5 most common challenges of the financial department – How to deal with them?
In our practice, we often see financial department employees confronted by the need for digitalization that creates questions of how it will influence their workload, responsibilities, and business processes. More often they tackle terms like digitalization, automatization, robotization, quickly changing environment, blockchain, new systems and implementation, requirements of new skills, and complete transformation of their work so far. Optimization of financial processes related to the new technologies is essential for every company for it to succeed in the competitive environment in the long term. There are however different stages in which the companies and their financial departments find themselves. This should reflect the offered services reflecting actual stage and at the same time the goals and needs depending on the company. Thanks to our experiences we know that general recommendations do not work, and close communication and collaboration are essential for us to help you define your current stage and future direction for us to support you in the whole process.it is always important to determine ambitious but realistic plans and goals that will move your company to another level. This does not necessarily mean that the next level is full digitalization and transformation of your financial department. Gradual steps can contain changes in technologies, processes, or people (roles, culture, skills). Change is with a grain of salt the only constant in today’s turbulent world. It is completely understandable that for companies’ change is often difficult, unclear, and hard to define, but is an important component of growth that allows the company to take advantage of strategic opportunities. Based on our experience companies tackle problems like:
Optimization and adjustments of Chart of AccountsBig and inflated Chart of Accounts leads to problems with incorrect usage of an account, insignificant balance in accounts, extensive training of the accountants, higher expenses for audit, and incorrect financial statements. Sometimes companies replace reporting strategy with extensive accounting warps, especially small accounting units try to use the accounting warp as their tool for reporting strategy.
What can we do for improvement?Based on our experiences the first step is evaluation of the current accounting wrap, clearing up which accounts are no longer valid, and creating a new structure of your accounts and reporting that reflects that. typical example: we need individual accounts for every supplier only because it’s comfortable and we are used to it? And can we answer the question if it has additional value for us? After that, it is important to again recommend and implement an accounting warp while using transmission bridges/mapping.
Closing process (monthly or yearly financial statements)Do financial statements frighten you? Or can you handle it without issues thanks to run-in processes and reliable systems? Whether it is one or the other, we collected a few proven practical tips for you that could help you handle this disliked job better. Even though every company is set differently and has different internal processes we strongly believe that a small tutorial can be used by companies of all sizes.
What can you do for improvement?We prepared five steps we consider to be key steps and can help make the financial process statement faster. Of course, steps are connected, and it is important to approach the process of adjusting the financial statement process as complex. Even though this we believe that even a partial application of this advice will help you.
- Step 1 – Mapping of processes – Lack of systematic plans and clearly set processes and rules can lead to problems and complications.
- Step 2 – DataStream – Requires data collecting from sales, project management, transportation, and possibly other departments with connections to revenue and costs. Of the business.
- Step 3 – Definition of responsibility – does your company have established who is responsible for a certain process or its part? You probably know who is responsible for your financial statement. However, does this person know in what form and to whom to pass on this information? And is the person taking over a process or it is partially aware of it? If not, this can lead to unnecessary mistakes, delays, and misunderstandings.
- Step 4 – Tangled up accounting warp – Over complicated warp leads to mistakes., There might be accountants that have worked in the same company for decades and who can remember hundreds of different account codes and their variations, but for most workers, this does not apply. That is why it is important to have a clear, understandable, and structured accounting warp.
- Step 5 – In-house accounting – This should provide you with a detailed picture of cost intensity, effectiveness, and possibly the value of the individual business processes and products on a level of cost drives like for example cost centers, commissions, and profitability of the center that t the same time match the basic structure of accounting controlling objects during the planning process.