How outdated finance processes are leading to inefficiencies
Finance directors and their teams play a vital role in driving the growth of a business. However, for some finance teams this role is underutilised because they are weighed down by inefficient processes.
The best finance directors and members of senior management are always looking at ways to improve these processes. This includes increasing the use of automation which releases members of finance teams to perform more useful and interesting tasks. Let’s take a closer look at why this is so important, starting with the issues that outdated and inefficient processes can cause.
Problems caused by outdated processes
There are several problems that can result from the use of outdated finance processes in an organisation.
- Reduction in productivity due to information silos caused by outdated systems.
- Lack of individual and team motivation due to frustration with processes that are more complicated than they need to be.
- Increase in the likelihood of fraud due to paper accounting systems that lack security.
- Difficulty in managing mountains of paperwork.
- Mistakes in making manual data entries. Even simple mistakes can lead to major issues such as large over or underpayments.
- Lengthy approval processing which can lead to payments being delayed.
- Lack of transparency due to the volume of documentation in a paper-based system. This can also lead to a lack of important financial insight for a business.
- Mislaying of important documents such as invoices and receipts.
How to improve processes
It’s clear that these problems could be a major issue for an organisation. So, the best Finance Directors and their teams take action to update finance processes in their organisation. They do this by:
- Auditing existing processes. As with any business processes, improvements in finance have to involve auditing current systems. This includes analysing strengths and weaknesses and looking for potential cost savings.
- Involving the team. The success of any changes is always going to depend on the buy-in of individuals. For this reason, top Finance Directors communicate and consult at all times.
- Collaborating across the organisation. Top finance professionals ensure that their team collaborates with others across the organisation. This helps to improve the flow of processes and make sure that they are fit for purpose for all.
- Automating as many processes as possible. The most obvious processes to start with are labour intensive tasks like purchase orders and invoice approval. Automating in this way improves efficiency, releases individuals to work on more productive tasks and reduces the risk of fraud. One of the most important aspects of automation is to ensure that updated processes can be integrated with each other.
Outdated finance processes lead to expensive inefficiencies in an organisation. They also leave businesses open to fraud. Therefore, leading finance professionals are taking steps to update processes. They are doing this by auditing current processes, involving their teams in changes and introducing automation that is fully integrated. The result is that the finance processes of their organisations are more efficient, cost-effective and secure.
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Date Posted: September 18th 2020
Posted By: Mark Masson