Time to get off the hamster wheel: staying in control of company finances

Time to get off the hamster wheel: staying in control of company finances

Automating and integrating accounting processes not only saves the finance department time, it is also key to generating the insights needed for growth, says Steve Berridge, finance technology specialist at The Access Group.

Time to get off the hamster wheel: staying in control of company finances

As a financial controller, you know just how much the board depends on the data your team holds and processes to achieve the company’s strategic objectives. From new hires and equipment procurement, to major capital investment projects and business growth, board members cannot make effective spending decisions, and satisfy shareholders, unless they have confidence in the evidence you provide.

When you deliver the correct figures on time, they are unlikely to question how long it took you, the number of spreadsheets used nor the frustration you felt grappling with a piece of outdated software. After all, reporting is simply part of the job and diligent finance professionals never shy away from putting in the extra hours where needed.

Yet this often means they find themselves on a hamster wheel, manually (and sometimes frantically) collating information from different sources for the most pressing deadline that week, whether it be for a board meeting, end-of-month billing or tax return.

Spreadsheets rarely tell the whole story

Even if this way of working is broadly accepted, it is certainly not sustainable as the business starts to scale up and/or take on new projects.

For a start, there is no guarantee that the finance department will grow at the same rate as the company, if at all. Senior managers, keen to minimise risk and keep expenditure low, may well expect existing staff members to absorb the extra load without increasing headcount, despite operations being more complex.

Not surprisingly, most employees will only tolerate this for so long – particularly when they are already struggling under the weight of excessive admin related to poor, outdated processes.

At the very least, members of the finance team will be left feeling frustrated, unproductive and disengaged, particularly its younger members who have grown up using intuitive online tools. In more serious cases, long working hours can contribute to work-related stress, absence (or presenteeism) and the loss of valuable skills if someone decides to leave the company.

Heavy workloads and employee dissatisfaction, though extremely serious, are not the only challenge firms face when their accounting processes fail to keep pace with expansion. While the figures submitted might be accurate insofar as they add up on a spreadsheet, they rarely tell the whole story.

Access to real-time data

One problem is the inevitable time lag in reporting, which makes it difficult to see where the cost of overtime, sickness absence or suppliers has suddenly soared. With different departments responsible for their own budget, procurement and staff hours, you have little choice but to wait for them to submit their monthly expenses, frequently at the eleventh hour.

It is one thing reporting to the board – but think how more valuable it is to spot a problem early on and take action. By encouraging departments to share suppliers and resources, and warning managers to stay on budget, you will be instrumental in reducing costs and driving up revenue at a crucial time.

Access to the real-time data also gives you greater control of customer credit. As soon as they hit their limit, you can impose a credit hold and remove it once payment is received, so there are no missed sales opportunities.

As well as data being out-of-date, and therefore less reliable, finance teams sometimes have no idea if managers are reporting consistently in the first place.

Standard system to improve data quality

One might sign off an employee’s expenses without question, whereas another could refuse a comparable claim. Without a clear policy and standard approvals process, how can you stay in control of expenses or, conversely, see whether someone has been left out-of-pocket conducting company business? If the finance department is capable of curbing spending, and improving employee confidence in the expenses system, then senior managers should recognise its value.

Poor processes, as we have seen, invariably hamper growth because finance teams are continually looking backwards not forwards, unable to deliver the actionable insights needed to effect positive change.

A central accounting system provides both data granularity and visibility, pulling in information from different sources such as HR and procurement. By integrating the data, setting spending limits and accessing real-time information through a standard system, you are able to improve data quality and move towards a single version of the truth. Your role is not just to rein in spending but to identify potential opportunities, such as shared resources or winning new business, as they arise.

Technology doing the heavy lifting

Furthermore, the platform allows you to do more than analyse historic data and instead quickly and accurately model different scenarios in line with the company goals. Consequently, senior leaders become more agile and informed in their decision-making, recruiting staff where needed, moving manufacturing operations and/or targeting new territories, having weighed up the costs. Capabilities like this give companies the confidence to move to the next level and ultimately, gain a competitive advantage.

As the business grows, it is important to let the technology do the heavy lifting, so you are able to reduce your reliance on manual processes. I mentioned earlier that excessive admin is hardly going to engage staff, but it also brings the risk of human error, first when it is inputted and then again when it is retrieved for reporting. Although spreadsheets require minimal investment, they are a false economy if people are unable to work as quickly and effectively as possible, without making mistakes.

Finance professionals, more than anyone else, understand the importance of utilising resources in a business for maximum ROI. With the right tools, they can automate time-consuming tasks such as credit control and report generation, as well as model different scenarios, using the richest data available. Rather than merely being a cost centre, albeit an important one, your department should be shaping the strategic direction of the company and adding value at every stage.

Steve Berridge is finance technology specialist at The Access Group.

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