Finance Directors and teams can be blamed for delaying payments but recent research suggests otherwise. The research - conducted by Invu of UK finance workers - suggests late payments are often a result of poor purchasing systems and processes, rather than a cash management decision based on visibility and control.
Businesses spending additional time and effort chasing money due to late payments isn't new and our research results show that 8 in 10 UK (83%) finance workers reported they are not always paying their suppliers on time. On top of that, with finance departments making basic errors such as duplicate payments - chaos quickly begins to reign.
In this blog Ian Smith, Finance Director & General Manager, takes a look at issues facing finance managers when it comes to finance processes.
Tackling the finance challenge head-on
According to Invu's research report of UK finance workers, 44% have to delay the production of their monthly management accounts due to slow processing of supplier invoices they had already received.
Unfortunately delaying payments wasn't the only challenge unearthed, with almost half (45%) reporting their accounts payable departments are still working manually – signalling a lack of investment in financial solutions.
In addition, over a third (36%) reported that their Purchase Order Processing is still not easy to use. The trio of challenges highlighted above point towards a lack of timely visibility and control over spending. Given the business risks associated with uncontrolled spend, poor financial visibility as well as fraud and financial error, there is clearly a business problem that needs fixing.
Whether it is a culture of compliancy within finance departments who truly believe they have an efficient solution and process in place, or it is a wider challenge of employee engagement and move towards self-service finance to improve utilisation of financial processing – the time to act is now.
Adopting the self-service approach
Addressing how, when and why employees engage with finance processes is the first step to take. Over half (57%) said they were unhappy with the effectiveness of their purchasing process. Self-service may be a model designed initially for consumers, but it has become increasingly important within a business context. Considering user interaction and behaviour, then building a solution or workflow based on a self-service model to improve user experience and engagement is now becoming common place within the business market. By its very nature, purchase processing doesn't remain within the finance department remit throughout its lifecycle and ensuring a financial process fits with a range of stakeholders' style helps to reduce human errors and admin from the finance department.
Learning from our consumer counterparts and thinking user experience first will help address the challenges of a modern day finance department.