Table of Contents
Key Takeaways
- Finance professionals are facing new and unique challenges.
- Outdated financial processes, inefficiency systems, manual labor, and month-close bottlenecks continue to plague finance departments.
- Leveraging modern technology and processes can help alleviate these stressors.
Would you give up your much-needed vacation time if it meant you never had to deal with expense reports again? According to Beyond the Balance Sheet: The Top Challenges Facing Finance Teams, our latest research conducted by Material, one in three finance professionals say yes.
And as excruciating as expense reports can be—they aren’t the primary challenges finance and accounting professionals are facing. On an industry-level, CPAs must cope with an increasing workload as more professionals retire, with 75% of CPAs reaching retirement age back in 2020.
At the same time, the finance department is more important than ever as companies navigate an uncertain economy. In this article, we’ll cover the main challenges financial management professionals face and what they can do about it.
What is the biggest challenge in finance?
The challenge at the heart of finance is balancing profitability and growth. All additional problems finance professionals seek to solve stem from juggling these two goals. It’s a push and pull—but not impossible.
When it comes to financial management challenges today, we are looking at the tension between legacy processes and tools and modernization.
4 significant finance department challenges and solutions
We have seen substantial change over the last decade, from accounting automation to the evolution of digital payment methods and new fraud risks. These developments resulted in a number of new challenges for finance teams. Here are our top 4:
Challenge #1: Finance processes are stuck in the past
In 2022, approximately half of knowledge workers make business purchases in a given year. We predict that percentage will only go up as businesses realize the impact a distributed approach to spending has on accelerating company growth.
However, many finance teams don’t have the proper infrastructure in place to keep up with the speed that businesses operate at today. In other words, they are relying on the same decades-old processes that weren’t designed for this new way of spending, resulting in more manual work–and more burnout.
The Beyond the Balance Sheet found that 7 in 10 finance professionals believe their tools and platforms aren’t as strong as those of other departments. This lag is especially taxing when it comes to expense report management, which most agree is one of the most frustrating parts of their job. Almost half of expense reports are sent back to employees due to errors; that alone speaks to the need for process improvement in the finance department.
The Solution: Updating infrastructure, such as simplifying and digitizing payment processes, can help finance departments better integrate with the rest of the organization.
Challenge #2: Inefficient finance systems waste precious time
In addition to agreeing that their systems are behind the times, nearly a third of finance professionals go so far as to say that the lack of access to digital tools, infrastructure, and automated solutions is one of the greatest setbacks in their role. Without technology that tracks real-time financial data as it happens, they are forced to hunt down receipts, do best-guess accounting, and have awkward conversations with employees.
The result: finance is spending more time than they’d like on virtually everything they do. In fact, according to the research, finance professionals spend nearly 61 hours each month reconciling spend, record keeping, processing expense reports, and monitoring fraud. That comes out to more than seven full business days each month dedicated to resolving issues caused by inefficient systems and technology—a major increase from the time spent on such tasks last year (around 55 hours each month in 2021).
The Solution: Shifting to modern and automated systems can reduce inefficiencies, improve fraud detection, speed up payments, and overall improve financial processes without adding to the workload.
Challenge #3: Manual processes slow down the whole organization
Similar to the finance team, the majority of employees confess that they’re frustrated with the lack of efficiency in current finance processes at their company. Knowledge workers report spending nearly 28 hours each month working with the finance department to confirm payment status for their vendors, resolve expense report issues, and understand how their spend fits within their budget.
Moreover, these employees claim to spend around 46 hours per month (often over a single week!) on individual responsibilities like organizing receipts, filing expense reports, figuring out corporate card purchases, managing others’ spending, and contacting vendors for missing receipts.
If purchasing, expense, and invoice processes were more efficient, employees would be able to put more energy toward the work they were hired to do. In that time spent on back-office processes, many employees said they would have focused their resources on business development and strategic long-term planning.
The Solution: Automating expense reporting, procurement, and invoicing can improve vendor relationships and significantly reduce time spent on repetitive tasks.
Challenge #4: The month-end close process is more daunting than ever
As a result of these inefficiencies and lack of automation, month-end close remains high on the list of what keeps finance professionals up at night—due not only to the sheer amount of manual work, but also to concerns around the accuracy of that work.
On average, finance teams spend 43.33 hours closing the books each month.
However, even after all that time and effort, over a third claim they aren’t confident that their month-end numbers are 100% accurate. Since surprise or mystery invoices can come in at any moment, finance often spends time tracking down information and documentation to make the numbers add up each month.
The Solution: Using accounting software that offers full transparency and captures payment data reduces the month-close burden and speeds up the process.
Building the finance team of the future
Something nearly all finance professionals have in common is their desire to create more efficiencies in the way they work. Since many finance processes are employee-facing, 9 in 10 finance professionals believe it’s important to give employees the tools to make purchasing decisions as quickly as they need to get their job done.
These common frustrations are why many finance teams are turning to an all-in-one purchasing platform. Through automation, finance can empower employees to buy what they need while maintaining real-time visibility and control over company spend.
Download our full report for more insight on increasing productivity and replacing mundane manual tasks with fulfilling work that contributes to company growth.
