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Today’s growing businesses are facing unprecedented challenges and opportunities. On the positive side, they have the opportunity to capitalize on global markets and resources by virtue of today’s telecommunications networks, electronic commerce outlets and lower international trade restrictions. As a result, companies of all sizes are leveraging lower cost materials and skills abroad, and selling to new markets worldwide. On the other hand, companies must also contend with escalating competition and more complex operating requirements.

At the same time, many businesses are increasingly reliant on a dispersed workforce of remote or mobile employees. They must also communicate more effectively with an expanding network of global suppliers, channel partners and customers. In order to manage these escalating challenges and fully capitalize upon today’s expanding market opportunities, an increasing number of growing businesses are recognizing that they must adopt more sophisticated financial management systems to properly support their businesses.

Some smaller companies have used QuickBooks to track finances, but now need a more robust financial management system to handle their increasingly complicated transactions.

Why? They need to better forecast and track their revenue flows, keep a closer eye on their cost structures and adhere to tighter accounting and regulatory compliance standards. In the past, when companies graduated from QuickBooks, they would have to make significant investments in costly and complex on-premise, financial management software to meet their needs. These premise-based applications often required long deployment cycles, added hardware to support the applications, and dedicated in-house information technology staff time to keep the software up and running.

Trends Leading to the Rise of Cloud Financial Management

• More and more companies of all sizes are adopting a new generation of cloud-based, Software-as-a-Service (SaaS) solutions to satisfy business requirements. This trend began with the adoption of customer relationship management, payroll and conferencing solutions from SaaS vendors such as Salesforce.com, ADP and Webex/Cisco. The success of these SaaS deployments has led to companies adopting comparable SaaS solutions to satisfy their financial management software needs as well.
• Companies of all sizes are facing a combination of market trends which are forcing them to more effectively manage their businesses. These trends include globalization, competition, worker dispersion, and a growing acceptance of web-based, on-demand services. Globalization has created new market opportunities, but has also opened the door to new market competition. It has given companies access to new markets and cheaper offshore resources. It has lowered the barriers to entry for a growing assortment of competitors who are increasingly competing on price rather than product features.
• More and more SaaS offerings have been specifically designed to scale to meet the needs of both small and large enterprises. SaaS appeals to companies that have been unable to acquire the sophisticated applications of the past, those who have grown tired of the complexities and costs of premise-based applications, and others who have outgrown the capabilities of their existing applications.
• While companies of all sizes must employ increasingly sophisticated financial management to control their corporate operations, small and mid-sized companies are particularly challenged to contend with these issues. Many of these companies are either young or too small to be able to justify the cost and complexities of traditional mid-market on-premise applications. Many have initially relied on Intuit’s QuickBooks to meet their revenue and expense tracking needs but their business requirements have evolved.
• As products and services become more complex, so do revenue management and billing requirements. Companies today also need to comply with increasingly complex revenue recognition guidelines. Most traditional mid-market accounting systems are not designed to handle this increased complexity and many organizations are forced to use manual spreadsheets to manage their revenue recognition and billing processes. By leveraging a financial management system that enables you to automate these processes, companies benefit significantly in higher finance productivity, faster close processes, and simplified compliance.
• As companies grow, they often need to track revenues, expenses and profitability across multiple business units. Rather than create multiple instances of financial information for each entity which must be consolidated manually into a Microsoft Excel spreadsheet, many companies seek an integrated, financial view of a company’s end-to-end operations.

Today’s new breed of SaaS offerings targeting cloud financial management permit users to pay on a subscription basis – relieving them of the added hardware costs, as well as deployment and management hassles. This allows users to focus on leveraging the software functionality rather than worrying about the application availability. Unlike on-premise applications which might be hosted by a software vendor, today’s SaaS solutions have been built to fully leverage the web and permit end-users to utilize the online financial management applications in the cloud anytime … from anywhere. For businesses positioning to take the next step in scaling for growth, cloud financial management presents great opportunities.

