Organizations need to use external data in planning and budgeting, both data and third-party forecasts. This need also extends to external data in training artificial intelligence systems to assist in planning and for predictive analytics. Companies do not live in a vacuum and things occurring outside physical facilities have a direct impact on how an organization performs. Incorporating external data and third-party forecasts in any systemic fashion is really only practical if you’re using dedicated planning and budgeting software. And increasingly, planning and budgeting software will be incorporating AI capabilities. Watch this brief video presentation by Ventana Research SVP and Research Director Robert Kugel to uncover the benefits of organizations using external data.
Sage recently announced that it is expanding its Sage Intacct software offering to support discrete manufacturing, with its initial foray into this competitive market centered in France. The move supports the company’s strategy of building out the scope of industries served by its cloud applications to include product-oriented business models and expanding Sage Intacct’s geographic footprint. The company has been extending the functionality it offers customers with human capital management as well as budgeting and planning and extending beyond its sole focus on service organizations to be able to support product-focused businesses. These include wholesale distribution, construction, retail (with the recently completed Bright Pearl acquisition) and now discrete manufacturing, specifically industrial machinery and supplies, electrical equipment and electronic parts.
I first wrote about a new era of trade a few years ago to make the point that the period of optimizing supply chains for the lowest cost was over, and that companies needed to redesign them to achieve greater resiliency. That observation proved correct. Now we are hearing about “the end of globalization,” a hyperbolic phrase describing the effects of ongoing changes to the international political order that have been underway for more than a decade. These changes are forcing companies to make sometimes significant adjustments to sourcing and supply chain management. Globalization, which started in 1492, isn’t over, but managing international trade requires the ability to deal with shifts in strategic planning assumptions and agility in dealing with tactical events. Software will play an important role in enabling corporations to meet these ongoing challenges caused by a major reordering of global trade.
How payments are effected is an afterthought to many involved in a transaction, but flaws in this process can be a source of pain and frustration for those in the back office, especially in accounting and treasury. To improve the way payments are handled in business-to-business transactions, the once ubiquitous paper checks are giving way to electronic payments. This category includes credit, debit and virtual cards, wire transfers, as well as ACH (Automated Clearing House) transmissions that may be in the form of direct deposits, direct debits and electronic checks. Electronic payments are supplanting checks because they lower processing costs for both parties in a transaction; increase accuracy, auditability and control of the accounting; provide better visibility into payment status; and enable deeper insight into spend or customer metrics. Building on these digital advances, blockchain payment systems (BPS), now at an early stage in development and adoption, have significant potential in the market because they offer similar advantages at an even lower cost. I assert that by 2025, fewer than 20% of organizations will be using blockchain payment systems, but those that do will speed transactions, reduce overhead and cut costs.
The term "corporate spend" usually refers to the incidental but still significant outlays organizations make to support operations. Especially in nonmanufacturing industries, purchases of indirect goods and business services – such as computers, office supplies, furniture and services – as well as travel and entertainment can represent a significant percentage of total costs. Technology has evolved to the point where executives – especially the chief financial officer – need to take an overarching approach to corporate spend that utilizes technology to tighten controls, deepen visibility into expenditures, increase productivity and reduce process frictions. Spend management software and corporate spend cards – either physical or virtual – offer a means of achieving spend management objectives. This is part of a broader trend to digitizing outlays: I assert that by 2025, more than two-thirds of organizations will be using spend management software and corporate cards to achieve greater control and increased efficiency.
Ventana Research recently published the results of our Business Planning Value Index Research and I commented on its connection to our emphasis on using software to unify planning processes across an enterprise to improve performance. Since 2007, we have advocated what we call Integrated Business Planning (IBP): a high-participation, collaborative, action-oriented approach to planning and budgeting built on frequent, short planning sprints. Short planning cycles enable companies to achieve greater agility in responding to market or competitive changes.
Value-added tax is a type of levy that is applied at each step of a transaction chain, from basic inputs to the final good or service. The amount assessed is based on the value added by an organization (hence the name) when a transaction occurs. VAT is used throughout the world because, historically, it has been harder to evade compared to income taxes. VAT is a common method of national taxation: Approximately 85% of countries impose it worldwide. A notable exception is the United States, where sales and use taxes are imposed at the state and local level and applied only to the price of the final good or service. As commerce has become global and cross-border sales have increased, traditional methods for calculating, applying and complying with VAT regimes has grown more complex. To achieve higher tax revenue while ensuring better compliance, governments are turning to technology to make collections more effective while making processes more efficient.
I recently attended an analyst conference held by Unit4, an enterprise resource planning vendor focused on midsize organizations in people-centric industries. The conference was intended to communicate the company’s strategy, product updates and roadmap. The meeting took place shortly after announcement of the availability of Unit4 Industry Mesh and the acquisition of Compright, which does compensation planning as well as in the context of the broad technology shifts affecting ERP applications.
Topics: Human Capital Management, Office of Finance, Business Planning, Financial Performance Management, Talent Managment, ERP and Continuous Accounting, Total Compensation Management, digital finance
Software that automates the full scope of the accounting close, including reconciliations, consolidation and reporting, has grown more capable and affordable over the past five years. By enabling consistent process management that captures best practices, and by automating rote, repetitive activities to boost staff productivity, these applications enable organizations to shorten the close, make the process more efficient and reduce the risk of material errors by strengthening accounting controls. As accounting departments have learned over the past two years, close automation software helps ensure business continuity under any circumstance, especially as remote workforces that are able to perform the close virtually become more commonplace.
Reconciling accounts at the end of a period is one of those mundane finance department tasks that are ripe for automation. Reconciliation is the process of comparing account data (at the balance or item level) that exists either in two accounting systems or in an accounting system and somewhere else (such as in a spreadsheet or on paper). The purpose of the reconciling process is to identify things that do not match (as they must in double-entry bookkeeping systems) and then assess the nature and causes of the variances. This is followed by making adjustments or corrections to ensure that the information in an organization’s books is accurate. Most of the time, reconciliation is a matter of good housekeeping that identifies errors and omissions in the accounting process, including invalid journal postings and duplicate accounting entries, so they can be corrected. Reconciliation also is an important line of defense against fraud since inconsistencies may be a sign of such activity.