Implementing Financial Systems: 7 Things to Consider Before Purchasing Financial Software

Implementing a new financial system can greatly improve a company’s financing, making revenue recognition, financial budgeting, and financial reporting easier. However, before deciding on what financial software to implement, there are many things to consider. Overall, the procedure largely revolves around determining the functionality of the current system and comparing it to the business’ specific needs. Below are outlines of the specific areas that need to be examined:

Goals  First and foremost, looking at the goals and needs of the organization will help frame the discussion around financial systems. A company will have different needs for a financial system depending on if they want to expand, reorganize, or adapt to a shifting market. Also, companies in different industries will have different goals in regards to financial software. Determining a business’ goals is the first step to implementing a new financial system.

Company Management  Implementing a new financial system also brings up the concept of company management. New financial systems can be adapted to categorize financial information any number of ways. It is necessary to decide what segments of business a company wants to manage, and this provides more direction about the best way, or best type of system, to put in place to gather this information. For example, some software accounts are sophisticated enough to distinguish between areas, product lines, different verticals, trade channel, and distribution channels, but it is first necessary to determine what measurements would be the most useful.

Budgeting  Putting a new financial system in place also affects a company’s budgeting. Overall, there are three main questions that need to be answered:

-Does the company have an integrated budgeting system?

-Does the company have an integrated forecasting package?

-Does the company have an integrated reporting tool?

Addressing these three questions will provide more information about the type of budgeting, reporting, and forecasting the financial software should include.

Modules  Financial systems are extremely customizable, with add-ons taking place in the form of modules. In implementing a new financial system, it is necessary to determine what modules should be purchased. In other words, a company needs to evaluate what financial notation is taking place in their own reporting software against what financial transactions are being recorded using a third party system. For example, accounts payable is often tied into the general ledger accounting, however payroll and specific product data may be recorded using a third party system. Knowing what modules are currently being used will help determine what other modules, if any, need to be added or adjusted with the addition of new financial software.

IT Support  Most financial systems come with some type of IT support, but it’s important to consider what support will be needed. IT support can come in the form of hardware as well as IT expertise, such as on-call financial systems technicians. In addition to deciding on what type of support will be needed on an ongoing basis, it is also important to consider that the current staff may need initial training on the new software as well. In order for the new financial system to operate as needed, it is important to get the right IT support package, including IT hardware, IT expertise, and initial software training.

Cost  One of the most important things a company needs to determine is cost. While a new financial system can increase revenue in the long run, a company needs to decide what its current budget allows it to spend on financial software. As with many products, there are a variety of pricing levels for financial systems, including entry level, mid market, and high end software, and a company needs to figure out a comfortable price rang. Once settled on a certain price range for an integrated financial system, it is helpful to do comparative shopping, taking note of the features and references from competing companies. Vendors will often give demos on how their product works and how their software can be tailored to a client’s specific needs. In addition, companies can always negotiate better pricing or more competitive pricing based on their allocated budget. Often the price of a new financial system is related to the number of users, details about the site license, training costs, and maintenance costs, and these figures can always be adjusted so the overall cost will fall within a company’s budget. Maintenance costs and the capital required to update and upgrade the financial system are particularly important and have a large impact on the final price of the new financial system.

Due Diligence  Lastly, as with any major purchase or installation, it is necessary to perform due diligence. For companies looking to purchase financial software, this includes getting references and unbiased opinions from other companies that have used a specific product or system. It also includes performing research to know how long the vendor has been around and if others in a specific industry are using the software. It can be helpful to talk with others to see what experiences, both positive and negative, they have had with a financial system. Lastly, it is important to note that implementing a new financial system and using a financial system for day-to-day operations are two different things. Efficient and easy implementation does not necessarily mean using the system is easy and efficient, and vice versa. When getting feedback from customers who have used specific software, it is important to get feedback on implementation as well as day-to-day usage.

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