Business finance professionals have greater responsibility than ever before. The root of the corporate treasury position may be about managing spend and cash flow, but today, these players are looked at as risk mitigation specialists, forecasters and controllers of the lifeblood of any business, large or small.
That’s a lot for a corporate treasurer to handle. According to new analysis of data from the APQC Open Standards Benchmarking database, it’s probably too much to handle, in fact, due to the continuing use of legacy, manual money management tools.
Reports published earlier this month by CFO, written by APQC Senior Research Fellow Mary C. Driscoll, highlighted the conclusions of that analysis, which broke down how corporate finance professionals spend their time. While the responsibilities of money managers have expanded, these employees are still spending significant portions of the day on the most basic of tasks — processing transactions, ensuring invoice accuracy, paying bills and other general accounting processes.
Researchers found that 49 percent of a finance professional’s time is spent processing transactions. That’s true for professionals in businesses with greater than and less than $1 billion in revenue.
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“This means that in an average work week, highly paid finance staffs are spending the equivalent of Monday morning through lunchtime on Wednesday making sure that bills get paid, customers get accurate invoices, general accounting work gets done and fixed assets are accounted for, among many other tasks that keep the money moving through an organization,” Driscoll stated.
Spending this much time on the nitty-gritty of accounting leaves less time for carrying out the modern duties of a corporate finance professional: managing risk, forecasting and other analytical jobs.
Analysts pointed out that CEOs and managers are seeking fast, high-quality analysis of the impact of any money moving that these finance professionals do. This means gaining insight into the impact of economic decisions and how it will affect the company’s bottom line.
Treasurers aren’t oblivious to these new demands, either. Separate research from Capital One’s Treasury Management Group published last summer revealed that the majority of business finance professionals (60 percent) say cash flow is their highest priority — not paying bills or processing invoices.
“In this persistent, low-interest-rate environment, companies are increasingly demanding capabilities to help them better understand and manage payments and liquidity,” stated Capital One Bank Head of Treasury Management and Enterprise Payments Colleen Taylor at the time. “Navigating data analytics is an ongoing challenge for today’s businesses.”
But when these concerns are placed against the backdrop of APQC’s findings, it becomes clear that treasurers cannot focus on their greatest priorities.
“When the finance staff spends nearly 50 percent of its time on transactions — plus the additional time it takes to maintain internal controls and do financial reporting — not much time is left over to dig into decision support,” Driscoll said.
Data from APQC found that just 20 percent of finance professionals’ time is spent on decision support at companies with more than $1 billion in annual revenue (17 percent of their time, within companies with less than $1 billion in revenue).
Reports pointed to manual, paper-based processes as an easy target to nail down why finance professionals aren’t using their time more strategically. After all, the hours spent manually entering in data from a paper invoice alone is significant.
But analysts also looked at other culprits. For example, C-level executives may fail to adequately communicate their goals; many keep the finance department out of their decision-making process altogether, meaning these players do not have a chance to point out how they’re spending their time and how they should be spending it.
According to Driscoll, APQC found that electronic data interchange and digital transaction processing are helping businesses — the larger firms, especially — free up time for their money managers. The most successful businesses — those that produce high-quality, affordable and fast results — are those that invest effort in making the finance function more efficient.
Unfortunately, more research suggests that while finance professionals know their work can have a meaningful impact on their companies overall, many understand that they don’t have the resources needed to make one. According to APQC, corporations that spend time and money wisely on the finance department can hand their treasurers the tools that will yield the results they desire.
“The companies that succeed have worked hard to boost the productivity of their transaction processing, simplifying systems, reducing the number of vendors, employing workflow automation for processes like invoice approvals, streamlining ERP environments and standardizing to a single chart of accounts,” Driscoll wrote.