3 Warning signs of a struggling finance department

You know the saying that says, "ignorance is bliss?" Well, that couldn't be further from the truth when it comes to the inner-workings of your finance department. Whether the news is good or bad, knowledge and awareness are key, and they can be the make-or-break factor when it comes to the long-term health of your business.

Fortunately, we're not the kind of people who serve you problems without a solution, so let's cut to the chase.

You're dealing with masters of disguise

Finance departments seemingly run on coffee and adrenaline from the fast-approaching month-end. Many processes and "go-to" standard procedures are embedded into the very DNA of running AR and AP processes. However, as the financial landscape starts to modernise, certain elements that have always been considered 'part and parcel' of the industry, are now being considered as red flags. 

Warning 1: Frequent invoicing errors and payment delays

Mistakes happen, right? Yes - but are they the exception or the norm? Frequent (seemingly insignificant) errors could point to a larger underlying issue. If your finance department still heavily relies on manual processes, things don't just slip through the cracks, the very foundation of what you're building becomes unstable.

Why? Well, manual processes cause tasks to be (and stay) siloed, labor-intensive, and time-consuming. This leads to:

• Errors and Inaccuracies
• Delayed Payments
• Difficulty in Tracking Payments
• Customer Disputes and Inquiries

Besides the costly price you're paying for manual processes, frequent invoicing errors and payment delays also has a significant impact on your team, leading to overextended and highly stressed employees, often leading to burnout within the finance department.

Warning 2: Lack of visibility and control over financial data

There are quite a few things your finance team wish you knew. One of them being that if you're still relying on manual processes, there is a significant gap concerning your financial visibility and data. No one likes doing business in the dark. An overreliance on manual processes can ultimately lead to material issues like cash leakages due to poor payment and/or collections systems, leading to cash flow strains. However, it's important to keep in mind that every leak has a source. Sure, you can clean up the mess - but if you don't fix the source of the leak, the drip won't stop.

Warning 3: Poor cash flow management

Now, you may be thinking - manual processes don't have that firm of a grip on my business. If this is the case, it's important to go back to what the definition of manual processes is in the first place. We're not talking about stacks of paper, piled up in back rooms and dusty cabinets. Manual processes do not mean "not digital." In fact, PDFs and spreadsheets are often the "current-day" culprits of businesses' manual processes. In other words, if your company still uses spreadsheets or you're still sending manual payment emails, we're talking to you. Cash flow impacts almost every aspect of your business, yet many bottlenecks go seemingly unnoticed within AR and AP processes.

Still, we're pretty sure that absolutely no one in your accounts receivable department wants to know about what more they have to do to streamline AR processes and improve cash flow. So, what's the solution?

Working smarter (not harder) to elevate your finance department

We're not asking you to reinvent the wheel. Instead, facilitate efficient and powerful AR and AP processes that seep into every department - not just finance. For more on how System1A AR software benefits all departments, have a look at our article here. Alternatively, experience it firsthand and book a demo or request a free trial.