5 Benefits of Using Financial Planning Software to Manage Your Company’s Finances
Companies have a lot of financial records to keep track of, so what's the best way to do it?
No matter what size or stage your company is, accurate tracking of finances and budget is critical to not only having a grasp on the financial health of your company, but to be able to forecast and make faster, informed decisions. The obvious solution to managing financials is to leverage a financial planning software, but there are so many options in the market, we have to take a closer look at what the true value of a budgeting and forecasting tool is, and which tools offer the most value to founders and teams.
While some companies still use the traditional Excel spreadsheet to do their financial planning, it isn’t as intuitive and user-friendly as other (more modern) financial planning softwares in the market, like Pry for example. Let's take a look at the true value of budgeting and forecasting softwares.
1. Financial softwares empower startups to forecast their growth
In the bootstrapped world of startups, every penny counts. Professional CPAs can cost a lot of money and they don't always educate the entrepreneur on how their expenses and cash flow are performing. As an entrepreneur myself, I've always been more hands on with my business operations because I want to learn for myself, how to run a small business. Knowing the in's and out's of our finances is better for the future of a small businesses leadership team. Plus, most financial softwares are designed with simplicity in mind, so the learning curve isn't as big as you may think. Other benefits of financial softwares for startups include:
- Planning for new hires as company grows (i.e. more sales, support).
- Building financial models to forecast revenue/expenses/COGS.
- Comparing planned vs actuals to keep track of how business is doing.
2. Financial tools empower CPAs/CFOs to do their work faster, with less errors
A computer is the brain power that works on our behalf when those post-lunch sleepies kick in. Today, softwares enable finance professionals to do all the heavy lifting for them, and it pays off by saved time and accurate records for the business. Large companies wouldn't dream of hiring traditional CPAs/CFOs who work with pen and paper, and neither should smaller companies, especially when there are so many platforms out there that can do the work for them. Project budgets are a great example of this - it's much safer (less risk) to use a software solution to monitor project lifecycles, than an employee and an Excel document that could lead to miscalculated expenses. Turns out that project WAS NOT under budget, as originally thought.
3. Financial tools empower investors with additional visibility of a business's financials
For any investor, the primary concern of funding a company is whether or not they'll see returns (ROI) on their assumed risk. When it comes to tens to thousands to hundreds of thousands of dollars (not your usual credit card loan), clarity of financial data is among the most valuable types of data that an investor can digest. Though business financial planning software is typically geared towards companies, a wise investor can leverage them for his or her own financial control. After all, isn't an investor, a business entity of their own?
An important aspect of the financial planning process for investors is forecasting, something that few platforms have integrated into their framework. With forecasting, investors can assess long-term health of not only their assets (companies) but their portfolio as a whole. Some platforms have taken this step, and even have pre-built templates that can be tweaked and adjusted however users like.
4. Multiple dashboards for categorized finances
Unlike a simple profit loss statement, which will typically reflect a single finance entity, cloud based solutions allow mixing and matching of data via a "dashboard" view. With digital, you can easily move numbers around to evaluate financial health from different angles - a task that would require a lot of manual labor if it were done on a physical ledger. With multiple dashboards, you can also create sections specifically for items like salaries, spends, forecasts, etc, all within a single user interface that can be cross-referenced as needed. When it comes to organization and accurate accounting, nothing beats a digital financial planning system.
5. Finance management tools allow for real-time collaboration
Additionally, financial planning is a complex topic and can benefit from having multiple cooks in the kitchen (checks and balances, and all that) to monitor a company’s finances. Companies like Pry.co (mentioned earlier) have integrated real-time collaboration features, so teams can work around the globe simultaneously - an important benefit for companies that are scaling quickly. Best of all, many of these business financial planning softwares come with a free trial, so you can get your feet wet before diving right in. Further benefits include:
- Collaborating remotely during Covid or other stay-at-home restrictions (more important than ever).
- Multiple financial team access, like CPAs, CFOs, etc.
- No more sending Excel files back & forth over email.
- Easy to understand/follow, don’t have to worry about breaking formulas, and everyone is on the same page.
Financial planning tools like Pry are paving the way for this type of collaborative, finance-focused work, and companies of any size that hop onto the train early, are sure to reap the benefits of a well managed, digital finance system, for a long time.
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