Entrepreneurial technology businesses are now in uncharted territory and experiencing a range of financial, HR and operational challenges as a result of a rapidly changing economic environment. Often, it is only when a crisis occurs that ineffective and inefficient structures in the finance team and the finance function emerge and create issues.
In this blog, we identify the indicators of an inefficient finance function and insights into how to build a best-practice finance function.
If the past few weeks have taught business leaders anything, it is that the current economic climate in the UK has tested the finance team to its absolute limits.
In such a situation, it is useful to consider an analogy of a fast-flowing river. When the supply of water is plentiful, the river flows with relative ease, washing over obstacles easily. Similarly, during economic and business growth periods, a business’ finance team tends to operate and perform with a similar level of apparent ease.
However, since COVID, the invasion of Ukraine, and now escalating interest rates the once fast-flowing river has dramatically receded, boulders and obstacles have risen above the water, and become increasingly treacherous to navigate slowing the progress of the water further.
For stale finance teams, the past couple of years have been challenging and fraught; ineffective and inefficient systems, processes and resources have emerged just like the boulders in our analogy.
When business activity declines, leaders can often identify areas of inefficiencies within a finance function that are holding the business back.
What are the indicators of inefficiencies in the finance function?
- Long reporting cycles for management accounts, budgeting, financial modelling, and cash flow forecasting.
- Insufficient business data and analysis on which to make informed decisions.
- Legacy issues, such as outdated accounting systems, controls, and processes.
- Considerable resistance to change and a staunch reluctance to embrace time-saving innovations, such as SaaS-based applications, time and expenses data capture software, optical character recognition technology, automated workflow and approval platforms and integrated banking systems.
- Minimal staff turnover within the finance team and a narrow focus on outdated systems, leading to stagnation in employees’ professional development.
- Senior finance leaders working on tasks that junior resources can complete more efficiently.
- A lack of staff turnover means that there has been insufficient refreshing of the finance “gene pool” or rebasing of the cost of finance.
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Having the right people is essential
Despite the benefits of a mature finance team, it is essential to invest in the continued professional development of junior talent to ensure that there is an appropriate blend of expertise, innovation and vigour in the department.
Deploying the right people in the right place at the right time is essential to develop the abilities of the accounting and finance team. On the contrary, a stagnant department can often blur the responsibilities of resources in the team.
The current global pandemic has highlighted this issue and brought the importance of having a fit-for-purpose function into sharp focus. And not only fit for purpose but also value for money
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How can accounting service providers like Isosceles help?
The capricious economic climate of late has changed the business landscape beyond recognition, government policy has altered accordingly, and innovations are continuing to disrupt the status quo.
At Isosceles, we review that paradigm and refresh the systems, processes, and people in the finance team to deliver value for money and knowledge of the latest new and novel accounting system innovation. We can step in on an interim or part-time basis and provide a refreshing perspective to facilitate change, so businesses can thrive even at lower levels of activity.
Our finance directors, financial controllers, and wider accounting and finance team understand business drivers and create assessments to introduce new concepts and processes sensitively.
Due to the increasing need to continue recruiting bright talent during this unforeseen period of uncertainty, Isosceles now also has a well-established, virtual graduate recruitment process for finding, training and retaining the best talent.
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