Five Ways You Can Improve Business Efficiency by Reviewing Your Finance Function
Making a company more efficient should be a goal for every business owner. Business efficiency refers to the fundamental reduction of wasted resources used to produce output, whether the latter be physical products or services. As a result, efficiency determines how effectively a business converts inputs such as capital, labour, and materials into outputs like revenue, goods, and services.
However, while analysing a company's efficiency, it is critical to recognize that there are many variables that contribute to and influence how effectively a business works. In this article, we will discuss the significance of reviewing your company's financial function while attempting to improve overall business efficiency. Continue reading to discover five ways that evaluating your finance and accounting procedures may help you improve overall company efficiency.
1. Audit Existing Finance Processes
If you want to make your company more efficient, you need to look at your current financial and accounting procedures first. In order to assess how money moves through the firm and if current workflows are efficient and support the company's objectives, businesses should conduct an audit or so-called 'review' of the established financial processes.
A firm's ability to define its operations, identify bottlenecks, and make procedures more efficient is critical to its effective growth. Small- to medium-sized businesses and large organisations all benefit from reviewing their current financial processes. With 90% of new businesses failing due to financial and regulatory reasons, having secure financial procedures and systems not only helps operate the business, but also enhances the overall efficiency of the firm.
2. Automate Your Finance Function
Accounting automation seems to be the ultimate solution to many of the inefficiencies that companies face. New finance technologies let companies build automated procedures that can change how a firm conducts business. Still, finance staff spend 50% of their work time processing simple transactions. This simply cannot be the most efficient use of their time.
Automating accounting procedures therefore allows workers to focus on tasks that need their entire attention, such as monitoring missed payments, following up with suppliers, and managing audits. Such high-risk activities should be the focus of financial personnel, ultimately enhancing the overall efficiency and reducing business expenditures.
Furthermore, accounting and finance software not only optimises the usage of time but also reduces reliance on paper documents, in addition to facilitating the production of analytical reports and trends that allow companies to support agile decision making.
More than 79% of company leaders believe that adopting artificial intelligence (AI) in accounting increases productivity while also decreasing errors, streamlining tax preparation, and enhancing cash flow management. Despite the numerous benefits automation provides in terms of quality and efficiency, business owners are still reluctant to implement it, which in turn negatively affects the company’s efficiency.
3. Integrate with the Rest of your Business Operations
Efficiency stems from a smooth integration of systems, workflows, platforms, and different business functions. Yet, many organisations are still split into separate data silos and utilise numerous systems, without thinking about the end-to-end integration and effectiveness as a whole.
Many businesses do, in fact, replace manual processes with software solutions, streamlining at least a portion of their operations. However, in some cases, accounting software is not connected to the rest of the systems used within a company, leading to the disintegration of the various functions and slowed-down, inefficient running of a business.
Business owners who choose to integrate their finance software will benefit from more reliable data sharing across the whole financial cycle, as data is seen, shared, updated, and recorded from all parts of your company quicker and with more accuracy than ever before.
4. Outsource Your Accounting
According to the 2020 Global Outsourcing Survey conducted by Deloitte, 70% of business executives primarily choose outsourcing as a way of optimising business costs. Furthermore, as indicated in the study, contemporary organisations also want service providers that can really change their company. As digital solutions become more common, companies want services that can assist them in enhancing their business processes, flexibility, use of new technologies, and overall speed to market.
Indeed, hiring an outside firm to handle your company's finances may not only improve earnings, but it may also decrease overhead expenses and eliminate the need to recruit, manage, and supervise in-house accounting and finance staff. Therefore, additional costs, such as sick and holiday pay or retirement benefits, are no longer your concern.
Moreover, finance and accounting outsourcing provides flexibility and allows businesses to respond to market needs more effectively. Assume you have a short-term project that will necessitate an increase in staffing. Hiring and recruiting additional workers would be expensive and inefficient.
Therefore, tasking your trusted financial partner to find workers can help you fulfill the short-term demands without any challenges. If you're a company owner, working with a financial partner means you'll have access to a team of specialists who are ready to help when needed, hence no more hours wasted on trying to hire in-house financial personnel.
5. Don’t View Accounting as Just a Means to Comply
Accounting and finance are often seen as a simple matter of complying with financial and tax laws – something that every company must do in order to avoid getting into trouble. The role of finance staff, on the other hand, entails considerably more than just processing transactions, handling payroll, and ensuring that all applicable tax regulations are followed.
The finance department has an impact on almost every aspect of your company. Every business function, including procuring key raw materials, finished goods, and services or optimising budgets in line with strategic objectives, relies on an efficient finance department.
Ideally outsourced financial partners or internal staff should be able to provide data-driven and reliable information that will drive your business to become more efficient, as well as shape strategic initiatives such as selecting the most appropriate expansion strategy that will lead to the highest financial gains.
Taking all these points into consideration, it is undeniable that reassessing your finance function and how well it supports business objectives is a paramount activity that could ultimately lead to increased organisational efficiency through optimised use of the company’s resources.