Understanding and improving workflows isn't only essential for how quickly finance teams work, but it’s also key for moving your entire business forward, because a strong finance team often equates to a resilient business. A well-organised financial workflow can have far-reaching effects on every bit of your company. But what exactly does this look like?
What are financial workflows?
A financial workflow works like a road map, guiding the team through each type of task with clarity and simplicity. The process makes sure each of the tasks are assigned to the right person as per their capabilities. Financial workflows promote effective communication while reducing the room for errors. It also provides finance teams with a centralised and consistent way of working, which boosts confidence.
If all financial data is aggregated into a single source there is less chance of any overlap or missed information when reporting. With greater control over data validation, finance teams can track expenditure and revenue more accurately.
Which processes fall under usual financial workflows?
Here's a list of common areas, processes, or responsibilities that are typically included in a standard financial workflow:
Financial Reporting: Financial reporting is a critical component of the financial workflow. It involves the regular preparation of detailed reports providing an overview of an organisation's financial health. These reports might include balance sheets, income statements, cash flow statements, and shareholder equity reports. By offering insights into revenue, expenses, assets, liabilities, and equity, these reports enable stakeholders to understand the organisation's financial performance and make strategic decisions.
Tax Preparation: Tax preparation involves preparing and filing the organisation's tax returns, ensuring accuracy, and compliance with all relevant tax laws. It also includes planning strategies to minimise tax liabilities where possible.
Financial Forecasting: Forecasting involves using historical data, market trends, and financial analysis to predict the organisation's future revenues and expenses. Accurate financial forecasting can help organisations plan for the future, make informed strategic decisions, and anticipate potential financial challenges.
Investment Management: Investment management involves overseeing the organisation's investments, which could include assets like stocks, bonds, real estate, or other securities. The goal is to manage these assets in a way that aligns with the organisation's financial goals and risk tolerance, potentially generating substantial returns over time.
Common challenges when planning and carrying out a financial workflow
The path of certain financial tasks can sometimes be highly complex. Here are some of the hurdles that might limit your ability to put workflows in place:
Inefficiency and time constraints
Inefficiency is a common problem in financial workflows, both in terms of planning and implementation. Manually driven/paper-based planning can be a waste of time and resources. This inefficiency can create delays, errors, and even financial loss. Automated systems and digital solutions can all increase efficiency with proper planning.
Limited visibility
If you don’t have a clear overall sense of the entire financial workflow, tasks tend to fall through the cracks. Restricted visibility in turn can cause errors, inefficiencies and missed opportunities. For instance, it may be difficult to identify bottlenecks in processes or places where resources are not fully utilised when attempting to achieve optimal performance of the workflow.
Manual tasks
Manual processes leave less time for any in-depth analysis and strategic thinking. Tasks such as invoice matching can be easily automated, and finance teams can focus on other activities around workflow preparation when they do so.
When there is change in business needs or market conditions traditional processes are slow and rigid. A financial management software that comes with automation capabilities reduces repetitive tasks and frees up people to contribute to a company's overall success.
Lack of collaboration
Financial workflows usually involve several stakeholders such as finance staff, department heads and executives. Failure of these individuals to work in harmony can result in miscommunication, delays, and errors. This is particularly true in big organisations where different departments may have varying goals and emphases.
Data security
As data breaches become common, the security of financial data has never been more important. This is especially true when the digital solution itself can be vulnerable to cyberattacks unless properly protected. There must be excellent security protocols in place and everyone on the team needs to understand how important data protection is.
Tips on overcoming common workflow obstacles
Any workflow requires maintenance to get continuous improvement. Here are some tips for navigating the challenges we discussed above:
Audit your existing processes
When you decide you want to improve your financial workflows, first you need to examine the strengths and weaknesses of your existing systems. You can start the process by focusing on areas that can be made more efficient and cost effective, then you can decide which ones you want to tackle first. You’ll want to identify areas that offer the biggest gains for your business first and roll out other improvements later.
Suppose you are a small business owner who personally handles multiple aspects of the business (including finance. You may find your current processes manual and exhausting. You can address this by utilising helpful tools such as expense tracking.
Establish clear roles and responsibilities
Make sure everyone knows what their job and duties are. This isn't just about assigning roles - it is also about making every team member feel like they are in charge of their part of the process
For instance, in a finance team you may have one member who deals with invoicing, then another person for payments, and someone else for performance reporting. Everyone should understand exactly what they have to do, when it needs doing, and how their role links with the responsibilities of others.
Train and develop your team
Another way to improve your workflows is to offer your team the relevant training. If you want them to work in a particular way, you need to tell them how to do it. This way, you always have personnel on hand who possess the knowledge needed to be successful
Set clear deadlines
Establishing mandatory deadlines can do wonders in terms of encouraging employees to play their part in a timely manner. Team members are far more likely to submit expense claims and invoices on time if they understand the bigger picture as well as the consequences of their inaction.
The role of technology in workflow optimisation
The success of workflow management relies heavily upon the optimisation of workflow strategies. If finance workflow processes are not optimised, they have a much lower chance of producing efficient results. By implementing financial workflow automation, you will be able to speed up and improve the quality of critical aspects of your business; like task allocation, moving data, and managing costs.
Ideally, with automation in the finance department, repetitive tasks can be taken care of seamlessly. This allows the team to focus on analysing information rather than just gathering it. Involving technology doesn’t necessarily mean that it is going to replace humans, but it does help to eliminate errors and automate tasks like data entry.
Areas of the financial workflow which can be automated
Areas of the finance function that could incorporate automation include:
Invoicing and accounts payable
Invoice and managing accounts play a big part in achieving financial goals. Managing multiple invoices submitted by different teams can result in errors and duplication. In order to ensure that you execute only approved invoices, finance automation software connects your accounts payable system directly to purchasing or reimbursement operations.
Expense reimbursement
Reimbursement requests can often become backlogged if employees are submitting through multiple channels. Unclear expense policies can cause poor visibility due to unstructured forms or lack of system integration, and delayed reimbursements caused by late or incomplete expense reports.
However, finance automation software can effectively address these issues by offering a clear information repository for common travel costs, a structured workflow for each reimbursement request, automatic notifications for approvers, and a feature that allows employees to track the status of their requests.
Tax compliance
Sophisticated accounting solutions can negate the need for expensive tax experts. They can also help companies to automatically remain compliant with changing regulatory standards.
Reporting
Building financial reports can be a strenuous task. You need to collect and study financial information, then show it in an easy-to-understand way. This job can take a long time and be full of mistakes. Automatic finance reporting tools can collate huge volumes of data in the blink of an eye. They give real-time information about a company's current health.
How Advanced Financials can help with your financial workflow
Most teams that work in finance spend too much time sifting through data and making reports. Technology gives them the power to be more than just number-crunchers.
Automation within financial workflows can provide more visibility, efficiency, and control over the processes that matter. Advanced Financials is a Cloud-based accounting software solution that integrates all elements of the finance function, providing real-time accessibility to a complete dataset.