Finance operations: How to create efficient & impactful processes

Patrick Whatman

Published on April 2, 2024

Finance and accounting processes are common sources of frustration for companies. Founders and CEOs need data, other teams need rules and structure, and finance teams never have enough time for all of this.

Some of this comes from true conundra - challenges that have no easy answer. But more often, a mix of outdated legacy systems and poor resource allocation are to blame. All that’s required is to identify the true problems and take simple steps to overcome them.

In this interview with RORA Director Sam Wilkinson, we explore what companies need most from their finance teams, and how smart business operations make teams more effective.

Read how Sam’s team interacts with new client companies to diagnose their finance pains and put more efficient systems in place.

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The traditional approach to accounting & finance

What businesses need most from accountants - or even their whole finance team - is the data and information to be able to make strategic decisions. And on top of that, also the ability for financial transactions to be able to flow through the business seamlessly.

That means, from a customer making a payment, through to paying a supplier or contractor, all of that should work with as little friction as possible.

Traditionally, this has meant that the less you hear from accounting and finance, the better. You just want your bookkeepers to be processing transactions. They’re behind the scenes, pulling the levers that make things work. And if you don't hear from them, then everything is going smoothly.

Part of this is still true: accountants are responsible for making sure that data flows seamlessly through, and that the data itself is complete, accurate, and high quality.

That’s still the bedrock of really good financial reports and business processes, and the health of the company is dependent on these.

But that’s really not enough any longer. Our goal for RORA clients is to make finance a function that drives the business forward. That involves providing insight, information, and metrics on the health of the business - to show how it's working.

What is finance operations?

Today, we see hybrid finance players making more impact than strictly accounting or FP&A roles. “FinOps” professionals can do some of the accounting, yes, but they have a much wider scope. Instead of thinking purely about balance sheets and cash flow statements, they implement processes and systems that keep the whole company financially healthy.

This is possible in part thanks to technology. In many businesses, the amount of hands-on accounting intervention required is actually very small. 10 years ago, you needed someone sat at their desk processing payments and updating the general ledger.

Today we can automate much of that. If the data flows are set up correctly, then there should be only minimal manual intervention needed. On a monthly basis, you might have accountants posting accruals and deferrals. But the vast majority of things should be, if not fully automated, and then mostly automated. And data will be available in real time.

What prevents efficient finance processes?

If you're running a business and you’re slow to get data flowing through the business, I'd say two things are probably wrong. First, you're likely using the wrong systems. You’re lacking the technology and the workflows you need to be efficient these days. Spreadsheets will only take you so far.

Second, you may have the wrong sorts of skills in your finance function. And it nearly always boils down to those two things. We often see businesses that have built up organically over time, historic systems get used, and ways of working persevere, even if they're not the most efficient ways of working. You really need to take a look at the systems you're using and say, “are these fit for purpose?” “Are they actually holding us back?”

Having “the wrong people” sounds a bit harsh on its face, but it’s always a balance of resources. You can either have insufficient resources in the finance team, or the wrong types of resources.

Smaller companies might have a CFO maybe a couple of days a month. They’re trying to not only do the strategic financial work - say, fundraising and forecasting - but they also need to get down in the weeds and do the bookkeeping at the same time.

Other companies might have a bookkeeper trying to do a forecast, and you just have a skills gap there. It’s incredibly common to see a disconnect between the people hired and skills required.

This doesn’t mean that you need a full-time finance operations manager right away. Outsourced services are a brilliant resource, and you may find most of the skills you need elsewhere in the business. But you must have someone spend the time to design and optimize your processes end to end. And ideally, that’s a finance manager with real ops experience.

Eventually, you’ll grow to a point where an operations team pays for itself. These are hopefully business partners who can build financial systems that will also connect with sales, marketing, HR, and the rest of the organisation.

How to make finance operations and accounting more efficient

If you can feel that inefficiency, you feel that things aren't working as well as they could be, you first need to diagnose where your problems are. The first thing we do with a new client is talk to all the stakeholders and get right into the financial processes they currently have in place. We need to get under the skin of the business, to really understand how it works and where the inefficiencies are.

Look for the points that are taking 80-90% of the time, and then focus on fixing those. And so For instance, we often find that making payments is actually a real headache for some of our clients.

Once you've identified the things that are eating up a huge amount of the finance team's time, then you look for the solutions that you can put in place. Is there another system you can bring in?

And you also need to look at the downstream effects of any changes you make. Are you using a legacy system that, if you upgraded, would eliminate that pain point? Or would you actually need to hire someone else just to manage the new system?

There's no one size fits all. Every business is different and every business is doing something different. So it’s about identifying these issues. And then there'll be some combination of getting the right people or the right tools - the right financial systems - to fix the problem.

Integrated finance tools

One good way of checking whether the systems you're using are helping rather than hindering is to look at whether they integrate with each other. Does information flow through them in an automated way, or does it require a manual download and then some kind of lengthy manipulation of the data to then upload it into a different system?

We have so many good integrations today, and for the most part we shouldn’t need to rely on manual data manipulation. And if you’re doing a lot of that, processes take a long time.

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Can’t we just outsource our finance challenges?

Plenty of businesses still outsource huge parts of their finance function - especially accounting. And in many cases, this is totally fine. Whether you should for your business depends on the role that finance plays for you.

Business owners should always think hardest about the parts of the business that are core to what they’re doing. Ideally, you double down on those and essentially outsourcing everything else. For some, this might include finance.

But I would always suggest that fully outsourcing a finance function is not the right way to go, because it's so fundamental to any business. Finance should be driving growth. It should be the engine in the center of the business driving everything forward.

At RORA, we actually build in-house finance teams in startups and fast-growing scale-ups. That way, business owners get the best of both worlds. They get a mixed skillset team of people who have expertise in FinOps. But they get that within their team, rather than it being outsourced.

In the end, I just feel that saying “oh well, let’s just outsource that problem and it will go away” is too risky. Finance is too fundamental to your company.

Rethink financial operations & reap the rewards

If there’s one key lesson from Sam’s words above, it’s that financial management can and should be optimized. Companies aren’t doomed to be inefficient, and decision-making can be data driven.

But it requires a mix of positive intentions and detective work to get started. And it may also mean acknowledging that certain resources need to be moved, and that some skills need to be trained or acquired.

The good news is that there are people to help. Companies in the United Kingdom can talk to RORA directly.

For other countries, look for help from experts in financial operations, and start thinking beyond strict accounting and financial planning roles. Smoother systems should be the ultimate aim.

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