The year 2011 ushers in a decade of financial visibility. It's a time when old ways of doing business no longer apply. Companies have had to reexamine their best practices from the past 10 years and change the way they do business. Those that have assimilated the lessons learned from the past decade and understand the new rules for the next 10 will be well positioned to succeed.
As markets, businesses and entire economies reeled from financial instability during recent years, it became apparent that things were not always what they appeared to be. On the national and even global level, the long-rising stock market dropped sharply, trusted brand-name financial institutions went belly up or turned to the government for bailouts and the wide-scale belief that a mortgage on one's house was a sound, safe investment turned out to be false for many families facing foreclosure.
How could this have all happened? What had happened to financial visibility and oversight?
In much the same way that these macro-financial problems were covered up by a booming economy on the corporate side, healthy business growth covered up process and operational issues in corporate finance. In many cases, organizations didn't realize the extent to which they lacked critical visibility across their financial value chains and the impact it was having on their businesses--until it was too late.
While companies are moving to automate their financial and procurement operations, most still have a long way to go. According to the Cost of Control research conducted in 2010 by Basware, which provides insights into the opinions and priorities of 550 CFOs and other finance executives around the world, the majority of companies are still relying on manual processes in finance and procurement and fewer than one in six have fully automated or tightly integrated systems.
With so many operations handled manually, it is extremely hard to accurately capture and view information on purchases and spend.
One problem that results from manual methods is unrecorded liabilities. With maverick buying--employees purchasing off catalog or outside the prescribed process of an organization--there are no purchase orders or record of purchases, leaving the finance department unaware of its exposure to outstanding purchase commitments. This makes it extremely difficult to accurately manage spend and cash flow.
STEP 4 THE AGILE COMPANY 'Achieving operational excellence and...