The Finance Team challenge: moving from survival to recovery

The pace of change within finance was rapid even before recent events added significantly more spice to the mix. Organisations initially went into survival mode with a concentration on all matters cash; collecting it, understanding government schemes, reducing outgoings. As lockdown measures start to be eased, we are now seeing recovery mode kick-in with a different set of challenges and opportunities. This article looks at some of the core tasks and activities of the Finance Team and how they can be controlled and improved.

1. Improving visibility and control of tasks and activities

The Finance Team are responsible for many tasks and activities during a period that encompass the two key roles that we engage in: governance and guidance.

Governance is, what we would term, the historic role of finance. Enforcing policies like accounting, auditing, statutory reporting and cash management.

Guidance is about supporting the business with analysis for operational decision making, adding insight and value. It includes providing services like management reporting, budgeting and planning.

Whilst much of our attention and discussion is often drawn to the ‘sexier’ guidance aspect of finance, the governance role is critical to us all. Without it, the Finance Team and the organisation as a whole would suffer.

Recent events have seen a huge change in the way that we work, with lockdown forcing remote working on many organisations. For many Finance Teams, who historically were predominantly office based, this has seen a significant change in the way they need to operate. However, the Finance Team still need to deliver the core governance tasks in a timely and controlled manner.

“The global pandemic accelerated a trend that was already well underway: the move towards automation and digitisation,” said Darren Heffernan, President, Mid-Market at Trintech, a leading global provider of integrated Record to Report software solutions for the office of finance. “While many financial teams were initially not comfortable with the types of remote processes that they have had to put in place, tech-enabled systems are now fundamental to sustaining business functionality for the short and long term.”

What are these tasks and activities?

Governance activities are often transactional in nature and are ERP or finance system driven. Some well-known examples are:

  • Daily cash matching in accounts receivable
  • Purchase order/invoice matching in accounts payable
  • Intercompany transaction matching/agreements
  • Bank or credit card reconciliations
  • Control account reconciliations
  • Reconciliation to sub-systems e.g. fixed assets

Many of these can be categorised as part of the ‘financial close’ process, as this is when they are normally performed. However, you can add numerous other activities and tasks to this list that need completing on a regular basis. For those organisations with multiple subsidiaries, you can begin to appreciate how visibility and control of all tasks and activities can be key to the performance of the Finance Team.

To continue the discussion on retaining control of activities and working efficiently in a remote world watch our on demand Deep Dive Live addressing the challenges of remote working with Darren Heffernan and Mark Cracknell.

The challenge of remote working

For those organisations using spreadsheets as their main tool, visibility over periodic tasks and activities is often limited. These tools are not necessarily built for collaboration and visibility, causing process inefficiencies and potential error. Even for those using other technology solutions, the associated workflow only covers that specific application rather than providing an overall view of all the tasks and processes of the Finance Team.

The reality is, even disregarding the crisis, many organisations do not currently have a high level of control and visibility over tasks and activities. To a large extent, they rely upon being face-to-face to overcome this, assisted by ad-hoc and manual controls e.g. spreadsheet lists.

In our recent Generation CFO Research: The impact of COVID-19 on the CFO and the Finance Team, collaboration and communication were highlighted as two of the major “people” challenges faced. Our survey also revealed that remote working is highly likely to continue as we move forward. If this is the case, we need to find a new way to collaborate and communicate. Failure to do could increase the risk of error and delay in our governance role with a negative impact on the organisation.

How can you improve collaboration and communication and thus control and visibility?

This is a perfect example where technology has a significant role to play as an enabler. Key to this is in-built capability and functionality that addresses the challenges of communication and collaboration. Workflow is critical to this, providing visibility over all tasks and activities, accessible to all contributors to the process. This would include the ability to store instructions and guidelines to help navigate team members through the tasks.

Whilst this addresses the challenges of remote working, we should not discount the additional benefits that would accrue from using such a technology. These include an improvement in consistency and the ability to record time required to complete tasks, an element of performance measurement, thus helping to identify problem areas and bottlenecks.

2. Improving the efficiency and effectiveness of tasks and activites

In our recent survey, 52% of respondents thought that events had increased the priority and importance of their Finance Transformation strategy. As organisations move forward into the recovery phase, we expect to see the start of this with a focus transforming the Finance Team.

As many of us will testify, there are still too many manually-intensive processes being performed within the Finance Team. We have not moved forward quickly enough. As a first step on the Finance Transformation journey, we need to automate these processes and tasks to improve the efficiency of the Finance Team.

In parallel with point 1 above, the focus for transformation often starts at the guidance end. There is potentially good reason for this as it tends to be the area where the most gains can be made and seen by the organisation e.g. budgeting/planning. However, the governance areas can also yield significant improvement, which is often overlooked.

What are these tasks and activities?

We can go back to the same section in point 1 as a good starting point. It has long been the case that reconciliations of various kinds have been performed manually, consuming a large amount of time that could be used more constructively elsewhere. We recently spoke with a trainee accountant whose role included reconciling a fixed asset database with the GL and reconciling accruals/prepayments on a monthly basis. Another example that we are all painfully aware of is the IC agreement process, where organisations spend so much time at the period end agreeing balances and/or transactions. All these tasks consume multiple days every month and yet are capable of being automated.

How do deliver an efficient financial close process?

Robotic Process Automation (RPA) is often associated with grander topics, but this is exactly what will help improve the efficiency of these processes. This is an initiative reliant upon technology, with the experience and knowledge of staff being required at the design stage to define the rules and administer the solution.

Again, there may be additional benefits to automation. There is a potential for reducing the risk error. Also, if tasks are automated, many can be performed daily or regularly throughout the period, thus reducing the activity spike at the period end. This may help shorten the close cycle, reduce stress on the Finance Team and improve wellbeing.

“CFOs were challenged with the transition to going remote in Q1, and certain companies were more prepared than others to execute a virtual close,” said Heffernan. “The Finance Team needs to avoid short-term decisions that limit them going forward. Investing in the right technology with scalability, applicability, global reach, and functional elements will ensure you are prepared for a virtual close to become the norm.”

GenerationCFO advice

We see the current situation as an opportunity for the Finance Team to step up to the plate and grasp the initiative. Finance Transformation has been on the agenda for many organisations for a long time and now is the time to make this a reality. Starting your transformation journey with small definable steps delivering quick wins, as identified above, is a low risk method of delivery and one that we would advocate.

Of course, it is not just as simple as implementing a technology. The People, Process, Technology and Data principles still apply!

Identifying the right technology platform(s) to enable your finance transformation is, of course, critical to success. This is where we can help by providing you with expert, independent advice through our GenCFO Advisory service.

This blog was authored by Mark Cracknell, Head of Research, Generation CFO in discussion with Darren Heffernan, President, Mid-Market at Trintech.

Trintech is a leading global provider of integrated Record to Report software solutions for the office of finance. Their mission is to help you transform your financial process to best in class levels of efficiency and effectiveness.

Learn more here.