Benchmark survey shows financial software systems are holding many companies back.
At first glance, some of the responses from this Annual Benchmark Survey of 745 Finance Professionals regarding software usage seem counterintuitive. Finance teams with lower software budgets spend less time on manual tasks than teams with bigger budgets. We would expect that purchasing software would reduce, and even eliminate, the need for manual tasks, or at least that would be an important motivation for purchasing software solutions.
We tried to make some sense of these numbers by reviewing how company finance operations work. We’ve observed that using a higher number of software solutions, typically associated with higher budgets, can result in spending more time (and dollars) to reconcile information across disparate systems and to sync everything to the General Ledger. A company that pays for separate bill payment, corporate card, and expense reporting systems, spends more time on reconciliation, and the transfer of information from all of those systems into the GL, than a company with one comprehensive system that performs all of those functions
A less surprising benchmark is that larger companies are more likely to use older software solutions. Having developed processes around legacy systems can keep teams limping along with suboptimal solutions because they are afraid that making a change will take too much time. For example, a majority (67%) of high headcount companies with 500–1,000 employees said they use the legacy system Bill.com for their bill payment platform. In comparison, a minority (33%) of respondents at low headcount companies (less than 100 employees) said they use Bill.com. Legacy bill payment platforms have been around for decades and were conceived to address a fairly narrow set of issues around processing purchase orders.
However, as companies have decentralized their spending, especially now with distributed teams working remotely across the globe, a major portion of non-payroll spend (corporate cards) is left out of the system.
Mid headcount companies (under 500 employees) are more likely to use spend management systems such as Airbase — the first spend management platform to deeply integrate and manage all types of company spend. These companies may be newer and more open to new technology, or simply more agile in adopting new systems because of the smaller size, but they are well positioned to grow. Recent studies have shown that willingness to adapt new technologies correlates with revenue growth.
Agility is a key concept for creating resilient finance operations, but the survey results suggest that many businesses rely on processes that don’t give them that vital ability to pivot quickly. We noticed that this was particularly true for larger organizations and for larger finance teams, and the data suggest that the solution for efficiency for accounting teams lies in the tools used, not in the size of the team. For many manual tasks — transaction categorizations, interim financial reporting, purchase orders and approval — finance teams with more than 25 employees spent a high volume of time on this kind of manual work. Overall, 24% of large finance teams reported that they spent more than 50% of their time on manual tasks, compared to 15% of teams with six to 10 employees, and 9% of finance teams with 11 to 25 employees.
The top manual task named in the survey by larger companies was gathering documentation, with 67% reporting that this is done manually. Smaller companies were less likely to spend time tracking down documents, with a relatively small 39% saying this was a manual task. Having a single source of truth, as is the case with a robust spend management solution, eliminates this need. Similarly, larger finance teams still rely heavily on spreadsheets, with over 40% reporting that they continue to use Excel spreadsheets, and almost 40% using Google sheets. (Although there is likely some overlap, the technology exists to eliminate spreadsheets altogether, so any use of spreadsheets is unnecessary.)
Despite the limitations of the technology used by many respondents, a clear majority said they would recommend their current systems. Although we were happy to see this level of satisfaction, the high level of manual tasks performed did lead us to wonder if some companies would benefit from a review of their tech stack. For example, although 71% said they were happy with their current ERP or accounting system, many reported an inordinate amount of time in completing their monthly close, with 61% saying that it takes more than a week to close the books, which suggests that the systems connecting to the ERP slow down the process. With the right tools, all types of transactions can sync to the GL, which drastically reduces the time-to-close process.
Many of the financial professionals we talked to say their company reached a critical point in their growth, where their existing solutions just didn’t make sense any more. The benchmark survey data confirms this trajectory. In order to grow efficiency, businesses must evaluate their software on a continuous basis. The right systems will improve overall responsiveness, save time, and reduce manual work. If you’d like to learn more about how Airbase can help, schedule a demo.
Airbase offers a one platform solution to manage all non-payroll spend. It provides oversight and control over spending with real-time reporting and automatic syncing directly to your general ledger. Control all payments – physical cards, virtual cards, ACH, and checks – from one place. Close faster. Empower employees. Control spend.