CFOs current focus equals industry disruption
The wholesale distribution industry overall has exploded in growth throughout the past several years with the increase of online shopping, Amazon’s proliferation and, most recently, a global pandemic that has forced millions of people to avoid brick-and-mortar stores.
How businesses can capitalize on this larger ecosphere trend is the question many distribution executives are asking themselves. Industry disruption has put the pressure on wholesale distribution companies to keep up with the digital times, and to question traditional distribution business models in general.
At the center of this change are the finance executives and accountants. Where does our business stand? How can we grow, strategically (and smarter)? What risks can we afford? What technology can we use to turn our business vision into reality? How do we find the answer to these questions?
To answer these questions, CFOs rely on accurate information regarding their company. For many growing businesses in the wholesale distribution industry, this is easier said than done. When companies grow, their original technology is often unable to grow adequately with the business. Business intelligence might be spread across multiple applications – isolated by function, and sometimes even by location. We’ve outlined four ways CFOs are transforming their growing distribution companies with modern business intelligence and accounting best practices.
Over the course of 25 years spent working with business executives, we’ve learned that CFOs that focus on the four following points are able to adapt and facilitate growth:
- Visibility into business performance
- Scalable business technology
- One source of truth
Visibility into business performance
It’s a common challenge for growing businesses to find themselves in a situation with siloed business systems. Many companies start out with a solution like QuickBooks, but as the company grows in revenue, employees and locations, new systems that are not connected are added to meet immediate needs. The longer term effect is systems that are not integrated and no longer fully serve the business.
How many separate, disconnected applications (sales CRM, HR, payroll, e-commerce, accounting) does your company run?
CFOs are handling this by moving all of their applications to one business system with embedded business intelligence. In the process they gain access to real-time information on how their company is performing.
Having real-time information helps companies within the wholesale distribution industry make smarter business decisions regarding their top priorities:
- Revenue growth
- Increasing profitability
- Customer retention
- Better inventory management
- Employee training
Four ways real-time analytics help CFOs
- Team members can stop wasting time playing “Hunt for the spreadsheet”
- More reliable management reports that are more accurate and up-to-date, enabling better business decisions
- Instant access to information regarding business performance
- Comprehensive view across all business units
How having real-time data affects customers and suppliers
- Accurate, up-to-date order information
- Accurate inventory
- Faster, better customer service
More than half of CFOs lack confidence in their current reporting tactics. Combined with today’s focus on managing a business through key metrics – finding “one source of truth” has become more and more important. One source of truth means one business system that provides the framework for all important business data.
Growing businesses in the wholesale distribution industry that are running tools like QuickBooks, often run out of “room.” This is usually solved with bandages: only allowing a certain number of employees to access the system at one time because of user restraints, adding on separate tools that are not connected, doing manual work – the list goes on.
Moving off of QuickBooks, or similar starter accounting systems, allows businesses to expand the functionality of their accounting software to other parts of the business and gain one real source of truth regarding the business. It means being able to ditch any add-on, disparate tools and decrease manual work. It also means accounting can easily find accurate financial information.
CFOs that ditch QuickBooks for a more robust solution gain, among many other things, more “room” to not only manage their existing business better but also expand – whether that is more product offerings, entering new markets, or growing their internal team.
CFOs that move from QuickBooks to modern enterprise solutions are able to:
- Collaborate better – across departments and within accounting/finance. Teams are able to work together online to close books faster.
- Be mobile – including mobile expense management, including the ability to take photos of receipts and mobile analytics
- Empower employees – to be more efficient and more engaged by giving them modern tools to do their jobs
- Go global (or national) – work across multiple subsidiaries, countries, currencies, languages, tax locales
To translate into business results, companies that use ERP after moving from QuickBooks have achieved:
- Doubled productivity in accounting (among other departments)
- Real-time visibility and improved customer support
- Stable positions for expansion
One source of truth
As your wholesale distribution business grows you need more than a simple accounting system. Finance and accounting teams that have employees in different locations and/or working remotely need more robust tools to collaborate effectively online.
CFOs that move from their starter accounting system to a more encompassing business software application are able to:
- Spreadsheet smarter – access database information from within Excel – retrieve, update, add, and delete data in real-time using a simple user interface
- Report better – accurate, sophisticated reporting for internal and external purposes
- Gain a global view of the business – all company financials in one system
- Conduct business from one system – finance, operations, inventory, sales and more all on the same software
In 2019, 46% of wholesale distribution companies named e-commerce as their top technology priority, and was the fourth year in a row it was ranked the top priority overall. Modern CFOs are getting their company financials in order while also setting their businesses up for e-commerce and other digital initiatives with one enterprise solution.
Moving to a real, integrated financial system allows CFOs to focus more on business innovation rather than worrying about technology.
Any executive that has had to spend too much time trying out how to manage the IT side of their business dreams of hosted, secure, and supported applications. CFOs today within the wholesale distribution industry need a business system that meets today’s standards and gives them the control frameworks they need at a cost that scales with the business. On average, businesses that implement enterprise resource planning solutions see return on investment of $7 or more on every dollar spent on the project. In one survey, businesses recouped their investment within a 16-month payback period and achieved more than 200% ROI.
CFOs that leave QuickBooks or systems like it behind for a better enterprise system are able to:
- Drive business decisions – with real-time analytics, and more accurate business information
- Support future growth – with the ability to work across locations, currencies and languages
- Enhance business performance – with better financial controls, more automated processes, and smarter business decision capabilities
CFOs are focusing on business innovation by ditching IT concerns associated with accounting software that doesn’t fully suit the needs of their growing business. By moving to more robust systems they enable:
- Multi concurrent users
- Virtually unlimited file storage
- Security assurance
- Database performance
- Automatic backups
- Painless updates/upgrades