Finance teams are frequently overstretched and are expected to handle more with less, even as the operating backdrop grows ever more complex and unpredictable. Those challenges are even more pronounced at fast-growing companies and scale-ups where finance teams often outgrow existing systems as the volume of their work increases exponentially.
Furthermore, finance leaders at those companies are often having to make decisions without access to accurate insights. According to AccountsIQ’s 2024 CFO Mindset report, almost 86% of respondents said decisions about financial strategy are made without sufficient data or insight.
Those respondents are also heavily overworked, with 63% saying they feel overwhelmed multiple times a month about the challenges they face, and 85% saying they would need an additional one or two days to complete their workload every week. Frequently in these circumstances, finance leaders are spending too much time on routine compliance work and not enough time on strategic matters that can better support the wider business as it grows.
The overstretched finance function
Having the right systems and technology in place can help reduce the stress finance leaders face. More than a third of respondents (38%) said they would feel more in control of their organisation’s financial future if they had access to better financial technology and software. Some 34% also said limited technology and software is the biggest threat to their organisation’s financial stability.
“For scaling companies, the biggest issue is putting the foundations in place with systems that get the balance right between being efficient and effective,” says Darren Cran, CEO at AccountsIQ.
The ownership structure of the business is also important. If a business is owned-led, then often that person is plugged in enough to manage with limited information and basic accounting software. But when a company is trying to scale its business model, often there will be investors involved who will expect to see greater investment in technology and systems. This investment can create internal challenges, particularly if finance teams are wedded to current ways of working and are reluctant to embrace new technologies.
“People can sometimes be an obstacle to having an always-on change mentality and culture,” says Cran. “Scaling businesses therefore might need someone to join the finance team who is a bit more strategic, who can reassess processes and identify where to roll out more technology.”
This means evolving beyond basic accounting software because as the business grows, there are many more moving parts to deal with. This requires more complex coding to maintain visibility into what is going on with a company’s finances.
“When you’re booking invoices into your system, there’s a story behind all of those contractual commitments that a business is making, both in its service or product it’s selling. Then there’s the costs that it employs to serve the business and the customers,” Cran says. “To be able to show what the story is behind these transactions requires a database that can take all those different coding points.”
If businesses can’t capture the story of a transaction at the point of first entry on its finance platform, then finance teams will need to manually overlay the story onto what is going on - something that is completely unscalable, Cran adds.
Scaling finance systems for growth
Increased transaction volumes also create additional challenges for overstretched finance teams. To better manage this, finance teams need a system that can automate routine processes and allow them to spend more time engaging with the business and providing insights into what those stories mean.
“Being able to tell stories is a fundamental role of the finance function,” Cran says. “The compliance element is obvious, but the real value add is being the custodian of all the contractual relationships that a business has, and being able to effectively relay and visualise those stories back to the various different stakeholders around the business.”
To do this successfully, finance teams need access to high-quality, structured data that can be dialled up whenever needed. That structure also needs to be scalable so as businesses add revenue streams and cost lines, the underlying data can expand. This ensures growing companies can always get the right data to the right stakeholder, at the right time, Cran says.
Take accounts payable, for example. If finance teams are trying to manage budget spend, but they don’t have the technology in place that can efficiently move data along the approval chain, then approval cycles can break down and budgets overshoot.
“This is a classic example of real time information being spread and shared across a platform, whereby you’re now allowing finance to collaborate with other managers in the business to make sure that you’re controlling costs and allowing people to do what they need to do,” says Cran.
By digitising discrete processes like this across the finance function, fast-growing companies can become more efficient. One area that is ripe for what Cran calls a quick digital win is expenses. Often even in small finance teams there will be one person whose primary role is just managing expenses - an inefficient use of resources.
“Although expenses are a very small item on a P&L (profit and loss statement), it’s a disproportionate amount of manual process that’s going on,” says Cran. “A well-integrated expense solution can save an enormous amount of time. It also means that finance is adding value to employees, because they’re giving them a slick digital platform to collaborate on and therefore there are fewer annoying emails going back and forth.”
Digitising these discrete processes also means companies need a finance platform that allows integration with third-party systems so data can be captured and moved seamlessly. This approach is effectively a sweet spot for fast-growing companies as it gives them flexibility without having to invest in a full-blown enterprise resource planning (ERP) system, which may be too costly and complex for their needs.
Building an agile financial ecosystem
“You have to create an agile ecosystem of technologies that work together easily,” says Cran. “Often when you buy an ERP, usually what happens is you end up only needing 30% of the functionality, but you have to go through the cost, the expense and the time of setting it up. An ERP has a place, but they are really for much larger organisations.”
Most modern cloud-first finance systems like AccountsIQ support API connectivity to enable this integration, as well as integration with file transfers given that companies may have legacy proprietary systems they want to continue using but it doesn’t make sense cost-wise to have programmable integration.
Other processes finance teams should be looking to integrate where there is likely to be significant return on investment are their customer relationship management system, accounts payable and bank reconciliation, giving finance teams more visibility into their cash positions and greater forecasting ability. AccountsIQ’s platform, for example, allows full integration with Salesforce and other applications, as well as electronic banking systems.
Before embarking on this process, however, finance teams really need to understand the exact problems they are trying to solve - both now and in the future.
“Often people can go a little bit off-piste and start looking for things that they don’t necessarily need. Being strategic about what problems you’re trying to solve is really important,” says Cran.
Finance teams also need to carry out sufficient due diligence on any third-party vendors they are considering given the pace of technological change and how rapidly systems can become obsolete.
“You need to get a sense of the company’s willingness to invest in a roadmap and where their technology is going,” says Cran. “This is important because if something stands still, that might be fine for a few years, but things move quickly. So you need to know, for example, what their strategy is to augment AI into a product.”
Understanding potential service levels is also important given that if a business buys a product from a large brand, often the only way of getting that product serviced or implemented is through a reseller. That can mean projects end up being bigger and take longer, Cran adds.
“If it’s possible to have a product that is very fast and easy to get up and running, that allows the wins to come in really quickly and keeps the cost a lot lower,” he says.
Ensuring finance teams have access to more accurate and timely financial insights will also help them better manage the challenges they face at a time of heightened uncertainty and operating complexity.
“It’s all about businesses being able to make themselves more efficient over time and allowing finance professionals to be increasingly data led in their decision-making,” says Cran.
By adopting a flexible cloud-based finance platform, finance teams can combine deeper and more accurate financial insights with the ability to handle growing transaction volumes with ease, ensuring their finance capabilities scale in tandem with the wider business.
To find out more please visit accountsiq.com
