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Improving investor appeal with financials in the cloud

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Improving investor appeal with financials in the cloud
Derek Bose, Senior Director for South Africa and the SADC regional cluster at Oracle

While there has been an increase in appetite toward investment across the African continent, lessons learnt from experience – including the global financial crisis – means that funders are taking a more cautious approach in deciding who they provide funding to, and being even more cautious that the funds are applied to the intended purpose. A transparent cloud-based financials system provides the transparency foreign investors increasingly want.

The World Bank announced a record US$57 billion in financing for sub-Saharan African countries – including $8 billion for private sector investments – over a three-year period between 2017 and 2020.

For private and public sector organisations looking to raise funding, having a transparent financial reporting system provides potential investors with enough information for them to carry out due diligence processes and make well-informed decisions. For example, a health ministry in sub-Saharan Africa has applied this very approach to secure funding from a global healthcare donor organisation.

For an organisation still using traditional on-premise IT systems based on often customised software and spreadsheet-based reporting, getting an accurate view of company financials, ensuring that reporting adheres to international standards, and then sharing this information with an external third party can be a major challenge.

Bringing finance agility

Many organisations are held back by the limitations of their traditional financial reporting systems, in terms of scope, efficiency and accessibility, but a shift to the cloud will give them the agility and transparency they need to bolster their chances of securing investment.

A finance cloud empowers organisations by simplifying and automating transactional processes as much as possible, using emerging technologies such as robotic process automation and machine learning.

This doesn’t just help companies cut down on labour-intensive tasks; it even helps them protect sensitive data by replacing unsecure spreadsheets and emails, and consolidate the process of documenting and assessing business practices to satisfy financial reporting regulations, such as Sarbanes-Oxley (SOX) and equivalent laws around the world.

In addition, a cloud-based solution allows for seamless integration of data from across functions (including ERP and HCM), as well as easy sharing of information and dashboards with potential investors, including for revenue, expenditure, and budgets.

It allows organisations to show potential investors where and how resources are spent, giving financiers the confidence that their funds will be used in the right manner. Or allows NGOs to show donors that their money is being spent on the right projects.

With access to accurate and timely information from across the organisation, companies can further run scenarios with different sets of variables to assess both potential risks and opportunities, and share those with full transparency.

Data protection legislation and information security

More countries around the world are bringing regulations into effect to ensure the protection and privacy of the data of individuals – the PoPI Act in South Africa and GDPR in Europe being examples. In the case of GDPR non-compliance comes at an especially high price – 4% of global revenue or €20 Million, whichever is greater – and financiers will want reassurance that this is not an investment risk.

A further risk is that of hacking, malware and similar nefarious activities. A report by The Economist Intelligence Unit and Oracle shows that organisations have witnessed a 42% increase in hacking, a 39% growth in malware and a 23% rise in financial theft over the past two years. Globally, cyber-crime is expected to reach $2 trillion by 2019.

Industry-leading cloud vendors invest massively to ensure data protection and security. By using cloud computing at the infrastructure, platform and business application level from these providers, businesses can eliminate their exposure to such risks – affirming their ability to meet data protection and privacy requirements.

By Derek Bose, Senior Director for South Africa and the SADC regional cluster at Oracle

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