Benchmarking the Accounting & Finance Function: 2014 by FERF in collaboration with Robert Half reveals some interesting results on the inner working of the finance function among nearly 1,600 financial executives representing companies across the United States and Canada.
Burning the candle at both ends
Accounting and finance managers in the United States work an average of 46 – 47 hours per week, while non-management clocked in around 40 – 42 hours.
This suggests that management invests almost 20% more time at work.
Temporary staffing is down but not extinct
Interim staff provide staffing flexibility for the business when there is an increased workload or project needs. Based on the survey responses, an average of 5-8% of finance and accounting staff members were temporary. This is likely due to the fact that over half of the respondents said they still reconcile accounts manually – placing a significant strain on the staff and resources. The percentage of temporary, contract or project professionals was highest at smaller companies. 11% of U.S. executives said their employees’ hours do not change when workloads are high because their firm brings in temporary employees during those periods.
The ability to conduct a fast and clean period end close is vital, as it allows the finance department to use resources for other high-value activities, such as analytics. Payroll was the single most commonly outsourced function among all the respondents, followed by tax. This suggests that finance departments made an effort to reallocate resources toward activities that deliver higher value to the organization and away from manual and time consuming tasks.
Companies of all sizes indicated they were seeking benefits from shared service centers. Consolidating functions into a single center that serves multiple business units often leads to greater efficiencies and centralization, promoting process improvements and enhancing services and capabilities. Shared service centers help simplify the acquisitions process by streamlining the organization and eliminating redundancies. Those surveyed reported varying degrees of success with outsourcing as a whole.
Growing complexity in general ledger accounts
A growing number of general ledger accounts can be indicative of increasing complexity in how businesses need to record and report. More than a third of the respondents said they had over 500 general ledger accounts, and nearly 10% said they had more than 3,000. In Canada, 4% had over 10,000! The larger the revenue of the business, the more complex the chart of accounts.
In order to ensure the accounts are accurate, reconciliations need to be done regularly – both in response to SOX compliance and as a requirement for quarterly or annual SEC reporting. Reconciliation accounting is under-appreciated, yet critical to control and assure financial integrity. Weakness and inefficiency in the reconciliation process can lead to mistakes on the balance sheet and a lack of precision in the financial close.
Efficient, accurate, and timely financial close (inclusive of the account reconciliation process), is essential for the business performance assessment. Automation of the reconciliation process is vital to sustaining “balance sheet integrity.” Among survey respondents, 15 – 20 percent said they reconcile anywhere from 500 to more than 10,000 accounts at least quarterly. This high volume of labor intensive manual reconciliations decreased slightly from 2013 to 2014, but continues to detract from finance teams’ ability to engage in higher value work and analysis.
A faster close
According to several respondents, automating the close process is essential to promoting operational efficiency. Companies that can achieve a quick, smooth close may have a competitive advantage because the accounting and finance department can deploy resources toward analyzing the numbers thoroughly, in order to help the business make better tactical and strategic decisions.
Excel remains the budgeting and planning tool of choice, among all but the largest companies surveyed.
As a result, extra time is often devoted to validating financial information due to the widespread use of tools like Excel spreadsheets in the reporting process.
Transitioning to the cloud
Among the respondents, Over 90% of the companies with $100m or more in revenue use ERP, but at the highest level no more than 11% use SaaS, primarily in the segments that have less than $100M in revenue. Oracle/PeopleSoft and SAP dominated as the ERPs of choice, with a surprising number of businesses (22%) having over $5B in turnover, using ‘other’ ERP systems.
Cloud-based solutions are one option for accounting and finance departments, but those surveyed continue to be cautious about adopting them. Even the respondents whose companies transitioned to cloud-based services expressed reservations about whether the solutions were robust and secure.
Consider Lean Data Management
If your business is running SAP and still working with Excel spreadsheets extensively, the good news is that your business can improve efficiency and effectiveness in the finance operations back office by using a template based approach to data gathering, reviewing, validation and posting to SAP.
Foundation can be applied to not only the high volume transaction processing tasks like journal postings, but also lower velocity and more complex finance master records activities that are critical to proper accounting, reconciliation and reporting.
Winshuttle customers have implemented Foundation to enhance processes like Customer and Vendor account maintenance, as well as General Ledger, Cost Center and Profit Center management, and control and management of internal orders.
Winshuttle achieves this with a low to no coding approach to transaction automation for single and mass record actions.
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