Latest IFOL study reveals the top three most inefficient finance processes and their slim chance of improvement.

16th March 2022. The global research carried out by The Institute of Financial Operations and Leadership (IFOL), shows that two-fifths (40%) of respondents said their finance team did not have modern and efficient processes.

Outdated finance processes

This means that two in every five finance teams worldwide are working with outdated and inefficient processes. This figure is much higher in the US and Canada – where 64% of finance teams are working with outdated processes, whereas in the UK and Ireland, it is 14%.

Just over three-quarters of respondents (76%) felt their finance team needed to review their processes. 

91% of respondents admitted that they had approached their manager in the past to discuss how a process could be improved, with automation being a key theme suggested.

Inefficient Accounts Payable processing

Whilst the research covered a broad range of processes within finance operations, there was an undeniable consistency with the results all pointing to one specific area – Accounts Payable.

The top three most inefficient finance processes sit within the Accounts Payable function, and are:

1. Purchase orders
2. Invoice processing
3. Invoice approval

Furthermore, when asked specifically about their most manual processes, respondents most frequently listed AP processes. 

AP processes also featured most highly on suggestions for improvement. 91% of respondents have approached their managers about improving processes, with the top recommendation being AP automation. 

With the undeniable trend of AP processes being least efficient, is this function overlooked in general by finance teams? 

Process improvement is not regular practice

Less than half of finance teams (43%) regularly review their processes throughout the year. Only 17% review them once a year, 11% every 2-3 years, and 7% never review their processes.

With such poor practice, several challenges are experienced by teams, most of which are those directly impacted by poor processes. 

Top three common problems experienced due to poor processes are:

1. Manual processing time delays 
2. Errors from manual processing
3. Lengthy invoice approval

Sam Hitchen-Rae, Director at IFOL comments, “It’s encouraging to see that some finance processes are working efficiently, but there are still too many that are not. Accounts Payable is such a critical finance function and managers should not ignore the issues that poor processes create. Adopting a regular improvement culture means issues are identified, and processes can be improved to remove inefficiencies – and frustrations – from within the team.”

For more information on the study please contact marketing@acarp-edu.org or download the full report below. Out panel of experts will be discussing some of the research findings during our upcoming webinar, find out more and register to attend here