How can businesses improve their financial processes in 2021?
For a business to sustain itself in the current economic landscape, its Finance team must run like a well-oiled engine. This means business owners and leadership teams must ensure that the Finance teams are empowered enough to go about their duties. This makes process improvements vital for a business to run efficiently.
Process improvements can be anything – It can be adopting modern software like an expense management software to automate expense management. It can also be identifying and automating mundane tasks that require more time and effort from your teams. But where do companies start? This blog details everything you need to know.
What are financial process improvements?
The changes made to improve the efficiency of standard routine financial processes is called financial process improvements. Process improvements can take a wide range of paths, from improving accuracy, refining workflows, adopting technology to helping your business take financially backed decisions to achieve its goals.
Why should businesses consider financial process improvements?
For instance, expense management is something that your Finance teams dread. Manual verification, processing, and approvals not only cost them their time but also cost your business money through hidden costs and even expense fraud. Thus, it would benefit businesses to consider automating this process as part of their financial process improvements.
Successful businesses that have identified expense management as a problem area have adopted a expense software to ease their processes. This makes it easy for Finance teams never to miss approval deadlines, overlook critical tasks, and have error rates that are way above the accepted norms. This would also mean your business is saving on hidden costs by streamlining this financial process.
Similarly, business owners and leadership teams must communicate with their finance teams to identify and address such problems. To start with, here are some methods to improve the financial processes in your organization:
1.Audit current financial operations with a process map
This is an essential step that helps Finance teams understand the various strengths and weaknesses of the current financial processes. It also helps identify broken operations that may benefit from process improvements. An easy way of doing this is by developing a Finance Process Map.
A process map is a visual description of the exact sequence of operations that would happen in any particular finance process (budgets approved or travel reimbursements.) This helps map and understand the time taken to complete tasks, potential roadblocks in the process, and more. This also allows businesses to mitigate process-related problems well in advance, enabling smooth functioning.
Benefits of process mapping:
- End-to-end visibility: No more ambiguities around going about financial processes.
- Transparent workflows: Always know who is responsible for delays when the process has stopped at a particular stage.
- Higher productivity: With every detail being over-communicated, there is little room for error/misunderstandings, and activities can now run efficiently.
- Easier risk identification: Having complete details and knowledge of every process right at the start makes identifying and mitigating potential risks easier.
- Acts as a training resource: Knowing every end-to-end process means you have a better way of explaining them to newly onboarded members who’d gain high-level context of the system with little effort.
- It also helps identify processes that repeat periodically and can be automated.
2. Automate all broken, redundant, and error-prone tasks
Business owners and leadership teams have to do their part in enabling and empowering both their Finance teams and other employees. For this, it is crucial for businesses first to understand what hinders their financial and employee productivity.
Whether operational or non-operational, businesses need to take corrective measures to ensure employees have everything they require to attain their business goals. A good start is by identifying and automating tasks that are redundant, error-prone, and inefficient.
Steps to identify and automate financial processes:
- Make a list of business and financial goals for the upcoming year and identify which financial processes play a pivotal role in achieving them. Then, start by automating these processes.
- Research about multiple vendors, the computational power they can offer, along with how far they’d enable you to achieve your goals in the easiest way possible.
- Ensure that employees and Finance teams test-drive software that’s considered a solution through free trials or demos to understand how well they’d be able to adapt to it.
- Calculate the ROI for operational and non-operational scenarios and how long it would take for your organization to implement the software.
- Encourage and provide necessary training to your employees to make the switch seamless for them.
List of financial processes that can benefit from automation:
- Accounts payable and accounts receivable, which would also include processing payments and billing.
- Expense management, employee reimbursements, and cost-allocations.
- Budget and forecasting along with financial planning and analysis.
- Auditing, cash flow management, and policy compliance.
- Payroll processing which includes everything from salaries, benefits, deductions, compensations, raises, and commissions.
3. Leverage the power of automated cloud computing
Gone are the days when Accounting and Finance teams had to spend multiple hours checking and rechecking data for accuracy. What initially took weeks can now be done in minutes with automated cloud computing.
Benefits of businesses adapting to cloud computing:
- Little to no data entry errors or policy violations due to automation-driven processes. This, in turn, leads to reduced expense fraud and increased policy compliance.
- Employees and Finance teams can seamlessly collaborate with access to data from any corner of the world. This is beneficial for both field and remote working employees.
- CCC reconciliations happen instantly wherein bank statements are matched with employee expenses. Finance teams also gain real-time visibility into credit card spends.
- With increased visibility and control in spending, employers can make better decisions about cutting business expenses or knowing when they’re overspending.
- A seamless accounting experience would mean a shorter turnaround time for reimbursements which would result in happier employees.
Develop concrete risk mitigation strategies
Financial risk management shouldn’t be treating like an annual/quarterly event but a continuous activity that accounts for all areas of your business. While budgeting, insurance payments, or audits are usually good times to review risk mitigation measures, it’s essential to repeat this periodically to check other business activities.
This step becomes easier if businesses use automated software to do the heavy lifting for them. Take, for instance, in the expense management ecosystem where out-of-policy expenses and expense fraud are common. If handled manually, Finance teams will have little to no insight or control over business expenses or fraud. But with an expense report software, all of this is automated. In addition, finance teams can simply view their centralized dashboard for updates on expense management throughout the company. This helps them not only identify but also mitigate financial leaks right at the source of expense creation.
In addition, you can also find Free project management software for freelancers on the internet. Here is the list of a few Free project management software for freelancers:
Provide financial management training
Employees in charge of accounts need to be smart enough to adapt to refined financial processes and software. Therefore, businesses can also conduct in-house seminars to enable non-finance employees to understand the financial processes better. This will help in better and quicker adoption of newer technology and improved financial compliance within the organization.
Considering how many businesses have closed since the pandemic, companies need to improve financial processes to stay ahead in the market. So if you are a business owner looking to maximize your employees’ productivity, know that Finance teams and processes will play an increasingly important role in positioning your business to the new normal.
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