What is Financial Process Management?
A Financial Process Management is the automation of a company's financial processes and the internal steps needed to get the financial operations fulfilled. Financial Process Management aims at separating out the finance business function to do their respective tasks in a more consistent, predictable and measurable way. Finance Decision Makers within an organization should be able to view the various business functions within Finance Business Unit, see the bottlenecks, take swift actions, streamline approval process and at the same time ensuring compliances and reporting is intact. Financial Process Management not only streamlines the day to day operations but at the same time gives a clear visibility into debts, cashflows, spends that an organization does.
Financial Process Management in layman terms comprises of the methods and procedures followed by the finance office. Financial Process Management generally includes
- Data collection from different business units under an Organization
- Strategic planning
- Profit and Loss (P&L) and balance sheet planning
- Working Capital planning
- Project Based planning
- Production, Inventory, Stock planning
- Sales and operational planning
- Marketing planning
- HR planning
- Planning Statutory compliances and disclosures
- Strategic forecasting
- Rolling forecasts
- Cash flow forecasting
- Burn Rate and Runway management
- Financial Reports around compliance adherences
- Financial Management across different business units, processes, and users
Let's have a deeper look into commonly used financial processes within an Enterprise.
What are the commonly used financial processes within an Enterprise?
- Expense Management
- Employee Reimbursements
- Employee Reimbursements
- Payroll Management
- Inventory and Stock Management
- Statutory Compliances Adherences
- Working Capital Management
- Billing and Credit
- Accounts Payable
- Accounts Receivables
- Procurement Process
- Financial Approval Management
Financial processes are one of the key core functions any Organization need to organize to plan for scale. Any loose corner may lead to reputational, financial and operational risks.
Why is Finance process management important for Businesses?
- Streamlining Business Decisions across Organization
- Reality check into businesses financial health
- Efficiently planning manpower for better financial output
- Define Accountability, Track Revenues and Expenditures more accurately
- Siloed Financial Management by Business units always poses a risk of miscoordination, skewed projections
- Centralized Financial Process Management gives a better visibility into the overall business
How to improve and streamline Financial Process Management?
- Unifying and connecting all the financial processes within an Organization into a single Financial Business Process Management Tool. A software like Rocketflow helps drastically in mapping all your business process together giving a unified view.
- Map Processes
- Define different process stages involved in a Financial Process
- Define owners/users/group of users for respective process stages and map them
- Define Data points which needs to be captured at each process stage
- Define business rules and routing for defining workflow around the Financial Process
- Test and Pilot the workflow with all the actors involved
- Keep refining the process as you identify slow moving stages
- A unified Financial Process Management instills lot of confidence as you have a Single Source of Truth. Define reports from process operations, statutory compliances point of view and keep vetting the data points at recurring check points.
- Enhancing Collaboration amongst business users. Once you have setup a unified view for the Financial Processes within an Organization the next big step is to ensure the users of the platform are working towards a single common goal. Map Organization Hierarchy in the platform, define rules for compliance, escalation and operational governance. Enable the Financial Process Management Software for triggering notifications at crucial business events and process stages.