How to Change Finance Systems*
(*Without getting fired!)

Does all the management information you need come rolling out of the finance system at month-end with minimal effort on your part? Or do you have to toil for days in Excel spreadsheets to produce the figures that other people think just appear by magic? 

Reporting is probably the key test of your system’s efficiency.  

“Are you getting what you want out of the system every month – and how easy is that process?” asks Richard Woolgar, Head of Outsourcing at Armstrong Watson. 

“For example, when someone asks an FD ‘How much did this project make for us?’, the FD needs to be able to refer to a standard report that comes out of the system monthly.” 

Lauren McCluskey says: “If your system isn't providing you the reporting and the information that you need on a day-to-day basis, without a lot of manual intervention or workarounds, it's normally time to look at something else.” 

Frances Kay, a Partner with business advisers and accountants TC Group as well as Director of the independent app resource App Advisory Plus, says: “The people who come to me are usually moving away from desktop software to a cloud product – and their problem is usually about the output of data. 

“The CFO will be asking for information that they can’t get out of the product at all or they’re chasing figures from months ago.  

“If a CFO doesn’t have the numbers, it’s hard to form a serious strategy and do everything else they have to do. And these days it’s not just about the balance sheet and P&L.  There are a lot more analytics that people want, a lot of which affects operations.”  

For decision makers, access to real time data is essential, says Jamie Allen, Founder and CEO of the technology advisory firm 4PointZero. “Businesses need to know whether they’re pricing correctly or where they might be overspending. In hospitality, for instance, fluctuations in food procurement costs or staffing expenses might require immediate menu price adjustments,” he says. 

“In a professional services firm, rising costs may mean increasing charge out rates to maintain profitability. The key is acting on this information now, rather than realising six months down the line that margins have been squeezed. 

“Historically, finance and operations worked in silos, often relying on separate data sets. Many businesses still operate this way, with operations presenting an optimistic outlook while finance delivers a starkly different reality. But with modern software, these teams should be working with a single, reconciled source of truth.”

📖  READ MORE: Warning signs: How to tell if you've outgrown your finance system  

Does your month-end tend to go on all month? 

Putting together the monthly management accounts takes longer than a week for 55% of finance leaders, research by iplicit has found. Nearly a third of those leaders report that it takes longer than two weeks.  

For most organisations, that just isn’t fast enough.  

“You should be closing within a week. Anything outside of that is probably subpar,” says Russell Frayne, who implements a wide range of systems as Director of Transformation at tech-enabled accountants Gravita.   

“A longer closedown means whatever data you’re looking at is already out of date.” 

Lauren McCluskey says: “The length of your month-end is normally a key question. Are you getting the board reporting and financial reporting out in the way you need to? Is the business able to use the system easily? And are people able to get the budget, the forecasts and the project spend out of the system nicely?” 

 Source: iplicit survey of 1,000 finance decision makers, 2024  

📖  READ MORE: Adding to the Pressure: A Survey of 1,000 UK CFOs on the State of their Accounting Software  

What do your people do all day? Taking a thorough look at your processes – and how much staff time they take up – will help reveal any duplication and inefficiency. 

Are people bogged down in data entry? Do they have to rekey information from one place to another because different systems don’t talk to each other? Do purchase invoices take lengthy tours around different parts of the organisation before they’re approved?  

“If you’ve got the same information passing through multiple touch points – involving different people, systems and processes – that’s absolutely an indicator that things are not as efficient as they should be,” says Russell Frayne. 

Often, workarounds will have evolved because the software couldn’t keep pace with growth.  

“The limitations that both businesses and charities can run up against are either about transaction volumes or complexity,” says Richard Woolgar.  

“Often, the capabilities of the system have been stretched to the limit and people have built unwieldy processes, with workarounds upon workarounds and a lot of work happening in spreadsheets outside the finance system.” 

Lauren McCluskey adds: “You often see duplication and inefficiency crop up when different departments own different bits of the system and nobody has overall responsibility. The more these different teams make bespoke additions to the system, the more unwieldy it becomes.” 

Louise Zandstra says: “Often, you have spreadsheets at both ends of a process – some for information that needs to go into the system and some for information that’s coming out. So the system isn’t doing any of the work for you; it’s just a repository for data and all the work goes on outside the system, requiring you to capture data two or even three times. You should be capturing the data just once and then the system should be using it to provide the management information you really need.” 

It isn’t just the finance team that will feel the strain. “Inefficiency affects operational teams as well,” says Frances Kay. 

“When you’ve got someone filling in staff expenses on a spreadsheet, everyone’s going to moan about that kind of thing until eventually a conversation starts about how to do things better.

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Are you using a basic finance system connected to a lot of third-party applications? Those plugged-in apps might be good at doing things that the accounting software can’t. But as the number of applications rises, so does the cost and the risk that a connection between two parts of the tech stack could fail. 

“There comes a tipping point where you create a Frankenstein system, where so many things are bolted together that you’ve created a monster,” says Russell Frayne. 

“You can end up with a lot of different apps to log into. How many different single sign-on (SSO) procedures or multi-factor authentication (MFA) processes do you have to use just to access your finance system? 

“It might all be fine but if you’re controlling this for a whole business and you have to manage 10, 15, 20 apps – and be accountable for the price – that can be quite overwhelming.  

“You should also look at the nature of those connected apps. Are they off-the-shelf tools for tasks such as data capture, reporting or stock management? A more powerful finance system could handle tasks like that. But if there’s something that’s more bespoke or unique to your business or sector, you might feel that particular piece of software is non-negotiable and would have to be integrated with any new system.”

📖  READ MORE: Should you upgrade your accounting software or integrate more apps?  

