Continuous Accounting ERP for Fintech With Forsys

In the recent years, there has been a significant increase in the number of successful FinTech companies, such as payment providers, banking API providers, currency exchanges, and cryptocurrency companies. Companies in the FinTech sector must carefully evaluate how they can effectively and compliantly scale and meet the demands of this expansion.  ERP solutions facilitate the attainment of these objectives by FinTechs; however, this has prompted numerous finance and IT leaders, CIOs, and CFOs to inquire:

What is the optimal ERP solution for fintech?

What is the optimal ERP system for payment providers?

What is the optimal ERP system for expanding financial services organizations?

What is the cost of ERP for fintech?

In this article, we will help you understand the most effective ERP systems for expanding FinTech enterprises and address all of your questions about the commencement of your ERP project.

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What is Continuous Accounting?

Continuous accounting is a method of managing a company’s accounting cycles that incorporates the latest developments in information technology and reconfigures the function of finance and operations within the corporate structure. The continuous accounting approach is a novel alternative to the conventional accounting method, which typically involves the most extensive work being completed at the conclusion of the accounting period (month, quarter, year). The new methodology is designed to enhance the efficiency of an organization’s accounting operations and procedures by enhancing the accuracy of reporting, preventing accounting errors, enhancing data integrity, and allowing skilled employees to allocate more time to other valuable duties.

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Continuous Accounting Principles

The fundamental principles that underpin the concept of continuous accounting are as follows:

1. The Utilization of Technology To Streamline Repetitive and Mechanical Accounting Procedures

New technologies that enable the automation of repetitive duties are implemented by continuous accounting. Nevertheless, the strategy does not aim to automate all procedures; rather, it aims to automate as many duties as possible. The primary goals of the automation are to eliminate errors in the accounting records, ensure data integrity, and provide CPAs with additional time.

2. The Optimization of the Accounting Calendar Ensures a Consistent and Equitable Distribution of Assignments.

The use of new technologies enables the smoothing of duties throughout the accounting periods. Rather than completing all transactions at the conclusion of a single accounting cycle (e.g., month-end), new financial software offers the possibility of performing multiple accounting transactions, such as reconciliations and allocations, on a daily or weekly basis. The stress on employees is reduced, and unnecessary errors are eliminated, as a result of the more equitable distribution of the workload. Furthermore, the company’s administrators are provided with the most recent financial information through the more frequent reporting. Consequently, managers can promptly identify opportunities or resolve issues.

3. The Establishment of a Continuous Accounting Culture

The establishment of an appropriate culture is essential for the successful implementation of continuous accounting. The method necessitates a dynamic environment that prioritizes continuous improvement. In order to surmount the inertia and perpetual consistency that are inherent in accounting department operations, it is imperative to implement a novel culture. It is undeniable that continuous accounting offers certain advantages to businesses. Businesses can achieve a competitive edge over their competitors by transitioning to this accounting method, which represents a significant strategic advance.

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Is ERP the Optimal Option for Fintech Organizations?

Enterprise resource planning is the acronym ERP when it is extrapolated.

This is due to the fact that ERP systems were initially developed for product-centric businesses, including manufacturers, wholesalers, and retailers, to facilitate the faster procurement and management of stock and materials, as well as the management of accounting.Therefore, it is worthwhile to inquire whether the implementation of an ERP system is the optimal decision for FinTech organizations.

In short, the answer is yes.

As fintech companies expand and mature, they are increasingly employing ERP systems. ERP systems offer Fintechs a significant amount of the operational, process, and structural capabilities necessary to facilitate their growth.

Continuous Accounting ERP for Fintech With Forsys

What ERP Modules and Functionality Is Required by a Fintech Company?

As the fintech industry has expanded and developed, it has become evident that there are now numerous subindustries within the sector, including payments, cryptocurrencies, digital and challenger banks, insurtech, savings, wealthtech, and more.

Private Cloud or SaaS Deployment

The majority of fintech companies are cloud-native, with minimal or no on-premise infrastructure, and they have no plans to alter this. As a result, the overwhelming majority of fintech ERP evaluations will concentrate on Software-as-a-Service (SaaS) or Private Cloud ERP deployments.

