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What will transform finance operation

Holistic enterprise solutions are the second wave of automation in finance after ERPs which came more than two decades earlier

TOC

  • Financial Automation: The Demand Rises 
  • Changing dynamics in Finance Operations
  • ERP: The Roadblocks
  • CMS vs ERP
  • From cash visibility to control: Why does your business need this tool?
  • CMS is here to stay

Changing dynamics in finance operations

The last decade saw finance teams reduce their overall costs by 30%, however, in the wake of emerging finance operating models the focus on achieving a higher level of effectiveness is now more than ever.

Latest trends and market expectations shaping the business landscape

Automated daily operations

The integration of automation is simplifying day-to-day finance operations, reducing manual tasks, and increasing efficiency. This shift has provided finance leaders the opportunity to redirect their efforts toward higher-value initiatives such as financial planning and analysis, operational risk management, and policy formulation.

Frequency of reporting

Today, real-time financial reporting drives operations and key decisions, replacing periodic reporting. This has enabled organizations to make informed decisions based on up-to-date information, leading to improved financial performance.

Going beyond the traditional tools

Traditional ERP systems fail to fulfill the evolving requirements of finance departments, thus they necessitate a solution beyond ERP to boost their productivity and stay ahead. The ideal platform should possess real-time reporting, data analytics, and collaboration features to aid finance teams in achieving growth and improving financial performance.

The below text can appear in a separate box.

  • Automation is gradually penetrating the finance industry, streamlining operations and significantly enhancing efficiency.
  • Automating financial transactions has freed up more time for finance leaders to focus on value-added services (Financial Planning & Analysis, operational risk management, policy setting, etc.)
  • Periodic reporting is a thing of the past, real-time financial reporting is driving operations and key decisions.
  • Traditional ERP systems are not enough, finance teams need a platform beyond ERP to enhance their efficiency further.

Financial Automation: The Demand Rises

The global market for Cash Management Systems is poised for exponential growth in the coming decade as businesses look to improve their financial management and competitiveness. According to industry estimates, the market was valued at a record USD 3.66 Billion in 2022, with projections forecasting a staggering value of over USD 14.18 Billion by 2032. This represents a remarkable growth rate of 14.5% during the forecast period. (We can show an infographic here).

The driving force behind this growth can be attributed to the digital transformation across the world and the ever-growing complexity of financial management. In response, financial innovations are being integrated with advanced technologies, such as artificial intelligence and blockchain, to provide organizations with powerful tools for improved cash forecasting, enhanced risk management, and increased operational efficiency.

In terms of adoption, large enterprises are investing heavily in end–to-end streamlining of their financial operations. The CMS industry is a dynamic and rapidly evolving market, offering a wide array of solutions that cater to the diverse needs of businesses. 

Traditional CMS Vs CMS 2.0 

A Cash Management System is a suite of tools and processes streamlining cash flow management, providing real-time monitoring, accurate forecasting, as well as avenues to use surplus treasury to improve the bottomline. Industries deploying the tool expect increased efficiency, complete cash visibility, and robust risk management, leading to an overall improvement in financial performance.

Closer home, KredX, India’s leading supply chain finance platform, has worked with hundreds of enterprises over the past 8 years and developed KredX Cash Management Solutions, a one-stop solution for enterprises to optimise their cash flow. With a single dashboard that gives you full visibility and control of Accounts Payable, Accounts Receivable, with Integrated Data and Analytics, B2B Payments and Embedded Financing, this is a holistic tool, a big update on traditional Cash Management Systems. 

The Other Side: ERPs And Their Shortcomings 

Enterprise Resource Planning (ERP) systems have become ubiquitous in industries, but organizations face significant implementation challenges. Despite the advantages of an integrated view of business operations, ERP systems can be costly, time-consuming, and may not prioritize cash flow management. Here are the key challenges:

  • Expensive: Average ERP budget per user is $9000
  • Training inefficiency: Only 27% of employees are equipped to use ERP
  • Longer implementation time: 57% of businesses find the standard timeline of 21 months for ERP implementation challenging to meet. 
  • Greater focus on overall management than cash flow management

KredX CMS vs. ERP 

  • The main functionality of CMS and ERP separately  (this can be shown in a Venn diagram format as well)

KredX Cash Management Solutions 

  1. Cash flow forecasting
  2. Cash visibility and monitoring
  3. Investment management
  4. Liquidity management
  5. Reconciliation management
  6. Reporting and analysis

Enterprise Resource Planning (ERP):

  1. Financial management
  2. Supply chain management
  3. Human resource management
  4. Customer relationship management
  5. Inventory management
  6. Project management
  7. Reporting and analysis

Overlapping areas:

  1. Reporting and analysis
  2. Financial management

Factors for choosing each (To be shown in 2 boxes side by side)

Factors to consider when choosing a Cash Management System (CMS):

