October 1, 2020

3 Keys to Scaling Finance Operations

After months of cutting costs and just aiming to stay above water, businesses are starting to prepare to scale once again. More than 59% of finance professionals surveyed at the Agile Finance Summit said they are "gearing up for growth in the next 6 months.”

But at the same time as finance teams are looking to do more, the data shows that they may also have to do it with less. A Gartner study found that 57% of shared services departments (including finance) have more to do, with less money to do it.

In order to grow your business, you need scalable finance operations in place. So what does it take to accomplish more with the same or fewer resources? According to top CFOs and finance leaders, there are three guiding principles: start with a strong foundation, embrace automation, and empower the rest of the company to make better decisions independently.

1. Start with a strong foundation

Before scaling any process, it’s important to be sure that it’s worth scaling in the first place. Scaling a process that is broken or inefficient will lead to more problems, not fewer. So the first step to scaling finance operations is to take stock of your current department and ask: are we starting from a position strength?

Eileen Treanor, CFO of Inkling, said your foundation of utmost importance. “If you don’t have a good solid foundation in the operations of the finance department or finance teams as you scale,” Treanor says, “it can have long-term consequences.”

What does a solid foundation mean in finance? It means lines of communication between finance and other departments are open. It means outdated processes like physical credit cards are a thing of the past. It means the finance team is thinking proactively, rather than solving problems reactively. And it means the finance team has access to the data they need to complete key financial functions like forecasting in real time.

As Teampay VP of Finance Peter Nesbitt emphasized at the Agile Finance Summit, this last one is where too many teams today fall short: “There’s so much uncertainty around decision making at many companies,” said Peter Nesbitt, VP of Finance at Teampay. “Decisions get made in a vacuum without all the information, because a piece of data was stuck on someone’s computer somewhere.”

Before you scale your finance operations, make sure you’re scaling the right way. Run an audit of your expenses and eliminate any zombie subscriptions and other unnecessary expenditures. Make sure you’re reconciling your books against real data, and not your finance team’s best guess.

Scaling operations is all about small decisions that result in big impacts. Putting the practices in place now that you want to scale later is the first way to do that.

2. Embrace automation to unlock operational efficiencies

Scalability doesn’t mean adding people or departments when more work needs to be done. In fact, just the opposite: scalability means empowering the team you have to do more.

Alec Whiting, PwC Director, notes that scaling finance to tackle more strategic problems will require removing the more routine finance tasks from the team’s list of responsibilities: “In the past, the role of finance has been predominantly seen as a back-office function that should be delivered at the lowest cost possible,” he notes. “But there’s more to finance. Companies that embrace a more value-oriented perspective can do financially better.”

One of the most powerful allies in enabling the finance team to take on this value-oriented role is automation. Take Microsoft, for example. Their finance group reduced time spent validating and compiling data by 20% by consolidating financial operations, credit and collections, management reporting and tax into a single automated portal. These strategic automation have resulted in 150,000 hours saved every quarter and a 30% reduction in cost.

“The fundamental point is to simplify work, to eliminate work,” notes Safilo Group CFO Gerd Graehsler of the time-saving benefits of automation. “[That] has a lot to do with creating the most effective and efficient organizational design.” And with the right systems, finance teams can make that switch and start seeing results in a matter of days.

Existing technologies can completely automate 42% of finance activities and mostly automate a further 19%, which translates into hours of time back for your finance team to redirect toward higher-impact tasks. By enabling proactive controls and real-time spend visibility - and unifying the disparate steps into a single, automated workflow - finance teams can ensure compliance and efficiency as you scale.

3. Empower the rest of the company to operate independently

In order for the finance department to scale their effectiveness, they need to scale the rest of the company’s ability to make financial decisions quickly — and independently. Finance can’t be the bottleneck to purchasing for the entire company, or they will end up sacrificing speed and scale in the name of control. The same goes for pulling spend data. When employees can easily see how they’re tracking, they can make more informed spending decisions.

On the flip side, when employees move too quickly and make purchases without securing the appropriate approvals, spending can get out of hand. Finance is left to reimburse expenses they didn’t even know had taken place, or have awkward conversations with employees if a reimbursement request is denied.

Teampay CEO Andrew Hoag has experienced firsthand how the demands of the rest of the organization can add friction to finance operations: “I was in the early stages of starting a new project, trying to focus on my business strategy, and I was constantly being bombarded by employees’ and contractors’ requests to use my card for services, purchase items on their behalf, or reimburse them for things I was seeing for the first time.”

With a distributed spend management system in place, employees across departments can obtain pre-approvals at the click of a button, so they can make purchases as needed. Employees are guided through the process via a conversational chatbot, which ensures compliance with policy - without requiring employees to remember it. They can see how their purchase tracks against the budget, enabling better independent decision making.

Unleash impact at scale

Scaling finance operations is about much more than adding to the headcount or increasing spend. It’s about finding systems that empower your finance team to be more strategic with fewer additional resources.

With planning, direction, and thoughtfully implemented automation, finance teams can scale operations in a way that has a lasting positive benefit for their department and the company as a whole.

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