Understanding the true impact of finance functions in a company can help a business move forward, win market share, consolidate in times of stress and shape direction. Putting processes in place to isolate areas of improvement and success strengthens this understanding considerably.
This is where company benchmarking really comes into its own. However, an overarching benchmarking project has shown that although business leaders have said they will do more to reduce spend, resources and time on their finance and accounting, it is not happening. Instead, more time is being directed to processing transactions than forming decisions to improve transactions.
Greater levels of outsourced accounting services
The APQC and IBM Open Standards Benchmarking Collaborative study found that financial directors and managers want to outsource more of their processing. Accompanying research from APQC also showed that staff costs contribute 64% to the finance function whole, making even more of an argument for outsourcing.
The biggest financial outsourcing services are in payroll and tax. In larger firms, 55% of them outsource these two financial big hitters. In smaller enterprises it is 45%, with the complexity in process or transaction likely to be a deciding factor in whether to outsource. If a more qualified skillset is needed, smaller firms are empowered by external expertise.
This trend is set to continue and increase too, with APQC data supporting a growth in tax outsourcing by small businesses to 70% by 2017.
Benchmarking sets outsourcing agenda
Benchmarking has long been seen as the way to analyse a firm’s financial performance, with Deloitte’s Peter Moller saying that the finance expense as a sales percentage is the most commonly understood and applied metric to this end.
However, he also says that employing other devices to transform a company’s financial performance is possible.
Eliminating and simplifying processes is a great start, says Moller, a partner at the firm, and is another area in which accountancy experts can help. From reducing the number of reports sent out incongruously to looking at changing stilted and cumbersome working methodologies, there are often basic steps easily available to be taken.
Some firms are also, Moller continues, a little stuck in the past, with many not managing a query and complaints outlet on social media and still sending paper invoices instead of e-invoicing.
These areas in which cheaper and more effective options are sometime obvious but, with expert help, they are often easier to find and exploit.