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Finance and accounting is a common sources of frustration for companies. Some of the frustration is caused by real challenges that dont have an easy, quick answer. But more often, a mix of outdated systems and poor resource allocation are to blame. The key to efficiency is identifying the problem and taking steps to resolve it.

What businesses need most from finance operations is for financial transactions to flow through the business seamlessly, and the data to make strategic decisions. Traditionally, this meant the finance team worked behind the scenes, pulling the levers to make things work. But today thats not enough to drive the business forward.

 

 

Productivity vs. Efficiency

Productivity and efficiency are often used interchangeably, but they are very different. Operational efficiency is about doing the same with less, and productivity is doing more with the same.

With operational efficiency, the goal is to find ways to take your resources and improve their performance, which may incur additional costs. In this case, the cost is justified because the output is increased.

With operational efficiency, the goal is more about producing at the same level with fewer resources, for example, this would mean keeping the same number of team members, but have them produce more product.

 

Creating a Baseline of Operations

A baseline of operations within an organization describes the functions in place that makes the organization run. You do this by collaborating with stakeholders within the company and asking and learning how each department works. The goal is to understand the major functions each department performs and how it relates to the operations.

Questions you should ask:

1. What is the purpose of this department in the company?
2. How does this department help the company reach its goals?
3. What are the major responsibilities of this department?
4. What are the steps taken to carry out this departments responsibilities?

 

 

What Prevents Efficient Finance Operations?

If your business has a hard time accumulating and organizing data, this is a sign that two things in your finance operations is wrong. First, youre likely using insufficient or the wrong systems, and you’re lacking efficient workflows. Second, you have the wrong skills on your finance team. Operations efficiency the proper balance of resources. You either have insufficient resources in the finance team, or the wrong types of resources.

There are changes you can make that will almost instantly turn things around.

 

• Do Internal Audits

This should be the first step to take to identify the strengths and weaknesses of your operations and find opportunities to make process improvements in the finance process mapping.

SWOT Analysis: What It Is and How to Use It:

• SWOT (strengths, weaknesses, opportunities, threats) analysis should be performed before you commit to any action, .
• Use the SWOT analysis to discover recommendations and strategies that leverage strengths and opportunities to overcome weaknesses and threats.

Strengths and weaknesses refer to internal factors, which are readily available resources. Opportunity and threat refer to external factors that influence or affect the company.

 

Communicate Expectations

Communicating to the finance operations the business goals and expectations gives the team clarity, ownership, and accountability. For a team to be effective, they need to be on the same page.

For example, communicating that delivering a cohesive customer experience is a top priority, it automatically puts operations, sales, marketing, customer support, and product teams on the same page. When everyone shares a common goal and expectation, it’s a lot easier to achieve them.

Also, be sure to set metrics related to communicated goals and expectations so that you can measure progress.

 

Train and Upskill Your Team

To keep up with procedures and new accounting/finance software the company implements, conducting training to optimize the team’s performance is highly recommended.

A playbook to upskilling your team

• Assess the skills you have
• Assess the skills you will need over the next five years
• Set upskilling goals
• Determine a learning format (in-house or external training)
• Monitor progress
• Match upskilled staff with ne opportunities

 

 

Automate and Collaborate

To improve efficiency, the departments within the company should be using a shared system, allowing operations to retrieve data from each department when needed. Find ways to promote inter-departmental collaboration.

43% of experts say operational silos are a barrier to efficiency and productivity. Collaboration done right is mapped out workflows that require input from multiple teams.

 

 

Create Policies and Procedures

Lack of discipline in the finance department is one of the most considerable money and time wasters for companies. Policies and procedures promote efficiency in operations by ensuring that processes are completed in accordance with the company’s regulations and standards.

Policies and procedures ensure the organization’s processes do not deviate or deteriorate over time or with staff changes. While organizations can operate without written housing policies and procedures, operations tend to be much more efficient and effective with them in place.

• Consistency
• Accountability
• Efficiency
• Clarity

 

 

Look Beyond Transactional Activity

Achieving the next frontier in finance operations efficiency and effectiveness will require a shift in thinking. Research has found a significant lack of efficiency improvements in the strategic areas of finance operations, such as FP&A, internal audit, and risk management.

Research shows 48% of operations departments will need to hire specialists for work that can’t be automated. Companies that develop disruptive ops models are more resilient. There are four vital shifts to this disruptive model:

 

• Change management
• Predictive analysis
• Data storytelling
• Critical thinking

 

 

Conclusion

The future of finance operations is less about cost-cutting and more about the optimal and intelligent allocation of resources.

The future of financial operations is a combination of sustainability and intelligence. Work automation, accountability, well-planned financial strategy, and technology - all play a significant role in fine-tuning your operations. For businesses that want to compete in their market, operations effectiveness and efficiency are not an option but a requirement.

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