Well-oiled financial processes are the crux of any business. Unfortunately, with the onset of remote work, traditional financial processes seem to have taken a massive hit. This makes it difficult for Finance teams to work as they did in the office.
Most businesses are now switching to cloud technology like payroll processing and expense management software to automate financial processes in an attempt to upgrade. The following article covers all that businesses can do to refine their financial processes for 2022.
What are financial process improvements, and why do they matter?
As the name suggests, financial process improvements are those changes made to existing financial workflows to bolster financial process efficiency. These changes can be both quantitative and qualitative.
Common financial process improvements businesses focus on:
- Automating error-prone and time-consuming processes
- Having a firm grip over employee business expenses
- Leveraging data to make the right business decisions
- Ensuring all statements and records stay up-to-date
- Defining clear business plan, goals, and deliverables
Moving remote changed everything for everyone. But, unfortunately, it has also shown traditional processes no longer seem to cut. These manual processes disrupt not only productivity but also morale.
Why should businesses improve their financial processes?
Let’s look at this with an example of manual expense management. It goes without saying nobody likes manual expense reporting. However, while employees run helter-skelter for expense report submissions, Finance teams have it harder.
They have to process, verify, and approve reports manually, all within a set deadline for reimbursements. This takes away critical working hours from Finance teams and opens up new avenues for financial leaks with manual errors and expense fraud.
There are two ways to approach this problem.
- Further, tire and exhaust your Finance teams by putting the burden of the process on them.
- Use an expense software to automate expense management and drive process improvements.
An expense software, in this case, can be considered a process improvement as it automates all redundant tasks. It also adds a layer of accuracy and efficiency that empowers Finance teams to look beyond minor back and forths and verifications of expense reports.
Similarly, let’s take a look at some of the other financial process improvements that can benefit your business:
1. Develop a process map to audit current financial processes
The first step in reforming your financial processes would be to understand the underlying strengths and weaknesses of the existing processes. An added advantage here is that you can also identify broken processes that could benefit from improvements. The easiest way of doing this is by developing a Finance Process Map.
A Finance process map is a visual representation of operations in the same sequence as they’d happen in the organization (anything from budget approvals to mileage reimbursements.) By mapping all intermediate steps in standard processes, businesses can understand the time taken to complete tasks and the potential roadblocks that deter faster and efficient closing of functions. This is a good opening for businesses to start the conversation around process improvements.
2. Leverage cloud technology to automate broken and error-prone processes
Once business leaders know what challenges hinder the Finance team’s productivity, they can find new ways to achieve maximum impact while performing critical financial operations. Automation is one such step.
While most folks may believe technology is out there to get them, the actual story is something else. Automation-driven technology is made keeping the end user in mind. It is made to aid Finance teams, not replace them.
List of financial processes that usually benefit from automation:
- Accounts Payable and Receivable – billing and payment processing
- Expense management – reimbursements and card reconciliations
- Budgeting and financial planning – data analysis and interpretation
- Cash flow management – clean and audit-ready finances, always
3. Leverage data analytics to make better business decisions
With traditional in-person processes, Finance teams hardly get all the data and reports from employees across departments on time. Even if they do, they spend their saved time going back and forth with employees to clarify submitted reports. This barely leaves them any time to take a step back and analyze data for meaningful insights. This results in bad business decisions that can cost your company.
If businesses were to automate processes, they would also get the benefit of real-time data analysis. This will empower Finance teams with data and actionable insights with no extra effort or time spent.
Additionally, high visibility and control into spending give Finance teams enough ammo to make better data-driven business decisions on curbing employee overspending on business and operational costs.
4. Develop financial risk mitigation methods
Remember not to treat financial risk management as an annual or quarterly event but rather something that happens continuously at set intervals. For example, budget or forecasting, auditing, or insurance payments are great times to review risk mitigation measures. A bonus is that it also allows you to check on other business activities quickly.
Financial risk mitigation becomes easier if automation does the heavy lifting for your Finance teams. A classic example would be expense fraud which has shown a 57% increase from Q3 2020, costing companies almost 5% of their revenue annually.
With manual processes, Finance teams would have no insight into the company expenses. This would make preventing fraud an arduous task that falls entirely on their shoulders. But with the use of an expense report software, all the burden is automated, and Finance teams can ensure policy compliance at the click of a button. Additionally, this plugs financial leaks that may have been invisible previously.
Given the pandemic, companies would need to improve their financial processes if they’re looking to stay afloat at the given rate at which businesses are closing down.
If you as a business owner who wants to maximize the productivity of your employees, keep in mind that your Finance processes are going to play a pivotal role in helping make that change. Thus, it’s in your best intentions to give them what they need to get the job done.