iplicit: It’s more important than ever for a finance team to be efficient. Here’s what that means in practice.

A recent webinar for App Advisory Plus – titled Running an Efficient Finance Function for Mid-Market Organisations – explored the issue, with input from iplicit as its App of the Month. 

The webinar heard why it’s more important than ever for finance teams to be as efficient as they can be. It also examined what efficiency looks like and how to go about ensuring you have the technology in place to achieve it. 

The new demands on finance leaders   

Finance leaders are not seeing any let-up in their workloads. Quite the opposite – as Matt Lewns, Partner Manager at iplicit, told the App Advisory Plus webinar. 

“I think it’s fair to say there’s been a bit of a change in what finance leaders and finance functions are being asked to do over the past few years,” he said. 

“The expectation has grown beyond just providing good governance and financial discipline, best practice etc to also being able to provide insights for strategic reports to the boardroom and wider stakeholders.” 

To be successful today, a finance leader needs to possess “a diverse set of skills and serve as strategic adviser to the entire business”, Matt said. 

What’s more, wider issues such as ESG (environmental, social and governance) reporting are likely to be laid at the finance team’s door. 

“It's therefore very important that people in the finance function start to demonstrate the value they can add to the business and identify bottom line growth opportunities,” said Matt.   

Don’t let inefficiency become your downfall  

The App Advisory Plus webinar looked at some specific challenges that are harder to address when finance teams have an efficiency challenge: 

Stress and burnout 

Inefficiency contributes to the stress and burnout that are rife in UK workplaces. The UK Labour Force survey found 914,000 people suffering work-related stress, depression or anxiety in 2021-22, making up 51% of all cases of work-related ill-health. That resulted in 17m working days lost, and a survey found Robert Half found 78% of CFOs expecting stress levels to rise.  

The recruitment challenge 

Good staff are hard to find and also hard to keep – a challenge that becomes worse if your organisation gives its team poor tools and processes. “The way we work has changed forever since Covid,” Matt Lewns said. 

“Many people are re-evaluating the kind of jobs they do and the sort of organisations they want to work for. On top of this, there’s not necessarily been the influx of bright young job hunters there probably was. 

“With such a shortage of talent out there, it doesn’t make sense to bog your team down in repetitive data entry.  

“All of us – not just the younger generation – are used to smooth experiences on smartphones and having data instantly at your fingertips, so that's what we expect in our jobs as well. Job candidates will be expecting the same from the companies they work for. They will expect them to be at the forefront of technology.” 

Security 

Many organisations needed to move rapidly to remote working during the Covid crisis. For those who were using on-premises software, that often involved setting up ways of connecting to their systems through VPNs – an arrangement which tends to be slow, cumbersome and more vulnerable to cyber attacks.  

Moving to true cloud software systems – where, for example, email can be separated from other business operations – has become increasingly important. 

“A secure, web-based system gives you access from anywhere but also gives you rapid access to financial data, with all your disaster recovery and business continuity plans built into the background as part of the service,” said Matt. 

Constant uncertainty 

In an unpredictable world, it’s even more important than ever to have quick access to comprehensive, accurate data for your own organisation. 

“We’re in turbulent times. There’s high inflation and political uncertainty across the globe,” said Matt. 

“It’s more important than ever to have access to your data. You’re going to need it, whether you’re battening down the hatches or whether you’re expanding and launching initiatives. So being able to rely on an efficient, group-wide finance system benefits everyone – not just the finance team.” 

The benefits of an efficient finance function 

It might be hard to define what optimum efficiency would look like in your finance team – though if your system is very inefficient, you almost certainly know about it.  

Matt Lewns highlighted some benefits that better systems should result in an efficient finance function: 

• Routine tasks and month-end postings are automated rather than carried out manually

• People throughout the organisation can serve themselves to access the real- time data they need

• Cash management is optimised, so business decisions can be made quickly on the basis of accurate figures

• Internal controls and processes are smooth – automated and electronic workflows for approving spending are swift and easy, bank feeds are accurate in real time and there are safeguards against fraud  

• There is one version of the truth, with information integrated across all applications from start to finish  

• Month-end close is performed speedily – in contrast to the 72% that take longer than three days, according to iplicit research.

Where do you start looking for efficiency? 

Technology can drastically improve a finance team’s efficiency – but choosing that tech needs to be done in a considered and planned way. 

Will Farnell, co-founder of App Advisory Plus and Farnell Clarke and the host of the webinar, warned against “setting yourself up to fail” by adopting technology without sufficient thought. 

He cited the words of Bill Gates: 

“The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency.”  

Luke Quince, UK Head of Digital Delivery Services for Azets, recommends a thorough review of all financial processes. For his clients, this involves one of his team being on site for one to two days with the finance team. They map out every aspect of core accounting processes. This could include the purchasing process from order to payment, or the ways bank reconciliation and fixed asset management are carried out. 

He advocates regular reviews. “In an internal finance function, you should certainly be looking at it on a regular basis. In an ideal world, we might say six months,” he said. 

You’ll need buy-in from business leaders 

Luke and Matt agreed that finance leaders need support from senior figures in their efforts to improve efficiency. 

“It’s definitely a top-down decision where you need buy-in from the directors or owner of the business to say ‘Look, I need X number of days to review how we work’,” said Luke. 

“And if that’s not an option internally, I would go and talk to your accountants and say, ‘Can you come and do this for us?’” 

Matt added: “Sometimes those board level members of the team don’t appreciate or understand the process that it takes to get to those numbers,” he said. 

“They don’t know if you’re there until 8pm doing something really manual. All they see is the output. If you educate that level of the business about what’s happening and how inefficient it is, I think the buy-in comes a lot quicker. They’re the ones that will then start driving change.” 

Find out more

The App Advisory Plus webinar Running an Efficient Finance Function for Mid-Market Organisations is available to watch on demand. 

And you can read more about efficiency in the finance team in The Superhero FD: How to Save Your Finance Team from the Clutches of Inefficiency, a free guide from iplicit including a guest contribution from FD of the Year Becky Glover.