Are your finance and accounting teams fine-tuned and functioning well? Now is not the time to rest on your laurels. Even effective and efficient teams need to constantly evaluate and pursue avenues for improvement. The process improvement lifecycle is not always instinctive or apparent. In order to streamline your workflows and optimize the accuracy of your processes, you might need to make subtle changes and provide relevant insights to your finance team. The finance and accounting team can also play a key role in driving business growth and strategy. Unfortunately, the team often underutilizes this opportunity because they lag behind with inefficient processes.
What are finance processes?
Finance processes are the backbone of any organization. The accounting and finance department executes multiple methods and procedures. This includes data collection, planning, budgeting, reporting modeling, and forecasting.
What are the common finance process challenges?
These are the common challenges that businesses experience in their accounting and financial processes.
#1 Inefficient Processes
This can be due to outdated systems that make processes more complex than they need to be. Inefficient systems affect productivity and cause stress. They also tend to create tedious repetitive work that prevents the team from focusing on more productive and strategic tasks.
#2 Unclear Role Division
Not clearly defining and designating tasks and approval processes can result in chaotic situations. Clear ownership of tasks is necessary to avoid things getting left undone or becoming redundant.
Not optimizing processes for fraud prevention can cause the business to run into huge losses. Billing and accounts payable systems are usually responsible for this problem. It is important to put concise and foolproof approval processes in place to ensure transparency and prevent fraud.
#4 Inability to Manage Information
Managing, storing, organizing, and tracking the large amounts of information and documents that pass through the accounts and finance departments improperly often causes problems. This is especially true if you are using manual systems. Documents need to be easily found later for audit purposes.
# 5 Manual Data Entry Mistakes
Manual data entry takes a lot of time and resources and tends to be a highly inefficient process. This can result in errors and cause the business to become vulnerable to serious financial repercussions.
#6 Slow Approval Processing
Manual approval processes will inevitably slow down the payment process. These delays can not only impact your relationships with vendors but also cause projects to run behind schedule.
#7 Lack of Visibility
If you haven’t automated your processes you will face hurdles along the way. This includes a lack of visibility when relying on paper documentation as well as time-consuming processes. You might miss out on tracking business patterns, trends, productivity, and efficiency due to the delays of a manual system.
How can financial processes be improved?
In today’s market getting and keeping ahead of the competition means making strategic choices to increase the company’s resource utilization (both time and money). Make refinements to your basic financial business processes that the employees carry out on a regular basis to improve quality and save money.
#1 Audit your existing processes
To improve your processes start with examining the strengths and weaknesses of your current system. Identify areas of improvement that can be made more efficient and cost-effective. Prioritize areas that will deliver the most significant gains to the business rather than trying to tackle them all at once.
#2 Involve the team
Get your team involved before you make any major changes to the financial processes. They need to understand how the improvements will benefit them as well as give their inputs in how to improve the system.
#3 Train the team
One of the crucial ways to improve your financial processes is to give your team members some cross-functional training. This way there will always be someone on hand who understands the basic workings of your accounting software and finance workflows. Training will also ensure correct processes and compliance.
#4 Establish Clear deadlines
Mandatory deadlines encourage your employees to hand over their financial documentation in time especially if there is a penalty for failing to do so by the deadline. Automated messaging reminders to submit documents in a timely manner can encourage and enforce these rules.
#5 Encourage and Increase Collaboration
Teams depend on each other. Promote interdepartmental collaboration to ensure efficiency in your finance department. Take time to find informational silos that various parts of the organization built and find ways to share all information.
#6 Automate and Integrate
Automating key financial processes will go a long way in improving the efficiency of your business. Invariably it is the labor-intensive manual processes that cause the most error are the one which are easiest to automate and should be given priority. Maximize efficiency by automating everyday tasks while customizing them to individual rules and processes. While you automate it is equally important to integrate processes so that all parts of your system are communicating and sharing information with each other.
Financial processes need constant and consistent collaboration which comes from transparent communication between divisions in your business. It’s important to ensure you are consciously cultivating teamwork within the business. Making inter-departmental cooperation as straightforward and painless as possible makes sense. The good news is that technology makes collaboration simple with video conferencing solutions, Slack, and other cost-effective and easy-to-use communication tools. The amalgamation of all these factors ensures a well-functioning finance and accounting lifecycle.
Are you looking for a financial advisor who can help you accelerate the growth of your business? We can help you achieve your financial goals while improving your finance and accounting processes. We also provide businesses with a complete fractional accounting team for the price of a full-time bookkeeper. Get in touch with us at Accounovation.com for a free consultation on how we can assist you with accounting services.