Finance and accounting professionals play a vital role in driving business growth and strategy, but most businesses underutilize this important resource because their finance teams are bogged down in inefficient finance processes.
With all the technology solutions available today, core tasks including invoicing and expense management can be automated with relative ease, not only reducing inaccuracies and delays but freeing up your finance team to perform more useful – and interesting – work.
In order to thrive in today’s competitive business environment, businesses need to make concerted efforts to use their resources as efficiently as possible. Streamlining and optimizing finance processes is one of the most important investments a business can make to help ensure long-term sustainability.
In this article, we’ll discuss some of the ways you can make your financial processes smarter. We’ll explore:
- Common accounting and finance process challenges,
- Finance process improvement tips,
- Key finance processes that can benefit from automation, and
- How frevvo’s financial workflow software tool can help you to improve your finance processes.
Let’s dive in.
Common Accounting and Finance Process Challenges
Let’s look at some of the common challenges businesses experience with regards to accounting and financial processes.
Outdated systems result in information silos that make finance processes more complex than they need to be. Inefficient reporting processes take a toll on productivity and cause members of the finance team undue stress. Moreover, subjecting intelligent and highly qualified finance professionals to tedious, repetitive manual work (e.g. data entry) not only encourages burnout but prevents them from applying their talents in more productive, strategic ways that could help grow your business.
Unclear Role Division
When the division of roles and responsibilities is not clear enough, employees do not know who is responsible for which tasks or who is responsible for which approval. This lack of clear ownership can result in redundancy or tasks going undone, which in turn leads to credibility and trust issues.
Fraud is an ever-present threat that requires constant vigilance to prevent. In 2018, fraud resulted in $7 billion in corporate losses, according to the Association of Certified Fraud Examiners. Fraudulent billing information and murky manual accounts payable systems are the primary causes of fraud, with instances ranging from invoices that don’t match expenses to check tampering. Implementing a solid approval process that prevents individuals from signing off on particular invoices in isolation can foster the necessary visibility and oversight to prevent fraud.
Inability to Manage Information
Accounting involves mountains of information and documents, which can be overwhelming for many finance teams. Properly managing, storing, organizing and tracking all these documents can be challenging, particularly for businesses that use manual systems. Given that all these documents need to be easy to find again later to double-check the information and for audits – only adds to the challenge. In a recent Levvel Research survey, accounts payable staff reported “receiving invoices in paper format” and “misplacing invoices” as two of the biggest challenges they face.
Manual Data Entry Mistakes
Manual data entry is a highly inefficient process that not only takes a lot of time and resources but also results in errors, making the business vulnerable to serious financial repercussions. Simple mistakes can result in underpaid or overpaid invoices and a number of other errors that can cause trouble further down the road.
Slow Approval Processing
Manual approval processes can result in a slow, complicated payment processing system, which can lead to late payments and purchase order delays.
Slow payments can result in dissatisfied suppliers, which can lead to additional charges or even suspended accounts and even impact other vendors’ willingness to work with your company.
Purchase order delays may result in projects running behind schedule and can even lead to delayed product rollouts, which can have far-reaching detrimental effects on a company’s reputation and even impact its stock price.
Lack of Visibility
There’s an inevitable lack of visibility and oversight that comes with relying on paper invoices and other documents. It’s almost impossible for your accountant to know off the top of their head precisely when each invoice was issued, when/whether the payment was made, or whether the payment has cleared – particularly in larger organizations. Manually tracking and logging each stage of each account and communicating the status of the transaction to suppliers and other stakeholders requires a lot of admin, most of which could be automated.
Another drawback of a manual system is that the lack of oversight leads to lack of insight into trends in the business’s financial operations, such as data showing spend patterns, productivity levels and overall operational efficiency. However, with automated finance processes, it’s easy to analyze this data and generate reports which can help to set the course for the business going forward.
When there’s a backlog of documents waiting to be processed manually, it’s not uncommon for emails or paper documents to be temporarily misplaced or completely lost. For example, in businesses that lack efficient accounting workflows, lost invoices may result in the accounts payable department having to waste time contacting suppliers to request replacement invoices – and that’s only if they notice that the invoices are missing. If they don’t, you’ll be in the embarrassing situation of having to explain to your suppliers why you haven’t paid them. Moreover, missing invoices can result in an inconsistent paper trail at audit time.
The graph below by Levvel Research demonstrates how much time accounts payable staff are spending on average each week resolving accounts payable process issues.
What is Finance Process Improvement?
Finance process improvement involves making changes to your finance workflows to increase efficiency. Process improvements can be as simple as creating more formalized guidelines for employees to follow when completing tasks such as submitting expense claims. On the other hand, using technology to automate your finance processes can have a significant impact on consistency, speed and accuracy, making it easier to meet your business goals.
Now, let’s look at some tips to help you improve your finance processes.
Finance Process Improvement Tips
Audit Your Existing Processes
In order to improve your finance processes, you first need to examine the strengths and weaknesses of the system(s) you currently have in place. Focus on identifying areas that can be made more efficient and cost-effective, and decide which issues you will tackle first. You’ll want to prioritize the areas that will deliver the most significant gains for your business first and roll out additional improvements over time.
Get Your Team Involved
It’s vital to get your team’s buy-in before making any major changes to your finance processes. Build support for the changes you wish to implement across your business, showing senior management and finance staff alike how the improvements will benefit them and make their jobs easier.
