Despite a banner year for innovation and investment in fintech, many finance teams still rely on dated, manual, and labor-intensive methods of managing organizational spend. Paper purchase orders, retroactive receipt gathering, and a lack of visibility into departmental budgets continue to cause pain for finance teams. And when it comes to month-end close, headaches ensue.
For example, The Journal of Accountancy found that 87 percent of financial professionals work overtime during the financial close process, and 60 percent experience increased stress levels. To avoid this, a change in process is required. Finance teams must begin adopting smart spend management solutions that enable proactive spend control, automated workflows, and efficient reconciliation.
During our session at the Tipalti Connected Finance Summit, our own VP Finance and Operations, Bevan van der Berg – along with Ed Fineran, the Chief Executive Officer and President of Atlantech Online – presented their ideas on how finance teams can modernize their processes and work proactively.
They outlined how organizations can improve the accuracy with which they record spending by:
- Developing a proactive spend culture that drives connected finance.
- Automating purchasing processes that increase efficiency and save time.
- Developing consistent and personalized approval workflows to streamline spend requests.
- Establishing, communicating, and enforcing spend policies that help maintain compliance and build a culture of responsible (and accountable) spending.
Here’s what they had to say.
Meet the speakers
Bevan van der Berg
VP Finance and Operations, Procurify
Bevan is responsible for leading Procurify’s finance team. He has a strong focus on streamlining financial operations while working closely as a finance business partner with marketing, product, and sales.
Chief Executive Officer & President, Atlantech Online
Ed Fineran launched Atlantech Online in 1995, and has spent the last 25 years building one of the most reliable, fast, and scalable technology companies in North America. His company provides fiber, voice, and data center solutions to business and government organizations.
The key takeaways from the event
Understanding the pain of a reactive spend culture
“We had a standard Excel template that requesters had to fill out. All of the right information had to be in there, and whether it was one line or 50 lines, it had to be right. Once they got that done, they would bring it to the manager and then they would bring it to me to sign off.”
– Ed Fineran, CEO & President of Atlantech Online
A manual purchasing process like this is prone to human error and bureaucracy, which inevitably slows down the procurement cycle and, consequently, hinders growth. But what Ed describes above is just the initial part of a reactive spend culture. There are many signs to watch for that organizations should become aware of, including:
- Manual signatures and signoffs that cause bottlenecks and disagreements.
- Purchase requests that are made through a spreadsheet template.
- Manual purchase order entry that leads to confusion and misinformation.
- Retying invoices from one tool to another, and failing to easily verify them against the purchase order.
- Too many people typing line items into too many systems. This leads to wasted time and the opportunity for error.
Fortunately for Ed and his team, he realized early on that this type of spend culture was detrimental to the success of his organization. About five years ago, he deployed Procurify and moved from a reactive spend culture to proactive one.
“We’re no longer fighting about getting the right information on the page and getting the approvals done internally,” Ed explained. “We can now spend more time dealing with vendors, finding the right vendor, getting the right price, and knowing our history of pricing on these particular items, so it’s much easier.”
Defining a proactive spend culture
“You really want to be proactive to help stop issues from occurring, to reduce risk, and to remain aware of what’s going to come through the door before it actually happens,” explained Bevan. “That way you’re able to monitor and make smart spend decisions before finances are committed.”
Building a culture of proactive spend isn’t about simply saying ‘no’ to requests that come in. At its core, a proactive spend culture is about saving money where you can. It’s also about making informed spend decisions. This way, you can reinvest capital back into strategic areas that align to larger organizational goals.
To do this, however, requires a clear and visible structure. This way, finance teams know exactly what’s going out, when, and by whom. “When you’re able to put the structure in place so the right people are aware of what’s being spent, you can make decisions before that extra money has actually left the business,” explained Bevan.
“[A proactive spend culture] is about understanding how you use the resources you have, which is both cash in the bank and the tools of your organization. You need to really make sure that you’re proactively engaging with your processes of spend.”
– Bevan van der Berg, VP Finance and Operations at Procurify
A proactive spend culture comes down to attitude
“You know, the attitude in the company is very critical,” cautioned Ed. “When Atlantech Online was a young company, it wasn’t just about spending money, it was about eliminating it. But that doesn’t lead to success.”
While cutting costs is a big part of smart spending at any organization, building a culture of proactive spend is more about how you use the resources you have, not how you can cut back. Bevan identifies a strategy that helps finance teams adopt this strategy:
“Get people inside your organization to think about spend from a resource allocation point of view, and don’t just get them thinking about saving dollars. Instead, enable stakeholders to really dive deep into how they’re spending money in order to drive growth, and action them to consider the impact of that spending on the wider organization.”
Having the right spend culture is the best way to ensure your finances are organized so that every dollar spent impacts success. As Ed discussed, “Personally, I’d much rather be proactive and organized than always having to react.”
Focus on automation and strategic thinking
At any organization, a CFO in 2021 is a strategic partner working with the leadership team to influence overall business direction. To do this effectively, however, requires two things: the right tech stack and time to think outside of the box.
“The first thing you have to do is commit to automation,” Ed said. “People don’t like change, but if you have the vision to make this change, do it. People will come along when they see how much time is saved and how organized things are. But you need a leader who’s willing to make this happen.”
“CFOs need to be sure that the team is not bogged down by old processes,” said Bevan. “So, as you move to a place where the organization requires more of your team, the tools you use will have a big impact. You want to be as automated as possible and take away those low value tasks that people do.”
Of course, the right tool does more than just free up time. It provides financial leaders with real-time insights into key financial metrics; it exists in the cloud so it doesn’t negatively impact your IT team; and most importantly, it offers CFOs the chance to leverage influence when it comes to strategic thinking.
A proactive spend culture requires a proactive mindset
Ultimately, a proactive spend culture comes down to understanding what the gaps are in your current processes. Armed with this, you can view everything with a proactive mindset.
To do this, Bevan ends the session with one important question that every finance individual should ask: how can you collaborate better as a finance individual?
To find out about how Procurify works, watch a demo here.