As a SaaS CFO, you understand the importance of planning your budget promptly and effectively. However, managing financial information can be overwhelming, especially when it’s scattered across various applications that don’t communicate with each other. That’s where data integration and automated financial reporting technology come into play.
In this blog post, we’ll delve into how data integration can improve budget financial reporting and make SaaS accounting more efficient, and why it’s critical for small and medium-sized entities to have a financial reporting framework that incorporates these technologies.
What is data integration?
At its core, data integration is the process of combining data from different sources into a single, unified view. However, there is much more to data integration than just this. Data integration involves a wide range of activities, and in the SaaS industry, there are two primary states in which companies’ data can exist:
1. Siloed data: When SaaS companies silo their data, different data sets exist independently in various departments. Employees usually resort to exporting data into spreadsheets sent as email attachments.
2. Data integration: When companies leverage data integration, their data is securely stored in a centralized data lake. This single source of truth (SSOT) is automatically, continuously updated and available to all departments.
Data integration impacts every level of your enterprise. Unsurprisingly, a 2022 Foundry study indicated that over 50% of surveyed organizations have a clearly defined data and analytics strategy.
The consequences of data silos
Part of the challenge is the lack of a holistic approach to data management. Fewer than half of business and technology leaders have a clearly defined data and analytics strategy, the Foundry 2021 Data and Analytics study found.
A haphazard approach can lead to data silos that impede sharing and collaboration and create inconsistencies, since information is formatted differently among applications and updates occur at different times. Siloed data operates on different schedules, making processes like revenue recognition difficult.
The importance of data accuracy
In addition, financial leaders and teams who manually transfer data into spreadsheets and reports may make errors along the way. In the Foundry survey, leaders identified data quality problems as the No. 1 roadblock for organizations adopting data-driven initiatives.
The benefits of integrated financial data
Integrating financial data into a single cloud-based platform improves data quality and accuracy and makes sharing information easier. Instead of individuals “owning” their own set of data, an integrated solution provides everyone with a common, updated, and accurate set of numbers to work with across the business.
Tangible impact on business performance
Improving data accuracy can have a tangible impact on business performance. A recent Gartner study found that breaking down silos and sharing data boosts business outcomes. Gartner predicts that by 2023, organizations that promote data sharing will outperform their peers on most business metrics.
By shifting to Sage Intacct, a unified cloud solution for financial data, courier service Quicksilver Express reduced the time for doing its monthly close by 50%. Credit card and bank reconciliations are now done daily, reducing errors and eliminating a week’s worth of manual work. And overall accounting efficiency is up by 75%.
Family-owned investment firm Halstatt experienced similar benefits after switching to Sage Intacct. In the past, because valuation reporting took over 100 hours, the company only had time to do it annually. Now the process takes just a few hours and is done quarterly, giving executives a detailed view of asset value and costs throughout the year.
As you can see, data integration can significantly impact your budget planning process. Companies that embrace data integration and automate financial reporting can expect a smooth ride during budgeting season, even in a recession. The positive impact of data integration on your financial processes can hardly be overstated.
The causes of SaaS budgeting and efficiency woes
Lack of a cohesive data strategy–and reluctance to fully automate financial reporting–leads to a plethora of budgeting and productivity issues for SaaS companies.
Since data plays a pivotal role in virtually all operational processes, these problems can quickly spread to every level of your enterprise.
Let’s review some setbacks you can avoid by automating your budgeting process and financial reporting technology, and integrating your organization’s data.
Data silos make shared decisions complicated
By their very nature, data silos are not built with sharing and collaboration in mind—quite the opposite.
Corporate budgeting is highly collaborative, often requiring intensive rounds of spreadsheet exporting, file editing, and resharing. (Often with that cycle repeating ad nauseam.)
Not only is this needlessly complicated and inefficient, but it’s also a security risk. Every spreadsheet you export, and every attachment you send, represents a new link in a chain of potential weak spots that hackers can exploit.
Revenue recognition is difficult without an SSOT
For any recurring revenue company, revenue recognition is complex without an SSOT. (That’s why building a revenue recognition strategy is wise.)
Without an SSOT, consistently accurate rev rec becomes almost impossible once you’ve scaled past a certain point. This is due to your data’s sheer volume and the fact that your datasets are refreshing on unsynced schedules.
This exposes your organization to potentially severe revenue leakage over time.
Higher risk of data inaccuracies
Not prioritizing data integration will place your entire firm at a higher risk of errors and inconsistencies.
Failure to accurately report your revenue, even if the misrepresentation is purely accidental, can carry severe penalties.
Among these are stiff fines and fees, a deep dent in your reputation, and problems with cash shortfalls if you operate on accidentally inflated figures.
Why switch to the cloud?
Data integration helps companies move beyond an ownership mentality with their data.
Traditionally, individuals or teams “owned” datasets and were responsible for updating them as needed.
When you move to an SSOT in the cloud and automate your financial reporting, your SaaS accounting and budgeting problems will instantly be cut down to size.
Automated alerts for budget deviations
Going over budget on specific projects or just in general is a big issue for many SaaS companies.
Sage Intacct supplies SaaS accounting teams with automated alerts whenever they approach a budget deviation–so you’ll never need to explain to your board why you exceeded your budget for the previous quarter.
Role-based data integration dashboards are the future
When you’re weighing data integration solutions, look for one with data integration dashboard functionality.
Sage Intacct comes equipped with role-based dashboards. These highly customizable screens allow individuals to see all the data they need for their specific role in one glance.
Pulling up a data integration dashboard when you need specific information is infinitely easier than waiting for an email attachment–especially if your budgeting deadline is approaching.
Automate financial reporting and forecasting with Sage Intacct
When searching for a reporting framework for small and medium-sized entities, you can’t do better than the cloud.
Automate financial reporting with Sage Intacct and say goodbye to slowly cobbling together forecasts and budgets from endless email attachments.
The future of data in SaaS accounting
Data is projected to play a greater role in business strategy in the future, as leaders gain new insights from advanced analytics. Seventy-eight percent of leaders expect data and analytics to fundamentally change the way they do business over the next three years, according to the Foundry study. The cloud, along with advanced capabilities enabled by AI and machine learning, will help companies get more proactive in mapping the best path forward.
The increasing capabilities and sophistication of cloud accounting represent limitless possibilities for SaaS companies–across budgeting efficiency, data integration, financial reporting technology, and more.
However, they also present the possibility of being left in the dust if you can’t adapt quickly enough. Data integration technology is as freely available to your competitors as it is to you.
Our recent ebook was written to help SaaS finance leaders like you thrive in a time of whiplash change.