We know from our research that finance teams were feeling overburdened, even before the sudden shift to remote work and increased urgency around controlling expenses. With so much economic uncertainty, teams need to focus more effort forecasting and reporting, but instead waste precious days each month tracking down receipts, itemizing transactions, and manually reconciling card statements. Here are some of the common issues that overburdened finance teams face:
- The monthly close takes 10 days or longer
- Monthly accruals vary significantly and are often inaccurate
- Employees use personal cards to pay for subscriptions and other expenses
- It’s difficult to determine how much is spent on software licenses and other discretionary expenses
- Accounting wastes time chasing down receipts, expense reports, and invoices
- Finance relies on complex Excel hacks to analyze and report on data
- Management requires more frequent, more detailed reports on spending
With many teams being asked to cut costs and freeze hiring or even reduce headcount, working efficiently and strategically is more critical than ever. And taking a new, technology-driven approach to expense management can have an immediate and substantive impact.
As you think about doing more with less, it’s important to consider process, policy, and fiscal culture.
Problem: Inefficient processes are common and can persist longer than they should. The recent transition to work from home and remote month-end closing exposed the weaknesses in many organizations’ systems.
Questions to consider:
- Are all of your expenses and invoices digital, or do you still track some paper?
- How many people are involved in requests, reviews, and approvals?
- How many different accounts do you have to reconcile? Do employees pay for expenses with personal cards and need reimbursement?
- How often do expenses have to be manually recoded before importing them to the general ledger?
Solution: Look for tools that streamline the process, from the point of purchase all the way to posting to the GL. Some tools only digitize the old paper-based expense report, which results in the same amount of back-end operational work for finance.
Problem: Ensuring that employees spend in accordance with company policy has always been a challenge, but the combination of tighter budgets and a remote workforce exacerbates the issue. Policy touches on everything from IRS compliance to spend management. Companies need to find the balance between controls and flexibility, and ensure that their tools can easily adapt to changing business needs.
Questions to consider:
- Are you using across-the-board cuts or spending freezes to hit short-term expense targets? How are you determining what spend is actually essential for long-term success?
- Do you have an official expense policy accessible to all employees? If so, have you updated it recently to address the challenges of working remotely?
- Do employees sign up for software subscriptions independently and expense them? Who is responsible for managing subscriptions, cancelling unused licenses, and negotiating fees?
Solution: Policies should be dynamic, informed by spending insights, behavior patterns, business strategy and goals, and fiscal culture. The right tools can help surface insights, recommend policy changes, and communicate updates to employees.
Problem: Each company has its own fiscal culture, shaped by its goals, values, and leadership. Challenging—and changing—business conditions make clear, frequent communication more important than ever.
Questions to consider:
- Is there alignment between your company’s strategic goals, budget, and expenses? Do all employees understand how their actions impact the company’s ability to hit its goals?
- How are you maintaining a strong shared fiscal culture with a distributed workforce?
- Is working remotely giving you less visibility into spending?
Solution: Tools can lighten the load by automatically auditing expenses to ensure they comply with policy, and facilitating in-the-moment coaching and communication.
The Future of Finance
The Covid-19 pandemic and economic downturn have placed even more burden on finance teams, who must complete their usual monthly reporting tasks in addition to helping organizational leadership reforecast and budget. Those with good processes in place have adapted quickly, while those who hadn’t yet made the shift to newer, collaborative technologies have struggled.
The role of finance is changing, and now is the time to set your finance team up for success. Forward-looking companies are structuring their finance teams to focus more on strategic initiatives and less on operational tasks. This shift trickles all the way down to how companies manage business spend.
As finance shifts away from routine and repetitive activities, it moves toward a more advisory, strategic role. And while its role is changing, so is technology. The first major waves of financial tools digitized traditional workflows. Going forward, true digital transformation will bring together AI-powered technology, real-time data, and dynamic workflows and processes to create innovative solutions to traditional problems.
TO THE POINT:
Understanding the root causes of operational overload for finance teams is the first step. The right technology can alleviate much of the transactional burden and empower finance to play a more strategic role.