This article on the 4 things stopping finance teams from becoming strategic was originally published in 2019. All relevant statistics and copy have been updated as of May 2022.
As we begin the steps toward recovery from the pandemic, organizations are embracing digitization to build a more strategic AP function to meet the increased demands. Finance teams want more insight into their spending, executives want more insight into their analytics, and CFOs want their teams to move beyond tactical tasks and become more strategic team players.
Some teams have done great work to position themselves as a strategic department, but the fact remains that many enterprises are still stuck in the tactical realm. These organizations are still doing an important job but they’re missing out on the unrealized potential of making the AP function truly strategic.
This article will explore some of the reasons why finance teams stay stuck in the tactical world and what they can do to transition into more strategic processes.
Manual processes are undoubtedly the number one issue holding finance teams back. For all the talk of digital transformation in finance, many departments still rely heavily on paper, Excel, and outdated legacy technology. Until finance teams free themselves of the busy work of the analog world, they will struggle to shift from a tactical to a genuinely strategic department.
The struggles with manual processes are only intensifying as management requires finance teams to do more with less. It’s no surprise that enterprises have faced significant budget and headcount troubles due to the pandemic. Consumer demand is up, yet a lack of processed invoices has made it difficult for teams to acquire the materials necessary to fulfill these orders. This has placed added stress on supply chains and organizations, as the C-Suite is asking their teams to take on more responsibility. Although recent studies have shown that organizations are open to implementing technology to solve this issue, it’s not happening nearly fast enough.
When companies face pressures and stressors that require them to act quickly, they’re at risk of focusing too heavily on the short-term and miss out on the bigger picture. This poses a threat when implementing technology, as a short-term fix often won’t support your needs as your company scales. Technology is not meant to be implemented as a short-term bandaid; it’s meant to be a long-term investment that adds value beyond just the finance department. If finance teams don’t implement future-proof technology that will grow with their business, they’ll only end up having to undo it later, making them fall even more behind the curve than they are today.
One of the biggest challenges enterprises face is siloed departments. When your teams lack communication and transparency, it clogs processes and creates even bigger problems for your finance teams. When finance doesn’t think holistically about the end-to-end process when adopting new technology, they reinforce the same business silos they want to break down. If finance can’t see what’s happening in other departments—and other departments can’t see what finance is doing—there’s very little chance of coming together to work towards common outcomes.
Here are some best practices to get your finance department on the road towards becoming more strategic.
With the intensified focus on finance in all enterprises and the continued momentum behind FinTech, finance teams have never had a better opportunity to leave the tactical world behind and become more strategic. It’s time to get out there and see what’s possible, and Tradeshift is here to help.