5 Pitfalls to Avoid When Planning Financial Integrations: A guide for financial services organizations


The key to future-proofing your firm in an increasingly competitive, ever-evolving environment is to adopt a flexible architecture and open application programming interfaces (APIs) that optimize efficiencies, while addressing customer needs, cost effectively. With software and data residing virtually anywhere, it is important to ensure that your infrastructure can scale up or down in real time and be prepared to integrate anything.

Modern tools use financial integrations to eliminate the rekeying of data, easily share information across teams or departments, and gather intelligence for deeper insights that enable faster and smarter decisions. For most companies using a best-in-class technology strategy, the finance system is the hub where all other systems plug into. It becomes a central point that delivers the right data, wherever it resides, when you need it with speed and accuracy. In short, implementing financial integrations is a critical component to maximizing efficiencies and your ultimate success.

As you look to create a holistic, fully integrated financial management system, learn the 5 big financial integration pitfalls and how to avoid them so you can get the most out of your connections – within and beyond your financial services firm.

1. Failing to set and manage expectations and requirements

This one is obvious yet the most difficult to attain across the life of your project! Here’s how to avoid the top 5 risk factors that impact every integration project:

Create realistic time estimates

Making an overly eager time estimate because of business demands is a risk that could haunt you throughout the project. As the project team struggles to meet the deadlines, quality often suffers, which means work may need to be redone ultimately causing you more costly delays.

Align developer costs to project scope

Your largest expense is usually tied to the developer’s time. As costs begin to pile up, management may begin to lose faith in you, putting pressure on you to complete the project asap. The result can be more errors, lost time, and lost dollars.

Beware of scope creep

When stakeholders begin to sneak in little change requests that circumvent the identified change request system, both time and cost are impacted. Scope changes can also stem from the project team not having a clear understanding of what’s considered in or out of scope. As a rule, you should decline any changes to scope unless they are absolutely necessary.

Ensure that the project goal is attainable

Some projects are unrealistic. Expectations for the project scope, schedule, and budget may be completely flawed. Realize the unfeasible aspects of a project or face the consequences.

2. Leaving your system’s sensitive information vulnerable

Connecting to your financial system requires serious considerations around security. It’s important to consider robust systems like Sage Intacct that require 2 levels of security to access the system through the API:

  • The first belongs to the company making the request. These web services credentials get logged with every request and must be white listed with the receiving company.
  • The second set of credentials links the request to a web services user ID in the system. By linking to a web services user ID, in the case of Sage Intacct, API requests can be limited to the permissions associated with that user ID. For example, an integration with Bill.com would only need access permissions to vendors, bills, and payment information. If the service is ever discontinued, the web services user ID would be deactivated, securing the system.

Tip: Secure your access credentials. Everyone involved in building the integrations, whether they are partners or members of your own IT team, need to keep credentials encrypted and stored where this confidential data can’t be accessed by a browser.

3. Clogging workflows and the general ledger

If you are integrating with a financial system that is not multitenant, but merely hosted as a one-off implementation on a service, it is likely that you will run into constraints that hinder performance. The Sage Intacct born-in-the-cloud financial management solution builds in elasticity to handle wide data volume, as well as improved operational efficiency and scalability. Consider how much data you want to bring into your financial system and what to do with it. If you have high volume trades, payments, claims, or other activities:

  • How do you want to store every transaction or customer record in your financial system of record?
  • Does it make sense to keep transaction and customer details in their respective functional systems and let the finance system just handle summary transactions? A modern financial system allows you to store much of your accounting and finance data in the system of record, while only feeding summaries into the general ledger.

A modern financial system allows you to store much of your accounting and finance data in the system of record, while only feeding summaries into the general ledger.

4. Missing the complete picture by only seeing the money

Investors are demanding broader and higher-quality nonfinancial data to support their decision-making. In a recent survey by EY, 97% of investors say they evaluate target companies’ nonfinancial disclosures.

Don’t risk incomplete insight by only looking at financial information. Often, when we look at connecting to the financial system, we think of things that have financial data, like payroll systems, banks, or trading platforms. Limiting the data you pull in, limits your reporting power.

Consider incorporating data from your HR system that keeps tabs on your employee retention rate or a lease management system that tracks occupancy. Using a financial management system that offers statistical accounts functionality, enables you to easily capture information from nonmonetary accounts for use in reporting, billing, or resource management – ultimately leading to smarter decision-making.

5. Making GAAP compliance and auditability difficult

Can you trace report summaries to the transactions and back to their source? Sage Intacct makes this easy by creating clickable links inside reports, and then providing link fields to source records. When sharing information from Sage Intacct with another system, the API speeds up the process with built-in link fields for each record. Other systems also provide links to connect to their source records and using them is vital to staying auditable.

For example, when you connect an expense software with Sage Intacct, you have a way to easily click back from the income statement to the receipt to verify information about transactions. Getting back to source data creates transparency and keeps you GAAP compliant.

Sage Intacct directly connects with 10,000 banks worldwide and growing, to reconcile daily and close continuously. Not only do the bank feeds bring daily cash insights with automated matching, it makes it easy to ensure accuracy and consistency of your financials. Integrating with your banks is so easy with Sage Intacct, that it’s just a matter of switching on the connection.


Set and manage expectations

Establish realistic timelines and project goals. Beware of scope creep – changes to scope must be reflected in the time and cost estimates.

Don’t be vulnerable

Consider requiring 2 levels of security to access your financial management system through an API – that is tested and proven.

Maximize efficiencies with the cloud

Use open APIs so it’s easy to connect your financial management system with existing and new processes and systems. AND protect your data at a much higher level and at a lower cost than if you did it yourself.

Be mindful of more than just the money

Use a best-in-class general ledger system, like Sage Intacct, to help you manage financial and non-monetary datagiving you deeper insights so you be more strategic.

Don’t take shortcuts you may regret later. Focus on quality from the start.

Article Source: sage.com

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