McKinsey recently published a global survey of CFOs that showed the biggest roadblocks to extracting value from data and technology were organizational, not technical. The two highest barriers were finance teams’ demanding workloads and a lack of relevant capabilities within those teams. Technical problems like inadequate IT infrastructure or poor data quality were less frequently cited.
From the CFO chair at Labor Finders, a nationwide industrial staffing company based in Palm Beach Gardens, Florida, Leslie Cotton is very focused on leveraging automation. “Automating certain processes has freed my staff from heavy data-entry tasks, allowing them to focus on managing exceptions as technology handles most of the work,” Cotton says. But getting finance staff to work smarter, not harder, can’t be force fit. Finance staff must believe that software tools and automation will ultimately be their allies by freeing them from time-consuming, low-value tasks, she says.
In an interview with StrategicCFO360, Cotton dug deeper into how Labor Finders has introduced powerful tools that save on costs but has done so in a way sensitive to people’s natural resistance to change.
How has your team deployed automation to its advantage?
Automating specific processes allows the staff to focus on managing exceptions as technology handles most of the work. We can process a higher volume of transactional data without needing more staff, which translates to substantial cost savings. Additionally, automation enhances the efficiency and timeliness of accounting processes, improving data accuracy and ultimately resulting in more reliable financial statements.
An excellent example of process automation is in accounts payable: Invoices and expense reports are automatically routed to the correct approver based on the vendor and amount. If that approver can only authorize a specific dollar amount, the invoice is routed automatically to the next level. The accounts payable team can quickly identify if an invoice is pending approval in someone’s queue and efficiently follow up, eliminating the [problem] of missing paper invoices or invoices getting buried on desks.
What challenges has the finance function dealt with in changing processes and procedures to allow for greater automation?
Most people don’t like change, and the finance staff is no exception. Understandably, there can be resistance to a new application because there is comfort in doing things the same way. Sometimes, we need to encourage staff to embrace the technology and explain that it will ultimately benefit them by allowing them to streamline their responsibilities. To counter the resistance, we try to implement these initiatives one at a time; otherwise, it can be overwhelming.
Another challenge is systems integration. We have a project to automate payment processing, but the application hasn’t integrated as seamlessly with our accounting software as expected. In that situation, we need patience and perseverance.
Finally, oversight must always be considered when implementing a new automated process, like the signing of paper checks. Many organizations are transitioning to a payment process in which the bank issues payments, eliminating the need for physical printing and check signing on the business’s premises. Those with bank-signing authority within the organization must review and approve those payments through alternative methods, ensuring transparency and accountability with clear audit trails. That requires planning and collaboration.
The Financial Accounting Standards Board issued several new standards and updates in the past few years. How has that affected you and your team?
In general, new accounting standards require additional processes and procedures, which need to be someone’s responsibility. Resource allocation can be challenging in a lean organization. Depending on the complexity of the standard, training can be informal and quick, or it may involve attending seminars or webinars, which takes time away from day-to-day operations.
These new accounting standards can also affect the scope and complexity of external audits. Our auditors have had to invest additional hours in the past two years to ensure we comply with the latest standards. Of course, with additional person-hours come increased audit fees. However, we have found that communicating with our auditors early in the year and making sure we’re on the same page can reduce those additional billable hours.
What have you found helpful when navigating new accounting standards?
A proactive approach has been crucial in ensuring our readiness to manage new accounting standards. Early understanding of the standards’ impact and effective communication with the team can alleviate their anxiety.
I’ve always believed in surrounding myself with experts. Finance leaders cannot be expected to know the details of every accounting standard. We partner with our audit team, who support us as needed throughout the year. It’s also in their best interest to make sure we agree so there aren’t any surprises at the year-end audit.
How has technology facilitated your team’s compliance?
We’ve discovered software can be a valuable ally. For example, when the ASC 842 lease accounting standard became effective in 2022, we implemented software that our auditors had evaluated. We simply enter lease specifications for each property or equipment lease. The software calculates amortization and lease expenses and generates journal entries automatically. Our auditors can access the software and review the specifications entered, along with a PDF of each lease.
Without this software, managing the new standard for 100 property leases would have necessitated hiring another employee. Adopting the software ensured compliance with new accounting standards and significantly streamlined our lease-management processes, enhancing efficiency.