Typically, fintechs prefer public Cloud or SaaS ERP solutions; however, they frequently choose private cloud deployments to achieve greater customization capabilities, deeper functionality, and control.

Accounting and Finance

Key requirements for fintech ERP systems include finance and accounting. In order to achieve their productivity and growth objectives, fintechs must typically be capable of managing rapid growth, expansion into new markets and geographies, and automation and intelligence within their finance system.

Management of Human Capital

At the time of ERP software evaluation, fintech companies may elect not to evaluate human resources management systems (HRMS) of HCM software. However, it is also crucial to attract, hire, integrate, and compensate individuals, as they are essential to the success of the majority of fintech companies. HCM/HRMS functionality may be integrated or available as a bolt-on feature in certain ERP solutions.

Treasury Management

Companies in the fintech sector are required to manage a significant amount of financial flow, currencies, and bank accounts. Treasury management is a feature that is either included in the functionality of many ERP solutions or can be integrated with prominent treasury systems out of the box.

Expense and Travel Management

Travel and expense management have not been a significant requirement for Fintechs or any other company in the past few years. However, the world has nearly returned to its previous state, and this will continue to be a critical requirement in the future.

Analytics and Reporting

A lack of real-time reporting across their enterprises is one of the primary reasons why many Fintechs initially adopted an ERP platform. Consequently, Fintechs must ensure that their new ERP system includes robust reporting and analytics capabilities.

User Interface and User Experience

Fintechs are frequently populated by exceptionally talented, intelligent, and expensive personnel. Additionally, they are populated by professionals who are tech-savvy and prioritize user experience. Additionally, they develop and design products that are typically distinguished by their user experiences. Therefore, it is also essential that your ERP provides a user-friendly interface.

Procurement

Typically, procurement for fintech companies is straightforward and concentrates on indirect expenditure, self-service procurement catalogues, and robust approval matrixes. This enables your employees to promptly acquire products or services when required, regardless of their location, through the implementation of intelligent purchasing control rules within your ERP system.

Integration

The integration of your fintech ERP with other systems is typically mission critical for the fintechs with which we interact. Typically, fintechs will operate multiple bespoke, proprietary front-end systems that give them a competitive edge. By integrating these systems with their ERP, they can execute business processes in real time at high volumes and scale.

Understanding ERP Systems and Their Importance in Fintech

1. Streamlined Operations: ERP systems eliminate data silos and automate manual tasks, creating a more efficient workflow.
2. Data-Driven Decision-Making: ERP provides real-time data and insights across all departments, enabling informed financial decisions, resource allocation, and risk management.
3. Enhanced Regulatory Compliance: ERP systems help automate regulatory reporting and ensure adherence to complex financial regulations, mitigating compliance risks.
4. Scalability and Growth: A scalable ERP system can accommodate growth and adapt to changing business needs, ensuring continued operational efficiency as a Fintech company expands.
5. Enhanced Security: Modern ERP systems prioritize data security, offering robust access controls and encryption to protect sensitive financial information.

Common Obstacles for Fintech Companies Without ERP

1. Data Silos and Disconnected Systems: Relying on disparate software for various functions creates data silos, making it difficult to obtain a holistic view of business operations and customer data.
2. Manual Processes and Inefficiencies: Manual data entry and reconciliation are time-consuming and prone to errors, reducing productivity and increasing operational costs.
3. Limited Visibility and Reporting: Fragmented data makes it difficult to generate comprehensive reports and gain real-time insights into financial performance.
4. Scalability Issues: As a Fintech company grows, managing multiple disconnected systems becomes cumbersome, hindering scalability and adaptability.
5. Compliance Challenges: Manually managing regulatory compliance can be complex and error-prone, increasing the risk of penalties.

Choosing the Appropriate ERP for Your Fintech Requirements

Careful consideration of your unique requirements and functionalities is necessary when selecting the appropriate ERP solution:

1. Functionality and Features: Guarantee that the ERP provides Fintech-specific features, such as regulatory compliance tools, anti-money laundering (AML) modules, and robust security protocols.
2. Scalability and Integration: The ERP system should be capable of accommodating future development and integrating seamlessly with third-party tools and existing software.
3. Deployment Options: Assess the appropriate deployment model for your infrastructure and security needs, whether it be cloud-based, on-premise, or hybrid.
4. Cost and User Interface: Evaluate the total cost of ownership, which encompasses licensing fees, implementation costs, and ongoing maintenance. Employee adoption and efficient workflows are contingent upon the user interface’s simplicity of use.
5. Vendor Reputation and Support: Select an ERP vendor with a proven track record of excellent customer support and demonstrated experience in the Fintech industry.

