Can IT Tools Help with my Financial Management?

If you run a business, chances are that in the past three months someone has told you that now is the time to manage your cashflow. They have suggested cost cutting and tightening your payment terms and collection policies.

I certainly have heard all of this advice in many of the industry briefings I attend, also in articles here on SmartCompany, and even in the SmartCompany forums. All of it is sound advice.

So as working capital management becomes critical and as equity and debt funding evaporates, tight credit and inventory management and constant cashflow monitoring are the keys to survival.

But you cannot manage what you do not measure, and therein lies the hitch for SMEs. Executive reporting systems that provide key information on as near to real time as possible become critical. Gartner says it is crucial to be able to see last month's figures by the 21st day of the following month.

This means good record keeping and great systems for recording and reporting. It may also require integration of key business systems to roll data into central reports. If you track people in one system and money in another you may not know the real cost of your efforts until it is too late.

The use of digital dashboards - where key information can be tailored to those who need it to manage in a timely and accurate manner - is the key to following through on all of the advice given by the economic gurus of our time.

A simple example from my business: We have carefully integrated our financial reporting system (which contains creditor information of who is on credit warning and credit stop) with our ticketing system, so new jobs are not booked for our slow payers. This is simple enough to do manually, but on a larger scale of multiple transactions, the automation becomes important to remove the opportunity for error.

In any business with multiple employees, whether it is a services business or a product-based business, there are numbers to track and actions to take based on the numbers.

My question to each business owner is: Are your systems strong enough to give you timely reports that let you take the critical action required to stay at the top of your game?
I look forward to your comments on this one!

David Markus is the founder of Melbourne's IT services company Combo. His focus is on big picture thinking to create value in IT systems for the SME sector.