Learn more about how practices can make meaningful improvements to their ways of working in order to increase growth and efficiency
Running a business – especially a smaller business – can be extremely difficult. When it comes to architecture, small and micro practices do not have the luxury of large, separate finance departments to sort out payrolls, keep an eye on overheads, rent and other bills, and plan and forecast.
With all this in mind, many practices could be missing out on the huge leaps forward that have taken place in digital finance software, simply because they are not aware of what is out there, says RIBA specialist practice adviser Philippa Carter, director at audit, tax and consulting firm RSM UK.
Architects are not technophobes, but their interest will naturally focus on the latest trends in design or modelling software unless practices are large enough to have dedicated finance specialist keen to adopt today’s state-of-the-art finance apps, Philippa argues.
“The accessible technologies available to small- and medium-sized businesses out there are amazing, and they have become so advanced,” says Philippa. “If you think back only a few years when people were manually going through bank statements and highlighting items and posting into spreadsheets, often with duplication of tasks, that has all gone away if you are using the right systems.
“It’s not about replacing people with computers, either - it’s about freeing up your finance function so that it can get more involved with strategy and decision making and helping directors to push forward and grow the business.”
What is finance function?
The ‘finance function’ of a business is the finance team (or person) and the systems they use to provide management with financial information. Too often in smaller business it will be siloed as a ‘back office’ function and will not be talking to the front office where management decisions are being made.
But the finance function should really be put to work identifying efficiency savings that can reduce business costs, informing investment decisions such as new technology, delivering better quality information and insights, and providing better forecasting. It should also, of course, be able to provide timely and bang up to date practice management accounts.
“You do not want a situation where management accounts have to be pulled from 10 different sources of data every month end,” Philippa continues. “These days systems can be continuously updated and the information is available at the press of a button. Timely management information helps businesses to make better decisions more quickly and makes them more agile.”
There are a lot of finance apps out there. Some of the better-known would be Xero, which is useful for small businesses, moving up to NetSuite and Sage Intacct cloud accounting. Businesses can choose a package the suits their size, complexity and international business if required.
These kinds of finance software will support tasks from creating, sending and tracking invoices to automating payroll, calculating tax obligations and managing expenses.
Philippa explains that apps are getting smarter all the time. For instance, they can automatically recognise incoming invoices among emails, read them and add them to the accounting system; they can recognise regular suppliers/payees and categorise them accordingly; they can also link to automatic bank feeds.
“Obviously, there is still a need for checking and the human perspective, but the systems are now so clever that time-intensive manual data input tasks have all but disappeared, freeing up the finance function to add real value to the business,” she says.
The finance software environment you choose can be readily customised to suit your own business. At the simplest level, for instance, a small business using Xero could add a plug-in app that will help to produce its cash flow forecasts.
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How can smaller practices make changes?
There is a tendency for small practices to carry on with the same approach to finance and accounts just because it is the way they have always done things, argues Philippa. She says now is a great time to take a fresh look at your processes and systems and review them from scratch to see if they are fit for purpose in the light of the digital finance and accounting applications out there.
Management can do this for themselves, or they can ask their accountant or a consultants to carry out a review for them.
“It’s really about taking that step back and looking at how you are doing things. I think practices will find that there is much more duplication of effort and human intervention than there needs to be,” she says. “The finance function should be spending its time doing things that add value to the business, not manual processing.”
Thanks to Philippa Carter, Director, RSM UK.
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