According to the O.N.S., less than half of all new businesses survive beyond the five-year mark. Additionally, about one-third of businesses survive ten years or more. One of the most common reasons that these businesses fall through is the failure to create and implement, especially when the company’s growth hits a period of acceleration.
An essential question that every accountant should ask themselves— is the tool your finance team currently uses capable of supporting big influxes of growth? If you’re unsure, it might be time to re-evaluate your financial framework.
Below are three ways financial automation can support your company in times of rapid growth.
Control Areas of Risk
The ability to spot and control potential areas of risk is invaluable to a growing company. In 2017, Gartner reported that the average annual financial cost of poor data quality was $15 million. And unfortunately, spreadsheets, the most common tool used in the office of finance, are hotbeds of risk. 90% of spreadsheets contain errors, and many of the worst financial losses occurring because of simple human mistakes within them.
Inaccurate data not only has the potential to cost your company money, but important decisions are based on the figures that the finance team produces. Fast-growing companies often require the ability to make agile decisions, and any decision based on erroneous data is a huge risk.
Having accurate data is not only crucial for compliance reasons, but the reputation, stability and future of your company depend on it— and spreadsheets just aren’t cutting it. Using financial automation in place of manually processing spreadsheets improves the accuracy of your reporting so that areas of risk decrease significantly, especially when the need to make quick, important decisions arises.
Organise Workflow Processes
As your company grows, your financial process methods must evolve to match. Spreadsheets not only provide optimal conditions for errors to breed but stunt workflow.
First, spreadsheets are locked to only one user at a time. This creates bottlenecks that add more time to processes that take up enough time as is. Moreover, each accountant has their own personal practices that they implement, which when compiled into spreadsheets, creates conflicting results and uneven task distribution across the entire accounting team.
Visibility is also important to an organised workflow. Because spreadsheets can only be used by one user, and there are multiple disparate spreadsheets everywhere, it is virtually impossible to have visibility into the status of the tasks accountants are working on and how long each item is taking. This makes staying focused on multiple tasks difficult for accountants whose managers are always requesting status updates.
Implementing a system of controls through automation improves visibility into financial processes so management can monitor progress and confirm that everything is on track, and all numbers are accurate.
Maximise Employee Value
When growth for your business skyrockets, the need for resources to cover your increasing amount of responsibilities does, too. The average salary for a newly certified, full-time employee is a little less than £40,000, not including recruiting costs and benefits, so accounting teams need to make sure that employees’ talents are maximised for their cost. Part of that means increasing employee retention rates.
The secret to workforce retention may lay in technology now. A Harvard Business Review study in 2018 reported that 51% of respondents said that old technology impacted their ability to retain skilled workers.
According to Pew Research, this might be because Millennials now make up one-third of the employment base, making them the largest generation of the developed world’s workforce. Another survey conducted by Deloitte interviewed over 10,400 Millennials and found that 46% were planning on staying with their present employer for another five years. However, this 46% also stated that their company was preparing their employees for a digital future, in which automation is a significant tool in daily processes. Of Millennials whose companies do not prepare them for digital processes, only 28% of individuals planned on staying with their current company for the next five years.
To modern finance teams, financial automation is not just a viable alternative to spreadsheets, but an expectation.
Laying the Framework for Growth
Unlike spreadsheets, financial automation has the ability to grow with your company by providing a solid framework to base your financials on. Not only does automation accomplish that by reallocating your resources from focusing on error-prone, manual tasks, but by giving finance teams back control in their processes.
This control doesn’t just extend to workflow and risk, but to strategy as well. Shifting attention from manual processes allows an evolving company to set their accountants to work on more value-adding activities so that companies aren’t just keeping pace with the market, but proactively setting their sights on the future.
To learn more about setting the foundation for your financial infrastructure, read our whitepaper on breakthrough simplicity in the financial close process.
Written by: Ashton Mathai