Finance and accounting experts are critical in driving business growth and strategy, yet most companies underutilize this valuable resource due to inefficient finance processes. With today’s technology, essential operations like invoicing and cost management can be automated very easily, eliminating inaccuracies and delays while also freeing up your finance team to do more important and fascinating work.
Businesses must make significant attempts to use their resources as efficiently as possible in order to prosper in today’s competitive business environment. One of the most significant investments a company can make to ensure long-term viability is streamlining and optimizing finance operations.
We’ll go through some of the ways you can make your financial procedures smarter in this article. We’ll look at:
Finance process improvement ideas, key finance operations that can benefit from automation, and how frevvo’s financial workflow software application can help you optimize your finance processes
Let’s get started.
Common Accounting and Finance Process Challenges
Let’s take a look at some of the most typical accounting and financial difficulties that businesses face.
Information silos develop from outdated systems, making finance operations more complicated than they need to be. Inefficient reporting systems reduce productivity and put financial team members under unnecessary stress.
Furthermore, forcing clever and highly skilled finance experts to monotonous, repetitive manual work (e.g. data entry) not only causes burnout but also hinders them from putting their skills to better use in more productive, strategic ways that could help your company expand.
Unclear Role Division
Employees don’t know who is responsible for which tasks or which approvals when the division of roles and duties isn’t clear enough. Due to a lack of clear ownership, redundancy or unfinished activities might occur, resulting in credibility and trust concerns.
Fraud is an ever-present menace that must be avoided at all costs. According to the Association of Certified Fraud Examiners, fraud cost businesses $7 billion in 2018. The principal causes of fraud are false billing information and shady manual accounts payable systems, with examples ranging from invoices that don’t match expenses to check tampering.
Implementing a strong approval procedure that precludes individuals from signing off on individual invoices can provide the visibility and monitoring required to prevent fraud.
Inability to Manage Information
For many finance teams, accounting entails mountains of data and records, which can be burdensome. Managing, storing, organizing, and tracking all of these records properly can be difficult, especially for firms that rely on manual processes. The fact that all of these documents must be easy to locate afterwards to double-check information and conduct audits just adds to the difficulty.
In a recent Levvel Research survey, accounts payable staff reported “receiving invoices in paper format” and “misplacing invoices” as two of the biggest challenges they face.
Manual Data Entry Mistakes
Manual data input is a time-consuming and resource-intensive procedure that not only wastes time and resources but also leads to errors, putting the company at risk of major financial consequences. Simple errors can lead to underpaid or overpaid invoices, as well as a variety of other issues that can cause problems down the road.
Slow Approval Processing
Using paper bills and other papers results in an inevitability lack of visibility and oversight. Particularly in larger firms, it’s nearly hard for your accountant to remember when each invoice was issued, when/whether the payment was made, and whether the payment has cleared off the top of their head.
Manually tracking and reporting each stage of each account, as well as conveying the transaction’s status to suppliers and other stakeholders, necessitates a significant amount of administrative work, the majority of which might be automated.
Another disadvantage of a manual system is that it lacks monitoring, which results in a lack of knowledge into financial trends such as spend patterns, productivity levels, and overall operational efficiency. However, with automated financial procedures, analyzing this data and producing reports that can assist define the direction for the organization in the future is simple.
It’s not uncommon for emails or paper documents to be temporarily misplaced or totally lost when there’s a backlog of documents waiting to be processed manually.
For example, lost invoices in organizations with inefficient accounting procedures may force the accounts payable department to waste time contacting suppliers to request replacement invoices – and that’s only if they detect the invoices are missing.
If they don’t, you’ll be in the awkward position of having to explain why you haven’t paid your suppliers. Furthermore, missing invoices can result in a skewed paper trail during an audit.
What is Finance Process Improvement?
Finance process optimization entails altering your financial workflows to boost efficiency. Creating more defined instructions for staff to follow while completing tasks like submitting expense claims can be a simple way to enhance processes. Using technology to automate your finance procedures, on the other hand, can significantly improve consistency, speed, and accuracy, making it easier to fulfill your corporate objectives.
Now, let’s look at some tips to help you improve your finance processes.
Finance Process Improvement Tips
Audit Your Existing Processes
To improve your financial operations, you must first assess the strengths and weaknesses of the system(s) you currently use. Concentrate on identifying areas where efficiency and cost-effectiveness can be improved, and then prioritize which issues to address first.
Prioritize the areas that will provide the most substantial benefits to your company first, and then gradually implement further improvements.
Get Your Team Involved
Before implementing any substantial changes to your finance operations, it’s critical to acquire your team’s approval. Build support for the changes you want to make within your company by demonstrating how the improvements will benefit top management and finance personnel alike.
Train and Develop Your Team
Offering cross-functional training to your team members is one method to improve your finance operations. This way, you’ll always have someone on hand who understands the fundamentals of your accounting software and financial procedures. More importantly, teaching employees the proper procedures and how they will benefit and save time will increase their willingness to comply.
Set Clear Deadlines
Setting obligatory deadlines might go a long way toward motivating staff to turn over financial data on time. When team members realize that payments would be delayed if they don’t file expense claims and invoices by the deadline, they are considerably more inclined to do so.
Setting up automated messaging reminding individuals to submit their documents can help enforce this, and dynamic forms with rules can help to ensure that they complete all the fields and submit all the supporting documentation required.