Train and Develop Your Team
One way to improve your finance processes is to offer your team members some cross-functional training. This way, you can always have personnel on hand who are knowledgeable in at least the basic workings of your accounting software and finance workflows. Perhaps more importantly, teaching staff the correct processes and how they will benefit and free up time will make them more likely to comply.
Set Clear Deadlines
Establishing mandatory deadlines can do wonders in terms of encouraging employees to turn financial documentation over in a timely manner. Team members are far more likely to submit expense claims and invoices on time if they know that payments will be delayed if they don’t submit them by the cutoff date. Setting up automated messaging reminding individuals to submit their documents can help enforce this, and dynamic forms with rules can help to ensure that they complete all the fields and submit all the supporting documentation required.
Finance teams don’t work in isolation; they’re often dependent on other divisions for data. Find ways to promote inter-departmental collaboration to ensure that information is submitted timeously. Breaking down silos between various parts of the organization can have a pronounced impact on efficiency.
Automate Key Finance Processes
By automating aspects of your finance processes, you can significantly improve efficiency and reduce busywork. The easiest processes to improve tend to be the ones that are most labor-intensive to perform manually, which also tend to be the ones with the highest risk of error. Obviously, you also want to focus on processes that are actually performed fairly often so you maximize time savings. These often include routine tasks such as purchase orders, invoice approval, travel reimbursement, and other activities that people spend time on every single day..
Try to automate as many of these everyday tasks as possible, and be sure to customize the automation settings to ensure that the specific rules and controls for each individual process are followed.
As you break your core processes down into their smallest components, you’ll find that additional opportunities for automation present themselves.
Automate, Then Integrate
While automating various tasks that make up your finance processes is a great start, it’s important to make sure that the various parts of your system are communicating with each other and sharing information. For instance, if you’ve automated your accounts receivable process, make sure that the tool you used to do so is capable of interfacing with your other tools, such as your inventory management software.
Most leading accounting and workflow automation software allows for easy integration with other business tools. For instance, frevvo’s APIs and connectors makes it easy to integrate web forms with SQL databases, document management systems and financial tools and applications.
Key Finance Processes That Can Benefit From Automation
Purchase requisitions and purchase orders (POs) play a key role in promoting efficient and transparent procurement processes. However, they can be difficult to coordinate manually, particularly if workflows aren’t clearly defined. Automating your procurement process simplifies the process considerably by allowing any authorized employee to complete a requisition form and route it to the procurement department for approval – or to a senior manager if the total cost exceeds a predetermined amount. Once approved, it’s easy to generate a PO and send it to the vendor.
Invoicing and Accounts Receivable
Generating invoices and managing accounts receivable are vital to ensuring that revenue doesn’t dry up. However, these tasks can be terribly time-consuming and prone to errors when performed manually – even more so when various different teams are involved. Automating the issuing, tracking, and reconciling of invoices – as well as automated reminder notifications – can make the process much simpler and help ensure that you get paid on time.
Ensuring that your business is up to date on paying its invoices is another key task that’s ripe for automation. Confirming that an invoice is correct, sending it to the correct person for approval, processing the payment and recording the transaction can involve numerous steps and potential bottlenecks.
This process can be streamlined and standardized significantly by automating tasks such as information capturing and approval routing, as well as sending timely reminders to the responsible parties. Following best practices for accounts payable automation makes accounts payable more transparent, which in turn reduces the likelihood of fraud. Moreover, your business may be able to save money by taking advantage of early payment discounts offered by many vendors by processing invoices as soon as they come in.
Previously, most businesses needed the assistance of expensive tax specialists to determine their tax obligations. Now, with the help of accounting software, businesses can easily calculate how much tax they need to pay on each transaction.
Travel requests are another finance process that many organizations would benefit from automating. Using dynamic forms that pre-fill fields with known information, validate information such as dates and and enforce certain conditions such as maximum amounts, can save businesses a lot of time. Automation also makes it easy to route travel requests to the relevant manager, finance department and travel desk for approval and keep everyone updated about the status of the request.
Reconciling company expenditure is traditionally one of the more difficult and frustrating tasks for finance teams. Employees collecting receipts and completing expense reports that need to be reviewed and approved, reimbursements that need to be processed, and finance teams needing to chase down employees to ensure they submit their expense claims on time – it’s a nightmare for everyone involved.
Implementing smart expense tracking tools that digitize the process and enabling workflow automation can make this process much less painful. Using a Google Maps API, frevvo’s automated expense approval software can even automatically calculate mileage reimbursements.
Use frevvo to Improve Your Finance Processes
While automation sounds great, you might think that it will be difficult and expensive to implement. Think again.
With frevvo’s easy-to-use financial and accounting automation software, you can upgrade your accounting processes and ditch all the Excel sheets. frevvo’s 100% visual workflow builder will make designing forms, configuring approval routing, and setting up rules a breeze – with zero coding and no reason to ask IT for help.
frevvo allows you to:
- Customize processes to fit your specific needs
- Design your exact forms with ease
- Configure process routing visually
- Integrate with accounting systems
- Enable mobile apps
- Set up dynamic behavior without coding
- Track, analyze, and improve finance processes, and more.
Simply sign up for a free 30-day trial and start by installing a pre-built accounting workflow template. Modify the template to meet your business’s unique needs and don’t hesitate to ask for help if you need it!