The Advantages of Cloud Financial Management for Growing Businesses

As businesses experience growth and face increasingly complex challenges, cloud financial management solutions offer several advantages to support their expansion. Here are the key benefits of adopting cloud-based financial management systems:

• Cost Efficiency: Cloud financial management eliminates the need for significant upfront investments in hardware and software. Companies can subscribe to these solutions on a pay-as-you-go basis, reducing the total cost of ownership and allowing for better financial planning.
• Rapid Deployment: Unlike traditional on-premise applications, cloud financial management systems can be deployed quickly. This agility ensures that businesses can start using the software without lengthy implementation cycles.
• Accessibility: Cloud-based financial management is accessible from anywhere with an internet connection. This feature is invaluable for businesses with a dispersed workforce or remote employees who need to collaborate and access financial data on the go.
• Scalability: Cloud solutions are designed to scale seamlessly with a business’s growth. Whether you’re a small startup or a large enterprise, you can easily adjust the capacity and features of your financial management system to meet changing needs.
• Automation and Efficiency: Cloud financial management systems offer automation capabilities for revenue recognition, billing, and other financial processes. This automation enhances finance productivity, speeds up the financial close process, and simplifies compliance with complex regulations.
• Integrated Financial View: Growing companies often operate multiple business units. Cloud financial management provides an integrated view of a company’s end-to-end operations, eliminating the need for manual consolidation of financial information across entities.
• Business Continuity: Cloud solutions are hosted off-site in secure data centers, ensuring business continuity in the event of disasters or disruptions. Data is regularly backed up and protected, reducing the risk of data loss.
• Focus on Core Business: Cloud financial management relieves businesses of the technical complexities of managing on-premise applications, allowing them to focus on their core operations and leveraging the software’s functionality.
• Subscription-Based Model: Cloud financial management is offered on a subscription basis, making it more accessible to small and mid-sized businesses. This subscription model provides flexibility and cost predictability.
• Web-Based Accessibility: Cloud financial management fully leverages the web, enabling users to access the application online from any location. This accessibility enhances collaboration and ensures that critical financial data is always at your fingertips.

Frequently Asked Questions (FAQs)

What is cloud financial management, and how does it differ from traditional financial management systems?

Cloud financial management involves using web-based software hosted in the cloud to manage a company’s financial processes. It differs from traditional systems, which are on-premise and require significant hardware investments and longer deployment times.

Why should growing businesses consider adopting cloud financial management solutions?

Growing businesses can benefit from cloud financial management due to cost efficiency, rapid deployment, scalability, and accessibility. These solutions offer agility, automation, and integrated financial views.

How does cloud financial management help with cost efficiency?

Cloud financial management eliminates upfront hardware costs and offers a pay-as-you-go subscription model, reducing total ownership costs. Businesses can better plan their finances with predictable expenses.

Can cloud financial management systems be deployed quickly?

Yes, cloud financial management systems can be deployed rapidly compared to traditional on-premise solutions. This agility ensures that businesses can start using the software without lengthy implementation cycles.

Are cloud financial management systems accessible from anywhere?

Yes, these systems are accessible from anywhere with an internet connection. This accessibility is essential for businesses with remote or dispersed workforces.

How do cloud solutions handle scalability?

Cloud financial management solutions are designed to scale seamlessly with a business’s growth. Whether you’re a small startup or a large enterprise, you can easily adjust capacity and features to meet changing needs.

What automation features do cloud financial management systems offer?

Cloud financial management systems offer automation for tasks such as revenue recognition, billing, and compliance. Automation enhances efficiency, speeds up financial processes, and simplifies regulatory compliance.

How does cloud financial management provide an integrated financial view?

Growing companies with multiple business units can benefit from an integrated view of their operations. Cloud financial management eliminates the need for manual consolidation of financial information.

Is data security a concern with cloud financial management?

Cloud solutions are hosted in secure data centers, reducing the risk of data loss. Regular backups and security measures ensure business continuity and data protection.

What is the subscription-based model for cloud financial management?

Cloud financial management is offered on a subscription basis, allowing businesses to pay for the services they use. This subscription model provides flexibility and cost predictability.

How does cloud financial management leverage web-based accessibility?

Cloud financial management fully utilizes the web, enabling users to access the application online from any location. This accessibility enhances collaboration and ensures critical financial data is always accessible.

Is cloud financial management suitable for small and mid-sized businesses?

Yes, cloud financial management is well-suited for small and mid-sized businesses that want to streamline financial processes, reduce costs, and adapt to changing business requirements.

What benefits does cloud financial management offer for business continuity?

Cloud solutions provide business continuity by hosting data off-site in secure data centers. This ensures that businesses can continue operations even in the event of disasters or disruptions.

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This article, “What is Cloud Financial Management?” was first published on Small Business Trends