It’s surprising what finance teams can get used to. As long as the hassles of completing a specific process don’t get any worse—and produce a generally acceptable outcome—many people never give much thought to doing it faster and easier.
Every now and then, a new team member may suggest that there’s a better way. Or a bored-with-the-process colleague will wonder if doing things “the way we’ve always done them” could be done—well, differently.
At those moments, you may be tempted to skip fixing something that doesn’t appear broken. But you might discover that there is plenty of opportunity to optimize your financial processes. Consider what you and your team could do, if you could free up just one day a month by using better technology.
If you’re thinking that maybe you could be doing things in a way that provides more value, here are 11 good questions to consider and discuss with your team.
Companies take different approaches to planning and budgeting. At some businesses, planning information is shared only with senior management, who ultimately make all the decisions on how top and bottom lines can be achieved. In other organizations, top-down budget figures are set in a system, and then budget-holders are required to crunch bottom-up numbers to match.
A better option is to enable all budget holders to participate in the process from the get-go. In the past, the back-and-forth to reconcile the numbers was generally too complicated to be this inclusive. But modern planning systems can now share a detailed strategy with all budget-holders and provide clear instructions on what they need to do.
It’s tough enough to generate a single annual budget for the next calendar or fiscal year, let alone run the numbers of different scenarios. But if your business can create only one version of a plan that you hope you got right, being financially prepared for the “what-ifs” is a bit of a gamble. Creating multiple versions that are shared off-line in spreadsheets is certainly a more forward-looking approach, but it’s pretty labor-intensive.
Increasingly, the most reliable way to prepare for potential contingencies is to utilize a comprehensive finance solution that allows you to run sand-boxes on a variety of what-if scenarios. Financial planning and analysis (FP&A) shouldn't depend on spreadsheets that aren't secure and can easily break.
It’s not as usual as it used to be, but at some companies, budget spreadsheets are sent to managers for approvals. And just how these spreadsheets were given a "yea or nay" often remains a mystery. At the other end of the spectrum, more sophisticated budget approval processes are clearly defined, automated, and managed in a planning system that provides visibility to more stakeholders.
Even in the most stable industry, it’s hard to imagine that a one-and-done forecast can enable a company to adjust to even minor disruptions or unexpected upticks. Still, it’s not as uncommon as you’d think.
At companies where management likes to have a more reliable picture of the end-of-year story, finance teams rely on solutions that generate rolling forecasts by incorporating actual numbers into the overall plan.
At a number of firms, it feels like the financial close process each month and year brings all other work to a grinding halt. Email inboxes get clogged and phones ring off the hook as stakeholders work in manual checklists.
Financial closes at companies with more modern technology are stressful, too, but real-time financial close systems provide analysis and automatic alerts. They also streamline the process by generating a complete audit trail from sub-ledger close to regulatory reporting.
The 24-hour news cycle has made us all a little inpatient about getting the most up-to-date news. So it’s no surprise that requests from the C-suite for financial close data can come at any time. At many businesses, though, even the most demanding boss still has to wait for the financial period to end to get a peek at the numbers. But increasingly, managers are providing their finance teams with solutions that help them generate reports anytime, anywhere.
Keeping track of money that goes out the door is vital to managing the bottom line. Many companies struggle to hold the line on expenditures because they have to manage large amounts of direct invoicing and personal expenses. A more effective strategy is to use procurement systems to ensure that the majority of direct and indirect spend is on contract with approved suppliers. Plus, systems that expedite purchase reviews and approvals help hold the line on unauthorized spending.
At a former job, I had to fill out cumbersome, spreadsheet-built expense reports. As much as I hated doing it, I can’t imagine how tedious it was for my manager to review all of the reports his staff submitted. Some companies still create spreadsheets that are emailed to an approver and then rekeyed into a supplier payment system by finance staff—while paper receipts are corralled into a brown envelope destined for storage in banker boxes. A more efficient approach is to integrate corporate credit cards with a mobile expenses cloud that lets employees photograph and submit receipts for approval and reimbursement.
The upside of an efficient invoice to payment process is more than just avoiding monthly meltdowns of finance staff who have to match documents, reconcile variances, and then get a check in the mail. When payments are done electronically, and when systems automate document-matching, companies can mitigate the risk of late fees—and better yet, benefit from early payment discounts and avoid incorrect or improper payments.
Inefficient billing and collection processes can really drag down a company’s bottom line. At many firms, AR, billing, and credit decisions are inconsistently managed in silos, especially if offices in different locations are involved. And even if visibility is provided through a billing system, centralized coordination isn’t always guaranteed.
A better approach is to manage AR in an automated shared service environment, in which credit decisions and bad debt accruals are managed centrally. This enables collection and aging issues to be managed proactively, without high-level staff involvement.
Account reconciliation can be a tedious task—often done at the local level in multi-office companies. If done after the period close, which is not unusual, filed financial reports may give an inaccurate view into the company’s performance.
More modern systems allow account reconciliation to be done at the local level, too. But when account reconciliation is managed through a centralized dashboard, uniform processes based on centrally defined standards enable careful workflow monitoring.
If you’re curious about what your answers to these questions might say about the value of your financial processes, our brand-new self-assessment tool can help. In just a few minutes, it will help you determine if your financial process could use a bit of an upgrade.