Financial software, your best ally when it comes to balancing your startup’s accounts

Running out of money is one of the top reasons for startup failure, and can happen when startups come up against difficulties in raising funding, incorrectly manage finances or lack foresight into a project’s medium and long-term performance. Reasons enough for every entrepreneur to be versed in key concepts like what the runway is, how to design the right financial plan for their startup, and how to perform an in-depth financial analysis of their company. But thanks to technological advances, they don’t have to have to go at it alone: financial software is specifically designed to make the task much easier, and there are different tools on the market that entrepreneurs can tap into.

What is financial software?

A financial management system (FMS) is a platform that manages a company’s finances, either hosted locally or in the cloud, to better track accounting and automate administrative tasks for optimised strategic planning and business accounts.

These tools let the accounting department work simultaneously with real-time updates, as well as collaboratively with other business units. They can incorporate features that automatically record expenses and income, generate financial reports, calculate key economic indicators, produce forecasts, manage risk, streamline invoicing, visualise account status in a clear and intuitive way, and much more.

Moreover, a substantial part of today’s financial management systems incorporates technologies such as artificial intelligence and machine learning to gain insight into the company’s current financial status and make more accurate and actionable predictions about its future evolution in business decisions.

Key features of financial software

• Extract and share information. Company managers can quickly and easily pull up and see data on payments, receipts, assets and other variables, which in turn can be shared with other departments.
• Improve financial indicators. With more transparent and efficient financial management, entrepreneurs can ensure they have enough liquidity, understand the profitability of their business and control their cashflow.
• Boost strategic decision-making. Financial software makes it possible to base financial decisions on a solid understanding of the actual state of the company’s accounts and its recent transactions.
• Streamline processes. This type of platform helps to simplify and automate administrative tasks, freeing up entrepreneurs’ time and resources for other tasks that add more value to the company.
• Reduce errors. Having an automated component and being centralised on one platform makes the company’s accounts more reliable and transparent. They also help companies meet their financial and legal obligations.

Differences between financial software and an ERP system

Enterprise resource planning (ERP) systems are also software programmes designed to help entrepreneurs manage all their business processes, including finances, from a single platform. This means that ERPs include features for financial management, as well as team management, supply chain management, and more. Given their many applications, ERP systems require significant investment and can be challenging to implement in an organisation.

Financial software, on the other hand, offers tools designed specifically for managing a company’s finances. It can be integrated with ERP capabilities, or it can be sold as a stand-alone solution, which, because it is a smaller platform, will cost less and be easier to implement. Financial software may therefore be a more cost-effective or convenient option, depending on the company’s needs, stage of growth or budget.

Examples of financial software in the marketplace

Some of the main tech companies that market ERP solutions, like Microsoft and Oracle, also offer specific financial software with features that focus on accounting and finance management. For example, Microsoft offers Microsoft Dynamics 365 Finance, while Oracle provides entrepreneurs with the Oracle EBS Financials platform.

Also noteworthy:

1. Sage Intacct. It delivers accounting tools such as an AI-powered smart general ledger, treasury and order management capabilities, real-time reporting, time and expense management, etc.
2. QuickBooks Enterprise. This is the enterprise version of the QuickBooks Online cloud accounting software, which not only includes the basic applications but also incorporates enterprise-specific capabilities such as reporting, budgeting and financial forecasting.
3. Xero. Designed for small businesses, this financial software helps manage finances with accounting tools for processing payments or managing fixed assets, automating compliance processes and producing detailed analysis.
4. Certinia. Formerly known as FinancialForce, this enterprise accounting solution offers useful capabilities for internationalised companies, such as multi-lingual and multi-currency features. It is based on the SalesForce CRM (Customer Relationship Management) platform, so it incorporates customer relationship management capabilities as well.
5. FreshBooks. This online accounting and invoicing software includes solutions for freelancers and businesses, and applications include managing payments and receipts, tracking expenses, paying taxes and budgeting.

Choosing the right financial software helps companies save time managing their finances by automating and simplifying administrative tasks. It also ensures more reliable accounting monitoring, supporting startups and scaleups in the major challenge of keeping their accounts healthy and up to date to ensure that their venture doesn’t run out of fuel.