obsolete.
- Cybersecurity Threats: Enterprises are prime targets for cyberattacks due to the volume of sensitive financial data they manage.
- Change Resistance: Implementing new systems can be met with resistance from teams accustomed to existing workflows, especially if they are large and exist across geographies.
5 Ways to Futureproof Your Financial Systems
- Focus on Data Integration and Accessibility
Data integration is useful for ensuring seamless operations and informed decision-making. At the enterprise level, a company may integrate financial systems with other core business platforms, such as customer relationship management (CRM) or enterprise resource planning (ERP) systems. For small businesses, this could mean linking accounting software with e-commerce platforms or inventory management tools. Breaking down system or departmental silos allows for an easier, more accurate flow of information and more simplified financial reporting.
- Strengthen Cybersecurity Measures
Financial systems are a prime target for cyber threats, making cybersecurity a top priority. Data breaches can result in severe reputational and financial losses, so regular vulnerability assessments are critical. As a best practice, your business may implement a combination of multi-factor authentication, encryption, and routine audits to ensure that data is well-guarded.
As security threats continue to evolve, so do the technologies designed to combat them. Consider adopting blockchain for transaction security, and advanced encryption tools to protect key sensitive information. On a smaller scale, password managers and secure backup systems are practical starting points.
- Build Flexibility for Regulatory Changes
Regulatory compliance is key for any size business; ensure that your systems are configured to accommodate tax laws, accounting standards, and data protection regulations. Some systems may update automatically, while others require manual administration of updates. Keeping staff in place to monitor for these changes is critical to maintain compliance. Choosing agile systems allows for quick updates without requiring extensive reconfiguration.
- Train Your Team
Financial system fluency, both for those who use it and those in IT who administer it, is important to ensure that each tool is operated and maintained correctly. Providing comprehensive training on financial systems can ensure smoother end user adoption. For small businesses, this can involve training a small team or even just the business owner. At the enterprise level, you may wish to create a “Change Agent & Super User” program in which certain power-users receive deep education on the system, then serve as a training resource for their broader teams.
Fostering a culture of continuous learning and openness to questions can ensure that knowledge is thorough and that there is an avenue for future pain points and feedback to flow upward. Training materials can also include refresher courses, educational information from the system provider, quick guides, and an easily accessible knowledge base that is continually updated when you roll out new system features or adjust design based on new regulations.
- Embrace Automation and AI
Finance automation and artificial intelligence (AI) can be game changers for financial systems in which certain repetitive functions or data entry are manual. Automating tasks in the realm of accounts payable, accounts receivable, data entry, and reconciliation can reduce human error and free up team bandwidth to focus on strategic tasks. AI-driven tools can also bolster financial forecasting, trend analysis, and fraud detection.
Platforms like Workday Adaptive Planning and Sage Intacct integrate AI for advanced analytics and workflow optimization. Small businesses might consider simpler AI-enabled tools integrated into platforms like QuickBooks or FreshBooks.
Plan for Continuous Improvement
Futureproofing is not a one-time activity; it requires ongoing effort and evolution. Once your business has assessed the current financial infrastructure and decided which corrective and preventive measures to adopt, a continuous improvement plan can keep your systems on track. Improvement plans can include:
- Periodic Evaluations: Regularly assess your financial systems to ensure your tools and processes keep pace with the changing needs of your business.
- Feedback Loops: Create a system for your team to share insights and suggest improvements. This could be as simple as holding quarterly meetings with your accountant or finance team.
- Stay Updated: Monitor industry trends and emerging technologies to stay ahead of the curve.
- System Maintenance: Perhaps most importantly, understand when your systems must be updated. If cloud-based, the provider may update automatically; in other cases, the updates must be performed on your company’s end. This helps to prevent security vulnerabilities and ensures that you have full access to any new features or enhancements to your existing infrastructure. In a previous blog post, we discussed what decision-making factors should be considered for upgrade timing, as well as how the CFO drives the final decision.
Conclusion
Futureproofing your financial systems is a strategic measure to safeguard your business’s growth and resilience. By assessing your current infrastructure, removing silos through data integration, adopting AI-driven solutions, prioritizing data security, and fostering adaptability within your team, your financial systems will be more ready than ever to meet the challenges of tomorrow.
Whether you’re running a small business or managing a large enterprise, these steps will help you navigate an uncertain future with confidence. Take the first step today by evaluating your current systems and identifying opportunities for improvement. Once you’re ready for a CFO to support your operations, contact us; our team of trusted executives can guide your futureproofing efforts and ensure that your systems are well taken care of. The future is unpredictable, but with the right financial tools and strategies, your business can move forward with confidence, no matter what comes next.
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