4 Things to Know About a Good Financial System

A few years ago I was working as a consultant to a small business which had not yet attained profitability. When beginning my work with them I asked to see their books which I assumed would be wholly contained in a popular accounting software. To my surprise I was given some individual Excel sheets which had been printed for me to review and also told that there was other financial information contained in their accounting software which only dealt with their wholesale activities. I am not sure how common this is in business but I was dismayed due to the need for any organization to be able to present their complete financial picture at any given point in time. This as a requirement within general accounting principles and also necessary for decision making.

Government financial information systems are often glitchy and challenging to deal with. A foundation is only as good as the materials and the craftsmen who build it. It is important to build a system that contains the following attributes: scalability, accuracy, single source of truth, and is connected to all other financial inputs.

Scale- A financial information system should have the capacity to grow with the organization. Information input and retrieval should be as speedy when the organization grows as when it was smaller. This requires the ability to store large amounts of data with the ability to access that data quickly. Any organization that is seeking to purchase a financial system or replace the existing one should conduct research to determine how robust that system will be. Robustness involves skilled programming which thouroughly develops the software and allows speedy access to data as it grows.In simple terms the system needs to be ‘big enough’ and ‘good enough’ to handle all present and future needs.

Accuracy-It may seem obvious that a system should be accurate however something to consider is that when multiple subsystems feed financial data into a main system then at any given time reports could be run to determine that a piece of information is accurate within both systems. At times some data can move to the main system and be altered for some reason due to a technical or programming glitch. This should not happen with an accurate and well developed piece of software.

Single source of truth-A single source of truth is the real and trusted number for information. This means that you can generate a report from a financial system and be confident that it is complete, accurate, and contains all up to date information. Without this capability decision making is iffy at best. Planning, budgeting, and forming strategy all rely on complete and accurate financial information.