Financial management systems for international companies
When a company starts to internationalize, financial management systems and processes are rarely among the top priorities. Here's why they should be.
November 20, 2023 |
3 minute reading time
What an internationally operating company should take into consideration while navigating in the jungle of financial management systems.
Challenges of internationalization from the perspective of financial management systems
When a company starts to internationalize, financial management systems and processes are rarely among the top priorities. Often, companies end up in a situation where they acquire software and local financial management partners to meet the local needs of each target country. As a result, financial management processes differ from country to country. Moreover, the systems in use in different countries usually do not communicate with each other at any level, causing data to be fragmented across different locations.
Maintaining multiple tools makes scaling the business difficult, as forming a real-time picture of key financial indicators becomes challenging. Reporting then inevitably becomes laborious and time-consuming, as information must be compiled from various sources. As a result, managing the business becomes more complicated, and the confusion stemming from systems can even create a significant barrier to growth.
Using multiple software also causes overlapping costs, both during procurement and maintenance. Country-specific tools are not always fully utilized, and payments have to be made to multiple system providers for the same features. Besides software licenses, money is also spent on various implementation projects and ongoing staff training.
What requirements does international business set for financial management?
It's important to address the problems caused by this system jungle well in advance before they become obstacles to growth and internationalization. A key question here is: what requirements do vision and strategy set for financial management? High-quality data, up-to-date reporting, and the ability to respond quickly to changes are typical examples of what a company aiming for international growth requires.
Once the target state is clarified, it's time to consider what kind of financial management system best meets these defined requirements. It is advisable to minimize the number of systems used so that financial management processes can be unified regardless of the target market. If, for example, five different country-specific systems are used for processing purchase invoices, this inevitably creates unnecessary confusion and rigidity.
When comparing systems, it is also advisable to assess the system's size and scope in relation to one's own goals. By keeping the utilization rate of tools high, you avoid paying for unused features. It is also crucial to adjust the degree of automation for processes and routines to a sensible level from the perspective of your own business.
Often, a system alone is not sufficient to meet a company's needs. It must also be ensured that billing complies with local legislation. In this case, a skilled system partner can combine both system knowledge and expertise in country-specific regulations and requirements.
Benefits of a successful financial management system selection
Ensuring transparency and control
Having unified financial management tools enhances the efficiency of accounts payable and accounts receivable teams. This harmonizes, for example, the Invoice-to-Cash and Invoice-to-Pay processes across countries.
From the perspective of transparency and control, it is also crucial to ensure that financial decision-makers have access to real-time information. If data is fragmented into numerous country-specific systems, gaining a clear picture becomes difficult.
Improving cost-efficiency and profitability in the financial management of an international company requires well-sized automation and sensible management of services. Centralizing Invoice-to-Cash (I2C) and Invoice-to-Pay (I2P) processes in one place enables smoother management, standardized practices, and better utilization of information.
The speed of software implementation is also an essential part of improving cost-efficiency and profitability. Faster implementation means quicker benefits, fewer disruptions in business operations, and agile transitions to more efficient processes.
Smooth processes and seamless interaction between systems
Smooth financial management processes and seamless interaction between different systems have become decisive factors in ensuring a company's competitiveness. Nowadays, massive ERP projects can be avoided through the systematic utilization of modern interfaces and integrations.
Understanding the costs of integrations, managing their quantity, and choosing the right partner are all factors that contribute to success in the financial management system environment. The critical question is how to get various system changes and integrations to generate value as quickly as possible. When comparing different systems, it is wise to carefully examine their integration capabilities.