by Rowan Lemley
The global economy continues to be challenging and for SMBs in particular, owners need to identify ways to grow, retain and find new business.
Finance is a central business function, and the processes that SMBs have in place – as well as the employees responsible for it – will determine how effective a company can be as it aims to grow.
Basware’s SMB Finance research surveyed 558 business owners and 1,368 employees with financial responsibility within small to medium enterprises. In the previous post in the series, we looked at key insight from the research to understand the current state of financial responsibility within SMBs. Here we take a more educational approach, looking at the measures that SMBs can take to ensure those responsible for financial tasks have the appropriate tools and support in place.
1. Training is imperative: Basware’s SMB Finance research revealed that 1 in 3 senior managers are unprepared for the financial role expected of them. It was also found that 45% of senior managers have yet to receive formal financial training. It’s no surprise that financial responsibility, coupled with a lack of training, is meaning that employees higher up the ladder are struggling to fulfill their role. By ensuring that the necessary employees have the expertise in financial processes, legislation and strategy, the organization as a whole will benefit from the appropriate financial support.
2. Take a holistic approach to financial responsibility: SMB owners should consider whether it’s possible to expand the number of employees that engage with finance. If more employees are involved with basic financial processes and tasks, this could prove beneficial in terms of ensuring that financial activity is appropriately attended to, easing the burden on senior managers. One strategy could be to move from more laborious paper-based systems to automated finance systems. This could help employees to complete financial tasks in a standardized and time-effective way.
3. Clearly outline financial roles and expectations: In total, 34% of employees’ job descriptions in Europe and 31% in the US did not include reference to financial responsibility within roles. If employees coming into a role are not expecting to engage with company finances, there is a chance that they don’t have the credentials to fulfill it. When recruiting for new roles, ensure that financial requirements (including specific knowledge of processes and software) are clearly outlined for applicants.
4. Decentralize control to ensure timely payments: While senior managers are often the ones tasked with taking control of finances, this might be one smaller component of their wider role within the company. This can mean that tasks such as approving financial expenditure and invoices are often delayed. In Basware’s research, 27% of European and 38% of European companies believed that the approval of invoices should be decentralized in order to guarantee timely payments. Provided that SMBs are able to educate employees about the necessary processes involved, this idea makes a great deal of sense to ensure that cash flow is working effectively.
Given the relative size of SMBs in comparison to larger corporate businesses, they can often lag behind in terms of the resources available to fulfill certain tasks. In many cases, SMBs may not have a dedicated finance function; making it all the more important that financial responsibility is appropriately spread out and resourced.