By Anwen Robinson, Managing Director, UNIT4 Business Software
Here we look at some key pointers to help you identify potential inefficiencies in your finance department and provide you with suggestions on how to streamline operations to allow more concentration on core functions:
1. MOUNTAINS OF PAPER:
As we strive towards a paperless environment, finance departments seem to find it particularly difficult to achieve anything close to a paperless office, with many documents still being transferred in old fashioned paper form. Unfortunately, large piles of paper generally indicate an inefficient finance system.
Information can often get ‘lost’ or overlooked in large piles of paper. If key data is not readily available, it makes life very difficult for finance professionals. There are a number of ways of avoiding this however. For example:
•Using a dedicated document management system can significantly reduce the time, costs and mistakes associated with the processing and management of financial documents. Such systems allow you to electronically create, deliver, authorise, store and retrieve business documents (invoices, statements, remittance advices etc.) directly from your finance system. This can, of course, also help reduce the manual data entry of invoice information.
•If the documents are for checking, for example supplier invoices, ‘matching’ software can dramatically improve efficiency. Rather than having to manually match each invoice, an efficient finance system should do this for you - quickly and easily. An established system should cover all aspects of tying up received invoices and credit notes to the relevant goods received notes (GRNs), return documents and purchase orders — obviously increasing efficiency and consistency throughout the process, reducing the reliance on paper, as well as freeing up valuable resource.
•Rather than printing out your sales invoices, putting them in envelopes and posting them to clients, electronic billing can make the process faster and more accurate — letting you focus on collecting the cash.
•If there are documents waiting to be authorised (e.g. purchase orders), automating the requisitioning/authorisation process with procurement software could be the answer. An effective procurement solution should not only reduce paperwork but improve costs by providing fast, controlled, online access to key procurement functions to employees, suppliers and customers.
The completely paperless office may still seem a remote prospect, but with the correct finance system, the paperwork can be reduced, organised, and easy to find and manage.
2. MULTIPLE DATA ENTRIES:
It is an unfortunate fact that manual data entry can lead to mistakes. Re-keying data which exists in one system or electronic format into another system may sound simple, but errors do occur. Plus it is time-consuming and inefficient. Let’s not forget, making a mistake at this stage can have many repercussions at a later date. Every business has its own unique systems, however, it should be relatively straightforward to build an interface between the two systems to extract and reload the data automatically — improving accuracy and saving time and money with every repeated activity.
3. REPETITIVE MANUAL TASKS:
It is common that members of a finance team often find themselves performing the same tasks time after time. Such repetitive tasks are a strain on time and resource and often indicate there is an opportunity to improve efficiency. Bank Reconciliations are a good example of this. This essential but monotonous task can be easily automated using software which matches transactions shown on a bank statement to those shown in the general ledger, highlighting only inconsistencies for the user to check and adjust as necessary. This all but eliminates a low value adding task, along with the associated paperwork, and reduces the ‘strain’ on the finance team.
4. SPREADSHEET REPORTS:
Spreadsheets have their value but heavy use of spreadsheets can be inefficient and inaccuracies can occur. A prime example of this is when reporting. As mentioned previously, if data is manually keyed, mistakes can happen, but it also represents one more process that could be improved through electronic extraction of data.
Even if the extraction is already automated, spreadsheets can still be very inflexible - having to be recreated for each new set of data, presenting only one view or even being immediately out of date. Remember, one mistake in the process can skew many reports!
Specialist reporting/analytics software is vital in this situation. Such software should offer organisations the complete financial transparency needed to monitor and drive performance — through real-time business analytics from across the enterprise — so that you can report on and make business decisions founded on up-to-date, trusted information.
There are also times when simply viewing or outputting data does not shed enough light on the true state of affairs. A successful financial management system with strong reporting and analytics capability can help you move on from knowing what the situation is, to understanding the underlying trends and reasons why.
5. INTER-COMPANY TRANSACTIONS:
If two or more companies within the same group have a large number of transactions between them this can be time consuming to manage and balance. An automated inter-company netting process removes the need for lengthy adjustments and provides an ‘at-a-glance’ inter-company balance.
For example, a suitable finance system should enable multi-company and international organisations to deliver efficient invoice-level reconciliation of inter-company balances, simply and consistently. This means no more lengthy and frustrating balancing acts or multiple contra-invoicing, leaving more time for solid business analysis.
6. MULTIPLE PERSONNEL CHAINS:
All organisations inevitably have dozens of administrative processes which involve contributions from many people around the organisation, forming a chain of events which is often highly manual. Examples might include invoice approval, timesheet submissions, holiday requests and so on. The process may be wholly within your finance department, reach beyond finance, or even involve external people and organisations. Often, too much time is spent trying to manage the process or ‘chain’ and checking that all contributions have been made.
A simple, but often overlooked method of solving this issue would be by installing a workflow system to automate the processes. The system should automatically prompt each person when their ‘task’ needs completing. The system would then notify the next person in the process, and so on.
Failure to complete a section could be set to send a further reminder to those responsible, with a copy going to the organiser. This would be ideal for automating activities with many processes, such as period-end close. Installing such a system would make the process efficient, controlled and less reliant on management involvement, vastly reducing the drain on your finance function.
7. LONGHAND CALCULATIONS:
Even in this day and age, too many finance staff are still using printouts and calculators to derive information or create reports. Using such manual methods can not only lead to errors, but also represents another unnecessary strain on your resources.
Technology has moved on at such a pace that these calculations should now be incorporated into your financial software system. Still simple to use, the finance system eradicates the need for staff and time to be wasted on such tasks.
Join us on