Finance drives through pain for growth
The typical UK finance department has been stretched by the economic downturn, and like many other business functions is having to do more with fewer resources and ageing systems, according to K2 Advisory.
In co-operation with Exact, K2 surveyed 370 AccountingWEB members to identify their corporate pain points and how the economic conditions were affecting their organisations. For 60% of respondents, the main pain point was that customers were slower to pay, affecting the company’s cashflow and increasing pressure on credit control.
“Household and bank balance repairs will continue to slow down growth and there will be reduced opportunities to launch and conquer new markets because of increased volatility in global markets,” commented K2 Advisory director Katy Ring.
The next biggest concern for finance managers was recruitment and resourcing: 21% reported that finance staff are hard to attract and 17% said that their central services would struggle to support expansion.
In spite of the constraints caused by economic conditions, only one-third of respondents expecting negative growth in the next year; the other two-thirds were looking forward to some growth, with 21% planning for double digit expansion.
The big challenge for companies and their finance teams, however, lay in ensuring that there was sufficient information to manage profit margins and costs as the organisation expanded. “You have to know and understand the profitability picture,” King warned.
“Finance professionals across the world have access to a wealth of information but struggle to isolate, interpret and track the key metrics with which to effect change.”
The issue was compounded for many teams by a lack of transparency often caused by insufficient reporting tools; 45% of respondents said they experienced notable or significant difficulty with reporting, which undermined their ability to know which parts of the business were performing well and which were doing badly, K2 found.
In the circumstances, finance managers were coping pretty well by doing the best with the systems and resources they had to hand. But the question that might be posed within many organisations is what could finance be doing to drive growth if its wasn’t held back by these constraints?
See the full 17-minute K2/Exact webinar to get a fuller picture of the issues that really matter to the UK’s finance departments.