This article originally appeared in Toolbox for Finance.
In its second-annual expense management report, technology company, Center, which helps businesses optimize spend, polled finance teams across the country to better understand what their current financial challenges are. The report revealed that many of these challenges were magnified by the pandemic. This article shares how finance teams plan to address those issues moving forward.
It’s hard to believe it’s October in what has felt like a long, trying year. Budgeting season is just around the corner, and financial professionals face a new normal as they look to close out this year and plan for 2021 that will look dramatically different from prior years.
We wanted to understand how finance professionals are adapting to the new realities COVID-19 has brought and what it all means for the future of finance teams. We recently surveyed finance professionals at a range of companies for our second annual expense management report.
The company wanted a better understanding of how finance teams use their time, the processes they’re using for expense management, and their priorities for the next six months. The survey also dove deep into the challenges teams are experiencing due to COVID-19 and what they’re doing about them.
It wasn’t surprising that 99% of respondents said their finance teams experienced at least one COVID-19-related challenge. The good news is that the research showed just how adaptable finance teams are.
Everything Is Fine Until It Isn’t
Last year, most financial professionals we surveyed knew their expense management process was not ideal. They said that their process was chaotic, wouldn’t scale, or they needed to hire another person to manage it.
This year, there was a major shift: there was a 25% drop in respondents who thought their expense management process was “smooth sailing.” Clearly, the cascading impacts of COVID-19, such as remote work and the need to have a better handle on revenue and expenses, have revealed fundamental weaknesses in expense management processes that still rely on paper, spreadsheets, or legacy software.
Opinions of Finance Professionals About Their Expense Management Process
We asked finance professionals about their biggest frustrations with the spending and expense management process. Four out of the top five related to the time spent on the process, whether organizations were using expense management software, spreadsheets, or some combination. Clearly, today’s software solutions are not doing enough. Technology should help streamline the process by automating routine activities, improving reporting, and decreasing the effort involved in closing the books.
Challenges Finance Professionals Face With Their Expense Management Process
Expense management isn’t the only place finance teams feel more pain from COVID-19. We asked finance teams how they felt about the month-end close process. Two-thirds said the month-end close process is unacceptable or could be improved. For many organizations, this was their first time closing the books remotely, and it’s no surprise that operational inefficiencies quickly came to light.
Just last month, I spoke with one prospective customer who was already two days behind schedule on her month-end close, with no end in sight. Remote work had made her team’s expense management process, which includes too many manual tasks, much more difficult. To make things worse, several directors had not yet submitted expense reports, and she had no visibility into what they spent because they refused to use their corporate cards. Her reminder calls went unanswered, and she felt like she was being held hostage by missing data.
Activities Finance Professionals Want To Spend More Time On
When you compare where organizations currently spend the most time with where they’d like to be spending more time, a clear pattern emerges. Routine, highly manual, often paper-based activities like invoice processing and expense management take up the most time, while process improvements, cross-department collaboration, and strategy and planning get squeezed. Day-to-day operational work often keeps finance teams from the critical strategic, collaborative, and process improvement work their organizations need them to do, now more than ever.
So, what are finance teams doing about it?
We weren’t surprised to find that finance teams are highly adaptable and are taking action to improve processes and outcomes for their organizations. They are undertaking a wide range of activities, including streamlining operations, improving controls, and adding staff training. The ranking of organizational priorities didn’t change, but the number of organizations planning to take action increased. For example, 10% more organizations than last year are seeking to streamline accounting processes, and 50% more are adding automation.
Post-COVID Priorities for Finance Teams
Organizations are also undertaking special pandemic projects: 91% said their organizations plan to take on at least one technology initiative in response to COVID-19. And they’re adding a lot to their plate. The majority (84%) have more than one initiative planned or underway, and on average, companies have 3.5 initiatives planned.
We found that 62% of respondents plan to upgrade legacy software like expense management, and we agree, there’s no better time than now to do it. With the abrupt shift to remote work, the pressure to contain costs and limited resources, finance teams are investing in technology initiatives to help automate time-consuming processes, like managing expenses, and drive more insights for faster decision-making.
Post-COVID Initiatives for Finance Teams
The great news is this doesn’t have to take a lot of time.! In fact, one recent customer was able to start and finish their Center deployment in just a few days, between a CRM migration and a payroll system improvement. In previous years, there was less urgency to take on multiple projects in sequence or parallel.
Now, organizations can’t afford to wait to make these important digital transformations. Moving to automated, real-time processes enabled by software is a high-value way to set your team up to emerge from this crisis stronger when organizations need to get more done with fewer resources.
In August 2020, Center surveyed over 200 finance professionals from U.S.-based companies of all sizes for this report.