by Maiju Rauma
It goes without saying that finance is a critical function in any business. In its most basic sense, finance refers to the management of money. While it would be possible for a company to function (for a short while at least) without marketing plans and a human resources department, the same cannot be said for finance.
Yet, while finance is absolutely critical, it doesn’t mean that copious amounts of time are required to ensure that it runs smoothly.
According to part two of Basware’s SMB Finance research, SMB employees are spending a staggering 16 hours and 53 minutes per month on financial processes, equating to two full working days on activity that may even be unrelated to their role.
With many SMBs requiring all employees to feed into financial processes, a significant time investment is being made by employees from around the company.
But is two whole working days too much time to be working on financial activity? Arguably so, particularly when we consider the (preventable) elements that mean finance is such a time-consuming exercise within SMBs.
The issue appears to be that complex manual processes within the finance function are demanding more time and resources from employees, which in turn is reducing the resources available to work on non-financial tasks.
Of those two days spent on financial processes, the most time-consuming exercises include responding to supplier/customer enquiries (2 hours 19 minutes), creating and sending invoices (1 hour 55 minutes) and reviewing invoices to be paid (1 hour 45 minutes).
Perhaps unsurprisingly, these findings coincide with the admission that, in Europe, almost half of SMB business owners (46%) don’t believe their company has a clear procedure for approving invoices to be paid, compared to 38% in the US. Similarly, 52% of US employees and 50% of European employees don’t believe there is a clear process for chasing unpaid invoices, leaving the SMB vulnerable to cashflow challenges.
It’s easy to draw a correlation between the copious amount of time currently being commanded by financial tasks and the fact that many SMBs don’t have a clear structure for handling invoices. Adding to this the fact that many are having to manually process invoices and we can see how the time adds up.
Central to building supplier relations is ensuring that all employees have a standardized and automated format for which to handle invoices. By automating their invoice function, SMBs not only reduce operational time, but also ensure that they transact in the way preferred by bigger companies.
As SMBs look to grow in this challenging economic climate, the research aims to inform organizations of the challenges they face in growth, as well as educating business owners on the productivity levels of their employees as small business finance processes reach breaking point.
With the research identifying a tangible amount of time that is currently being wasted on financial processes, SMBs are well placed to be able to make the change that can help their business achieve the required growth.