A rather unusual, but unsurprising finding in a recent survey of finance teams outlined the predominant sentiment that “everything” about legacy financial systems is bad — software, workflow, and culture. Fundamentally, such viewpoints can be attributed to the lack of standardization and the adherence to a siloed approach that’s inherent in legacy financial systems.
These systems are stagnant, rigid, expensive, and challenging to improve or roll out new features without a lot of disruption. For EPC companies, the drawn-out existence of such systems translates to an inability to streamline project finances and reporting.
The EPC sector’s financial operations remain resistant to change regardless of the digitization buzz. This sector has been slower to capitalize on digital tools and automation-related cost savings and benefits. It’s fair to say that the EPC sector is highly fragmented owing to the employment of stand-alone systems or point solutions.
EPC Project Finance Systems – The Challenges
Manually-Intensive Accounting Processes as Bottlenecks
Financial close times for the EPC industry are typically longer than other industries due to the numerous manual processes, a variety of operational accounting systems, many organizational units, and multiple people involved. The consolidation of reports and associated numbers is a time-consuming and effort-heavy process. Further, with a multitude of people engaging in the accounting processes, the costs incurred for technology and human resources are relatively high, not to mention the long time spent reconciling data errors and resolving discrepancies.
Constrained Stand-Alone Software
Ideally, a company’s entire construction finance software system should be built on a single platform to allow for better organization and ease of use. In reality, this is rarely the case. Some construction service providers and contractors use multiple systems to handle financial data. This makes it challenging to pull out specific amounts of data for cross-referencing, analysis, and documentation. It makes it virtually impossible to get insights based on aggregated data spanning functional and system boundaries.
Lack of Standardization Across Systems
Stand-alone accounting systems have differences in functionalities and in how those functionalities get utilized. Therefore, it is difficult to ensure common standards among all systems. This makes it challenging to develop new or updated proposals and reports. Plus, the increased time required to troubleshoot different systems or for people to learn new systems significantly impacts agility and efficiency.
No Cohesion, No Automation
Since data must be gathered from disparate systems, multiple excel spreadsheets are required for compilation, from where data is eventually transferred to one report. This requires manual labor for budgeting, reporting, and reconciliations. The lack of integrated data also hampers automation, making it difficult to update or add new features in the background. Not to forget that the slack in manual processes is often filled in with a reluctance to use technology and to change. As a result, financial planning, accounting, and reporting are seldom automated because it’s just too hard to do so.
Lack of Transparency & Trust
Financial systems must keep precise records of financial transactions. They are expected to present a clean and up-to-date view of the company’s financial performance and allow its stakeholders to make informed decisions. In the case of public companies, transparent and complete reports are even more essential. However, this isn’t easy to achieve, considering the untimely accounting report production.
Finance teams also worry about data reliability and possible errors, whether intentional or accidental. They frequently question why certain information is included or excluded from the reports, which leads to distrust and a lack of transparency. The slow and error-prone financial close also creates doubt about the reliability of the information.
So, What’s the Solution?
Intelligent digitization has the potential to improve workflows and increase productivity substantially. The best solution involves implementing a modern cloud-based financial system that offers standardization, automation, and integration of various business functions. This means that a single system can be used to manage across-the-board financial operations, including budgeting, accounting, reporting, and reconciliation. It also means that data can be shared among multiple systems. The best such systems are future-ready as they can be plugged into overarching “platforms” that can bring together powerful systems from across the operations of the EPC company.
For instance, Microsoft Dynamics 365 Finance & Operations is a unified business management system that is designed to work across the entire spectrum of operations and financial processes. Whenever data in one of the modules is updated, the information is reflected and shared in the other modules. This eliminates the need for data entry in the other modules, thereby reducing manual labor and the associated costs.
Furthermore, D365 allows for phased rollouts of upgrades and features, which is essential, especially for vertical integrations. This means that minor changes and upgrades to the enterprise’s systems can be implemented in the background without disrupting the ongoing operations. The businesses also have access to a wealth of modern features, such as enhanced security, budgetary planning, and risk management.
No wonder Forrester reports a 60% ROI on its implementation and a net positive charge in adoption.
Benefits of Intelligently Digitizing the Financial Systems
Integrated solutions like D365 Finance & Operations for EPC project finance offer so much more than single or stand-alone systems.
Reduced Project Complexity
With a single system and the associated standard reports, companies can create cost plans and tender documents to clarify financial cases better. Besides, there’s no need for an overwhelming coding-laden configuration of services.
Increased Business Agility
Implementing modern finance and accounting software can help EPC companies respond faster to business opportunities. With an integrated platform, employees have access to data across the entire organization, allowing them to make more informed decisions.
The Cloud Advantage
From scaling the existing infrastructure to customizing and implementing new features, the cloud offers flexibility and speed. Since there are no significant upfront costs for infrastructure, users can scale up quickly as the business grows. The adoption costs and maintenance burdens are also significantly less when compared to on-premise implementations.
Actionable insights from the financial system result in more efficient organization, better decision-making, and improved workflows. This is important because the faster one can go from order to actual work, the better.
The Bottom Line
In the modern-day, the financial systems should be linked to the EPC functions and all their associated costs: IT, licensing, security, and compliance. The best financial software platforms are designed to control expenses and manage costs, but more importantly, facilitate ease-of-use, agility, and standardization, to make them ideal for reducing friction and improving productivity.
That said, D365’s automation and unification capabilities allow users access to the most pertinent data across departments and focus on decision-making. Learn more about how integrating your financial functions would work wonders for your endeavors. Book a demo!