Planning and Preparing for a Smooth ERP Implementation

For ERP implementation to be successful, it is necessary to conduct meticulous planning and preparation:

1. Define the Project Scope and Goals: Clearly specify the business objectives and functionalities that you intend to achieve through the ERP implementation.
2. Establish a Project Team: Assemble a team of professionals from a variety of departments to supervise the implementation process.
3. Data Migration Strategy: Formulate a comprehensive strategy for the migration of data from extant systems to the new ERP platform, ensuring the accuracy and integrity of the data.
4. Change Management: Equip employees with the necessary knowledge and skills to navigate the transition by offering training and resolving any concerns they may have regarding the new system.

Integration and Personalization

1. Customization of ERP systems is frequently necessary to ensure that they are in accordance with the distinctive procedures and processes of the Fintech industry.
2. Collaborate with ERP implementation consultants who are well-versed in the unique requirements of FinTech companies. They can assist in the customization of the system to optimize workflows and guarantee a smooth transition.
3. Determine the third-party tools and extant software that require integration with the ERP. Select an ERP solution that offers APIs (Application Programming Interfaces) and robust integration capabilities to ensure a seamless connection.

Deployment and Testing

1. It is imperative to conduct thorough testing prior to the deployment of the ERP system throughout the complete organization:
2. Formulate an exhaustive testing strategy: This strategy should encompass all user duties, integrations, and functionalities in order to identify and resolve any potential issues prior to deployment.
3. Perform user acceptance testing (UAT): Involve key users from a variety of departments to test the system and verify that it aligns with their operations and requirements.
4. Phased deployment: To minimize disruption and facilitate fine-tuning prior to complete deployment, consider a phased deployment approach that involves introducing the system to specific departments or user groups.
5. To minimize disruption to ongoing business operations, schedule implementation during off-peak hours.
6. Create an exhaustive rollback plan to address any unforeseen issues that may arise during the implementation process, enabling you to revert to the previous system if necessary.
7. Ensure that employees are kept informed about potential disruptions and progress by communicating effectively with them throughout the process.

Success Stories and Case Studies

1. SoFi: A leading online lending platform, SoFi, implemented a cloud-based ERP system to streamline financial processes, improve regulatory compliance, and gain real-time insights into customer data. This resulted in a 25% reduction in manual tasks and a 10% increase in operational efficiency.
2. Green Dot: A provider of prepaid debit cards, Green Dot, implemented an ERP system to manage complex financial transactions, automate reporting, and enhance data security. This led to a 20% improvement in reporting accuracy and a significant reduction in compliance risks.
3. Chime: A digital banking platform, Chime, adopted a cloud-based ERP solution to manage rapid growth, automate workflows, and provide a superior customer experience. This resulted in a 30% increase in customer onboarding speed and a 15% reduction in operational costs.

What Is the Cost of a Fintech ERP Solution?

ERP software for fintech companies can range in price from USD 100,000 to several million dollars during the initial year. The cost is contingent upon the complexity of your business and the software you elect to implement.

The Future of ERP in Fintech

1. ERP solutions that are cloud-based are a preferred choice for Fintech companies that are seeking cost-effectiveness and agility, as they offer scalability, flexibility, and accessibility.
2. AI-powered Analytics: The integration of AI and machine learning into ERP systems will enable data-driven decision-making by providing deeper insights into consumer behavior, risk management, and fraud detection.
3. Security Enhancement: ERP vendors will persist in their efforts to protect sensitive financial data by prioritizing encryption protocols and robust security features in response to the ever-changing nature of cyber threats.
4. Industry-Specific Solutions: It is feasible that the development of ERP solutions that are specifically designed to meet the distinctive requirements of various Fintech sub-sectors, including payments, lending, and wealth management, will occur.
5. Leveraging these advancements and meticulously implementing ERP solutions can position fintech businesses for long-term success in the competitive and rapidly evolving financial sector.

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