We’re all familiar with the hackneyed portrayal of finance people as uber-cautious, buttoned-down bean counters. But sometimes finance teams are taking more risks than they might realise. 

Are you happy that people have access to the information they need in your finance system without seeing anything they shouldn’t? 

Are you confident that the right permissions are in place to prevent fraud and error? 

How’s your cybersecurity? Are fixes and updates applied automatically to your software or do you stop everything and install patches?  

Is your data stored in the cloud – and if not, what would you do if the server on your premises was hit by theft, damage or breakdown? Could the team carry on working if nobody could get into the office?  

“Just getting into the cloud is a basic requirement and is sort of happening naturally without us as advisers having to push it,” says Frances Kay.  

“In terms of infrastructure, security and integration with other products, almost everybody should be moving to a cloud product.”  

At the Blackpool Grand Theatre, finance was the last department using an on-premises server with no back-up. That made people very conscious of the need to change systems. 

“Virtually everything had been moved into the cloud and it was just finance on this end-of-life server,” says Mark Preston, Head of Business and Finance. “If we’d had a fire or a flood, we would have lost all our finance records.”   

Finance can be quite the white-knuckle ride when you think about it.

"There are really only two reasons to change systems," says Jamie Allen, Founder of 4PointZero. "Either you are solving a problem or you are pursuing an ambition." 

"When I sit down with a potential client, I ask, ‘Where are you going? And do your current processes support that growth?’ That is the ambition part," he explains. 

If your systems are already under strain and your organisation is aiming to grow, things are unlikely to get easier. 

"We often meet businesses that have scaled to a point where it no longer makes sense to keep hiring more people. That is simply not efficient," Jamie says.  

"Humans care whether they are processing one transaction or a million. Computers do not. Many businesses reach a stage where that difference really starts to matter, and increasing headcount is no longer a sustainable solution." 

Can you grow by your likely rate without swelling the finance payroll by the same amount? If not, you’ll need to change things.  

We’ve seen the dangers of overstraining a basic finance system. But is it possible that you’re not working that system hard enough? It’s a question to think about before you make a change. 

Have you exhausted your current software’s ability to improve processes? Have you kept on top of product updates and release notes? Does the vendor offer webinars to ensure you’re getting best value from the system? 

“A lot of people think their software can’t do something because it couldn’t do it when they first set it up,” says Lauren McCluskey. “But that might have changed. It’s important to ensure you’re getting the best use of the product you’ve got before looking for something new.” 

Russell Frayne adds: “Sometimes, people are just not using their current system well. 

“When we’re fact finding with a client, our first questions are always: Is the current system the right one for that client? Is it possible they’re just not using it properly?  

“Clients love it when we tell them they don’t have to spend a lot of money and that all they need is for us to show them how to use the system better – and perhaps pay a bit more for more licences.”  

📖  READ MORE: Five good reasons for NOT switching your finance software  

Some questions to ask about your current software:

 The Basics 

 Security and Reliability 

 Capability 

 Value for Money 

Answered mostly “yes”? It may be a case of “Don’t change, you’re perfect”. 

Answered “no” a few times? Read on. 👇 

Are your answers so far indicating it’s time to change? You could now be as excited by thoughts of accounting software as it’s possible for a sensible human being to be. Yet once you look at the cost of a new product, you might be tempted to call the whole thing off. 

It’s likely – though not inevitable – that more flexible and powerful software will cost more than your core system at the moment. You may dread trying to justify that price rise to your CEO or board. 

“The software cost is normally the biggest number on the page when you start out,” says Russell Frayne. 

“But that’s before you consider the savings. The monthly cost for most platforms is fairly insignificant compared with what that platform will do for you, if you implement it properly.”  

He has seen system changes that allow clients to redeploy people from the finance team and bring forward revenue-generating ventures by years. 

“When people see how a system will remove other costs and perhaps allow them to start a new revenue stream without additional staff, they can see the ROI,” he says. 

“But the really scary number is the cost of doing nothing. That cost will keep growing and it can be astronomical.” 

Richard Woolgar adds: “There are two kinds of costs from doing nothing. There are the costs of all those inefficient processes but there’s also the cost of not having the right controls in place. That brings the risk of fraud and error and also the risk that, for example, without a good purchase order system, people are buying goods and services for way over the odds.” 

To begin counting the cost of doing nothing, you can look again at all that time being taken up by manual and repetitive work – and try multiplying those hours by the cost of employing those staff. 

Then you can add any costs for multiple instances of the same software, along with the subscriptions for any third-party apps plugged into the finance system. If you’re hosting a server on your premises, the cost of that needs to be factored in too.   

At this point, the case for an upgrade might look undeniable.  

Now comes the hard part. Convincing other people.

 
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You probably have a hunch already if you need to change systems. In the words of Darth Vader: “Search your feelings – you know it to be true.” 

Try asking these key questions:  

• Are we getting the reports we need (without a lot of painful work)?  

• How long is month-end taking? (More than a week isn’t good.)  

• What processes are taking up the most time?  

• Do we have a Frankenstein system (i.e. lots of apps bolted onto entry-level software)?  

• How much risk are we running (cybersecurity, physical servers, remote working)?  

• Will our system keep up with our growth?  

• Can we make better use of the software we’ve already got? 
  
  

If you’re still unsure, go through our checklist above.

Then count the cost of doing nothing - time spent on inefficient processes, server maintenance, multiple software licences, the cost of not having the right controls. Is the case starting to look compelling? 

KEEP READING 

Ready to start making the case for new finance software?  

Begin winning people over with part two, Getting the board on board: How to win allies and influence people.