5 mistakes finance teams can’t afford to make

Finance teams have many responsibilities – reconciliation, accounts receivable, payroll, the list goes on. Despite each activity being different in their own right, they are however interconnected. As such, it’s crucial that accuracy is maintained across all financial operations and that they complete with the same efficiency as one another. If not, one error could swiftly subvert countless processes.

With this being the case and compliance, employee pay cheques, investment, and more all being on the line for finance teams, it is no wonder that over 80% of financial professionals have considered changing job role due to stress. However, at Aurum Solutions we want to erase the fear of mistakes from the psyche of finance teams and provide them with a safe space to drive benefits for their organisations.  

Read on to take your first steps towards financial confidence by eliminating five of the most common mistakes finance teams make.

Inaccurate budgeting

Budgeting is the financial blueprint which all activities are based off. It determines what is doable, and what is not. As a result, accurate budgeting is paramount for an organisation to be successful.  

However, knowing the value of funds available at any point in time is easier said than done. Payments are settled into bank accounts at different times depending on method, fees are deducted from revenue and often vary, and there is always the very real risk of something being accidentally paid for more than once. All these factors – and more – therefore result in inaccurate budgeting being a very real risk that finance teams must be guarded against.  

So how do finance teams keep their budgets perpetually accurate? They need a method which can match increasing payment speeds and complexities. In other words, they require accurate data at speed to inform their budgeting.

Such a feat would be impossible for many firms to achieve manually. However, with powerful matching automation, a library of over 600 APIs at their disposal, and fully customisable reporting, Aurum users have the antidote. They can ETL their data from various sources and guarantee data integrity in seconds thanks to reconciliation taking place without human intervention, eliminating any possibility of mistakes. As a result, Aurum provides them with the perfect foundation to make sure that their budgeting is accurate in real time.

Missed reporting deadlines

Considering the influence that figures have on the direction of an organisation, it should come as no surprise that various stakeholders wish to receive reports on them at regular intervals. Typically, this includes regulators, board members, auditors, and shareholders.  

Interestingly, these groups all have very different reasons for wishing to access financial intel. As such, despite their collective wish to be in the know, the fallout of them not receiving financial insights on time greatly differs. For example, whilst the likes of the FCA might fine a FX and CFD broker for failure to report on their transactions in time, if board members lack international sales figures, a business could miss out on a great opportunity.

Ultimately, regardless of who is requesting financial details via reports, it is for good reason, and as such consequences are severe if this is failed. Finance teams therefore can’t afford to miss their deadlines. Yet with volumes of transactions increasing, firms wishing to operate in multiple regions with different regulatory requirements, and an increased amount of data sources piling into reports, finance teams are left with an overwhelming amount of work to complete in smaller timeframes, increasing the chance that deadlines will be missed.

Overcoming the issue of time restrictions by providing inaccurate info is also not an option. In reality, there is only one action which finance teams can take – be organised, operate at speed, and operate accurately. A great example of this is reconciling on a daily basis. Taking this approach stops transactions from reach unmanageable levels and a mad rush ensuing whenever a reporting deadline looms.

However, that advice is hollow if a way to enact it remains elusive. Fortunately, many users of Aurum’s automated reconciliation are evidence of deploying an effective method. From Buster + Punch to Fexco, their finance teams, plus many more, have all moved from either weekly or monthly reconciliations to a daily regime thanks to Aurum’s automation making it an exercise which takes mere minutes out of their day, helping them be prepared for report requests no matter how frequent they are.

Weak internal controls

Meeting deadlines with accuracy might feel like a lot already for finance functions. However, in addition to speed and accuracy, they must also consider the control they employ when going about their business.

In terms of financial operations, ‘control’ refers to activities they have in place to make sure that unfortunate circumstances don’t arise. A common example of this is internal fraud such as illegitimate payments being signed off. With entire finance teams working hard to make sure that figures are moving in the right direction, they really don’t need anyone undermining them. However, it does sadly happen meaning that internal controls cannot be weak.

That’s why reconciliation is not just a process for ensuring accuracy but also maintaining control. When reconciliation is conducted with a capacity to review every transaction at a frequent interval – something only achievable with the speeds of automated reconciliation software – it quickly becomes clear which payments are legitimate and those which are not.  

In addition, the best reconciliation software tracks every transactional movement in real-time, automatically creates comprehensive audit trails, and requires sign-off at the point of a completed reconciliation. As a result, internal controls are steadfastly in place throughout the reconciliation process, leaving no opportunity for illegitimate transactions to go unnoticed.

Complacency with payment providers

Finance teams evidently do a lot behind the scenes for organisations, some of which is sometimes difficult to link to front-facing activities which impacts customers. Management of payment providers; however, is one activity where there is an obvious link.

Although this isn’t traditionally a responsibility of finance teams, with 48% of IT leaders fearing that their companies have lost up to 10% of revenue due to their payment processors not offering their customers suitable payment options, it should clearly be of considerable importance to them. Plus, with access to transactions from all sources, finance teams are in the best position to assess various performance indicators of a payment providers.  

Firstly, how many transactions do they facilitate? Secondly, what is their chargeback ratio? And thirdly, what are the associated fees and are they rising?

These are all crucial pieces of intel that can have a big impact on an organisation’s bottom line. However, far too often, payment structures are set up and left to exist without consideration. All the while, optimisation is very possible and better results left on the table to waste away.

Finance teams should therefore make it their responsibility keep an eye on the aforementioned payments intel. Fortunately, for those who use Aurum, they gain instant access to reports on transaction volumes, chargebacks, and even fees, helping them build a holistic picture of their payment operations, identify room for improvement, and take action.  

Settling for the familiar

High expectations are placed on finance teams – they must operate at speed and with accuracy. However, these standards are rarely reflected in the tools that they use. After all, 58% of finance leaders still rely on Excel – a software which was launched in 1985 and has hardly evolved since.

Whilst tools like Excel might be synonymous in terms of financial operations, it doesn’t mean that they are still fit for purpose. In fact, prioritising legacy over innovation can be significantly detrimental to finance teams. For example, working with outdated software risks:

• Work arounds – time, resource, and money having to be spent on trying to keep software fit for purpose in the modern day

• High costs – having to employ additional employees to compensate for outdated software’s inability to fully meet contemporary needs

• Lack of connectivity – limitations being placed on what additional software can be employed due to legacy software not being compatible with new technologies

Unfortunately, all the above also results in knock-on effects that can negatively impact retention of talent, budgeting, and even regulatory reporting. However, there is a better way. Instead, by deploying software such as Aurum which understands the financial landscape of today and possesses the flexibility to evolve with it, you can:

• Scale without restraint no matter how high volumes grow

• Ensure interoperability by connecting with over 600 other systems automatically

• Free up the time of your finance team, enabling them to engage in value adding tasks whilst saving money

Ultimately, settling for the familiar leads to opportunities missed. On the other hand, embracing innovation both delivers opportunity and allows additional opportunities to be explored thanks to limitations being removed. Arguably, the former is one of the greatest mistakes that finance teams can therefore make if they wish to progress.

From mistakes to success

The work of the finance department within an organisation is often foundational. It lays and secures the platform for subsequent success. Mistakes therefore are not an option for finance teams, especially ones which are so foundational to their own operations.

As a result, possessing data with integrity, maintaining controls, and maintaining their tools to a standard which is fit for today’s purposes are essential. In other words, investment in next-gen reconciliation software is one of the best ways for finance teams to make sure that they go from experiencing mistakes to success.

To set your financial operations up for success, book your Aurum demo today.