Is it a question of over-promotion or cross-promotion?
According to the long-standing Peter Principle management theory, even the best people in a business will be promoted beyond their level of ability. Some will be moved to the point where they are no longer experts in their field or may not have the required skill set. You may have the best salesman or manager in the world, but that doesn’t necessarily prepare them for greater financial responsibility.
The established Peter Principle of over-promotion is re-incarnated in small businesses today. Executives are not necessarily over-promoted, but they are ‘cross-promoted’ often given more and more responsibility that they don’t have the time or the training for.
Small business leaders have increasingly high workloads, which often include financial duties. The relative size and budgets of SMBs in comparison to larger corporate businesses means they can often lag behind in terms of the resources available to fulfill certain tasks.
Responsibility for financial strategy lies with senior management, but according to Basware’s SMB Finance research 1 in 3 senior managers admitted they are unprepared to take on the role. The research also found that 45% of senior managers have yet to receive formal financial training. A much greater understanding of the role is needed if senior managers are to be successful in taking on financial tasks, such as forecasting budgets and setting strategy. However many financial tasks can be simplified, automated and delegated to free up the time and brain power of senior executives.
A proven strategy for this is to move from laborious and unpredictable paper-based systems to automated finance systems. This promotes the completion of financial tasks in a standardised and time-effective way. Not only is it quick and accurate, but it is far simpler for employees to do. The result is that financial tasks are completed more readily. Senior executives get more time in hand as simple approval processes can be managed out in the business. This way it is easier to track financial processes when they are electronic and are far more accountable.
Affordable tools are key to this and SMB’s should focus on those that not only require minimal capital investment, but that also don’t require endless time and manpower to get off the ground. Cloud based services are an affordable way of rolling out these tools. Those tools that are off-the-shelf are also a big benefit to smaller businesses. The crucial factor to look for is something that is template-based. This means that processes are based on best practice and can be quickly set up.
Basware works with a large number of small and medium businesses to empower their financial processes. It’s a proven implementation approach that minimises disruption and maximises the benefits that a company can achieve by automating its purchase to payment process.