Posted by DeLynn Senna on Wednesday, August 5, 2015 - 08:30 | Follow me
When you’re already juggling compliance, staffing, budgeting, forecasting, closings, new technology and dozens of other duties, it can be hard to make time for reflection and improvement in other areas. However, to boost performance, accounting and finance executives need to carefully review their company’s practices and, where necessary, initiate and manage change.
Benchmarking your processes against those of other firms is the ideal way to determine your organization’s position, and Robert Half’s 2015 Benchmarking the Accounting and Finance Function offers valuable points of reference. Here are some key takeaways from the most recent report.
Reconciling accounts continues to be a crucial and time-consuming task for accounting and finance departments. Most companies (63 percent in the United States and 59 percent in Canada) keep between 100 and 500 general ledger (GL) accounts open, and about a third (30 percent in the United States and 34 percent in Canada) have from 501 to 3,000 active accounts. These percentages did not change much between 2014 and 2015.
As for how they reconcile GL accounts, 54 percent of respondents in the United States and 55 percent in Canada said their companies still use a manual process. In 2014, these figures were 59 percent in the United States and 66 in Canada, suggesting that organizations are moving toward internally developed or third-party systems to speed up reconciliation. The largest companies — those with annual revenue of $1 billion or more — tend to automate the process. But don’t expect software to completely take over. “There are a number of accounts where there’s a level of subjectivity, which requires human intervention and review,” said one executive in the report.
Benchmarking results indicate that many companies are reluctant to move away from internal servers to store company information. Running and keeping sensitive financial information in the cloud is a step many are not yet ready to take. About half (49 percent) of United States and 55 percent of Canadian organizations have no plans to use cloud-based solutions, either now or in the near future.
For budgeting and planning, Excel remains the darling of the accounting and finance world. About two-thirds of respondents in the United States (63 percent) and Canada (69 percent) rely on this ubiquitous spreadsheet software, especially among companies earning less than $5 billion annually. Executives praise Excel’s agility and usability. “For anything that is innovative or creative or requires that you bring some gray matter to the table, the spreadsheet cannot be beaten,” said one chief financial officer at an international tech firm in the report.
A well-staffed company is a successful company. The median cost for accounting and finance staff is 2 percent of total revenue for United States and Canadian companies surveyed. The biggest share of personnel dollars goes toward general accounting (23 percent), followed by accounts payable (15 percent), accounts receivable (12 percent) and financial reporting (10 percent).
The percentage of financial staff devoted to A/P and A/R rose slightly, to 27 percent.
Also, U.S. executives interviewed for the benchmarking study said accounting and finance management staff typically work 47 hours a week, and those who aren’t managers work an average of 42 hours.
For many companies, it makes financial sense to outsource certain functions instead of hiring the requisite internal personnel. Among the U.S. companies surveyed, the top duties handled by external providers were payroll (43 percent) and tax (42 percent). The numbers for Canada were similar: 39 percent for payroll and 45 percent for tax.
One reason for continued outsourcing of payroll is the increasing complexity of having a global workforce. “We have outsourced payroll for China, the United States and Canada,” explained one CFO in the report. “We don’t want to be experts at processing pay for employees across international borders.” For tax work, smaller companies (under $1 billion) tend to use external providers at two or three times the rate as larger companies.
On the other end of the spectrum, the vast majority of all companies surveyed use internal staff for A/P and A/R, general accounting, internal audit and treasury.
Benchmarking may seem like a luxury when you have so many competing demands. But for better insights into accounting and finance functions, and to make the changes that will take your company to greater heights, set aside time in your schedule for regular comparison and reflection.
Have you taken the time to benchmark the finance and accounting functions at your company? What's your experience? Please share your comments below.
DeLynn Senna, CPA, is the executive director of Robert Half Finance & Accounting. She joined Robert Half in 1996 as a recruiting manager. She has since played key roles in Robert Half’s permanent placement operations, also serving as a division director and later a senior business consultant. DeLynn was named executive director in January 2005. In her current role, she leads Robert Half Finance & Accounting’s global operations, including defining brand positioning, working with executive and field leadership across five continents to develop growth strategies, operating processes, and to shape and promote the company’s vision internally and externally.