Importance of Integration of Operations with FinanceMay 22
Success in business is always the outcome of an enterprise’s ability to expertly manage its finances. For a logistics service provider (LSP) keeping a watchful eye on the financial flows of the company can generate much needed cash in-flow and improved ROI. A sound financial management module that creates a centralized robust financial information system can stimulate growth by enabling enterprise-wide control and helps in reducing costs. At the same time, a good operations module builds a platform to improve productivity and efficiency resulting in revenue growth. But, integrating Finance with Operations using comprehensive logistics ERP software allows LSPs to gain immense benefits to improve both Operations & Finance.
The Need of integrating Finance with Operation –
- Access to relevant financial information allows operations to invest in processes with highest ROI
- Financial results can be used to set & measure performance benchmarks for various operations departments
- Financial managers can have more accuracy in predicting financial performance
- Accurate financial predictions allows effective planning with no surplus or shortage of resources
- Senior management can have clearer view and greater degree of control
Let us ponder over how this amalgamation of two crucial business functions can turn into a huge advantage for your organization.
A) Drive & Manage Growth –
To reap optimum benefits, the integration between finance and operations must be two-way. Finance team can use operational information to increase the accuracy and predictability of financial results. Operational managers can utilize financial information to optimize their processes and make effective decisions. Closely working teams from finance and operations can understand the effect of their decisions on each other. This greatly helps to optimize overall results for the benefit of the entire organization instead of any specific departments.
B) Scheduling of Invoices & Outstanding Statements –
When there are gaps in finance and operations, unnecessary delays occur while generating invoices for services consumed by customers. Such delays result in unpredictable cash flows. Advanced features like automatic dispatch of outstanding statements daily or weekly to customers as well as online view of Invoices enables freight forwarders not only to improve their customer relationship but also their own cash flows while reducing working capital requirements.
C) Controlling Costs –
Comprehensive financial module of freight forwarding software, when tightly integrated with operations, enables all provisional and final receivables & payables to be directly posted. This results in Zero Revenue Leakages and reduction in operational costs. Certain features like approval system helps manage finances much accurately and reduces chances of errors and frauds. The integration of finance with operation also provides enterprise-wide optimization of finance which uses crucial information acquired from operations to regulate credit limits of customers, improve cash flow and revenue realization. End to end Logistics software can help LSPs to control, manage and monitor the performance of individual cost centers/branches. Regulatory compliance can also be simplified with automated Tax Management features.
D) Better Strategic Planning and Analysis –
What major financial events do we anticipate in the coming year? How will emerging market conditions impact our business? What can we expect from a financial perspective if we acquire a smaller company or add a new line of business to our portfolio?
The ability to accurately answer questions like these is crucial to effective corporate planning. Freight forwarding software with capable Financial management module builds the foundation for successful business strategies by allowing financial executives to forecast future events, create and assess “what if” scenarios, identify new business opportunities, and analyze the potential for vital market trends and internal events.
E) Improved Decision Making –
Right decision made at right time can ingeniously improve important factors like profitability, productivity and customer satisfaction. By closely integrating financial accounting with Sales & Operations, LSPs can improve decision making. Information flow between these departments empowers the managers to make informed decisions.
All in all, if carefully managed, integrated finance and operations can work wonders for logistics and freight forwarding companies. Effective use of Logistics ERP software for this unification can help your organization reach newer heights. Right from improvement in profitability to growth in customer satisfaction possibilities are endless.