  • Cash flow forecasting capabilities
  • Integration with existing financial systems and processes
  • Real-time reporting and monitoring
  • User-friendly interface
  • Customization options
  • Security and compliance features

Factors to consider when choosing an Enterprise Resource Planning (ERP) system:

  • Integration with existing systems and processes
  • Scalability and flexibility
  • User-friendly interface
  • Customization options
  • Real-time reporting and analysis capabilities
  • Data security and compliance features
  • Cost-effectiveness and return on investment

While ERP systems offer a comprehensive solution for businesses,
CMS provides a specialized solution for cash flow management. (show in a table format with 3 columns – Criteria/CMS/ERP)

  1. Functionality

CMS – While both CMS and ERP are designed to manage financial operations, CMS systems aim to improve cash flow and cash management processes and decision-making. 

ERP – ERP systems provide a comprehensive solution for all business operations, including financial management, inventory management, human resources management, and supply chain management.

  1. Cost 

CMS – More cost-effective than ERP systems due to their specialized focus and relatively smaller scale making it a practical solution for smaller businesses and those with limited budgets.

ERP – Falls on the expensive end considering the cost of the system and resources required for implementation.

  1. Agile and Quick Implementation 

CMS – The implementation of CMS systems is usually faster and less resource-intensive because these are designed to address a specific need and, therefore, have a more streamlined implementation process.

ERP – A long and complex implementation process.

  1. User-Friendliness

CMS:  CMS systems have a more intuitive and user-friendly interface, making it easier for employees to use without the need for extensive training. The result can be an increase in productivity and efficiency.

ERP -Complex UI/UX due to multiple functions

  1. Customization 

CMS – CMS systems are typically more flexible than ERP systems, allowing businesses to tailor the system to their specific needs.

ERP– Limited customization for cash visibility and management

  1. Reporting and Analytics

CMS – CMS systems offer advanced reporting and analytics capabilities, providing businesses with a complete picture of their cash flow and keeping an audit trail for all the actions that can be used to improve financial management and make informed decisions. 

ERP -Integrated analytics and reporting of administrative, finance, and other areas

  1. Centralized access across multiple ERPs and supporting tools

CMS –  CMS systems can be integrated with other systems, including ERP, to provide a unified view of financial operations translating to improved visibility and decision-making.

ERP-Also allows centralized access and integrations

From Cash Visibility To Control: Why does your business need a modern CMS?

     Why CMS( Graphic) 

  • Improved Cash Flow
  • Reduced Risk of Fraud
  • Increased efficiency 
  • Increased Transparency
  • Improved Budgeting and financial planning

ERP alone cannot meet the challenges of cash flow management. Integration of ERP and CMS systems results in comprehensive business operations and robust cash management tools, leading to phenomenal management and improved decision-making.

  1. Improved cash flow forecasting capabilities: Integrating Cash Management System with ERP will provide real-time data on cash inflow and outflow, enabling better cash flow forecasting.
  1. Streamlined Bank Reconciliation: Automates the reconciliation process and reduces the time and effort spent on manual bank reconciliation.
  1. Enhanced Payment Processing: CMS integration allows for centralized payment processing, reducing the risk of errors and improving the speed of payment processing.
  1. Bird eye view of entire cash flow:  It provides a complete view of cash balances and transactions, enabling better decision-making.
  1. Better Investment Management: Equipped with real-time cash balance information, companies can make better investment decisions. It comes with an integrated suite with financing options.
  1. Improved Fraud Detection: The centralized nature of CMS allows for easier and more comprehensive monitoring of transactions, reducing the likelihood of fraudulent activity going unnoticed.
  1. Increased Transparency: CMS provides a clear and organized view of all financial data, allowing for greater accountability and transparency in financial reporting.
  1. Efficient Decision Making: With real-time information readily available, companies can make informed decisions quickly, maximizing returns on investments and minimizing the risk of losses.

CMS is here to stay

The finance and business world is constantly evolving, presenting new challenges to finance leaders. In response, many organizations have turned to innovative Cash Management Systems (CMS) as a solution to traditional ERP systems. These advanced systems offer a comprehensive and efficient approach to financial transactions, freeing up finance leaders to focus on driving success. Implementing a CMS can alleviate the roadblocks to business growth, providing valuable insights and tools to enhance performance.

Despite being an underutilized resource, the benefits of CMS are immense and can bring substantial value to any organization. For finance leaders looking to stay ahead of the curve and achieve their long-term goals, embracing this technology is essential.

Madhusmita Panda

Chief Marketing Officer at KredX

Madhusmita is the multi-hyphenate growth specialist at KredX. She worked with industry giants like Wipro and ICICI before turning entrepreneur and then brought that decade of expertise to KredX. She joined the fintech powerhouse in its early years and quickly became a growth driver creating marketing innovation in the fintech ecosystem with a unique approach integrating product and partnerships.