Recruiting and retention, increased cloud usage, and manual account reconciliation are just some of the issues addressed in the Benchmarking the Accounting & Finance Function 2017 report by Robert Half and the Financial Executives Research Foundation.
“Many internal key performance indicators can be used to gauge progress in various areas. But at some point, leaders can also benefit from asking the simple question, ‘How are other companies doing this?’” the report states. “This year, we found many accounting and finance organizations are still facing the same challenges – especially around recruiting and retaining skilled talent for their teams.”
Accounting executives continue to feel the heat to do more with less, with 62 percent of organizations reporting that their teams are at least somewhat understaffed.
“The tight job market for skilled accounting and finance talent, combined with a growing wave of baby boomer retirements, is leading to staffing shortages,” Paul McDonald, senior executive director for Robert Half, said in a prepared statement. “Many businesses are struggling to find the talent they need to handle general accounting duties; some have found it more effective to staff certain roles with interim professionals.”
The following are some key takeaways from each section of the report:
- Many accounting and finance leaders are focusing more on retention and giving employees a chance to work on special projects or pursue other types of development opportunities.
- To retain top talent, accounting and finance leaders are taking more time to understand what their employees want. They also want to connect their best people with professional development opportunities.
- Organizations continue to use interim staff and project professionals to supply special skills.
- Survey respondents were asked to identify areas in the accounting and finance function where they will invest most heavily this year. The result? Companies of all sizes – except those with $5 billion or more in revenue — will send most of their investment into budgets and analysis.
- About 23 percent of respondents at the largest companies said finance – including special projects related to that key area – would receive the most investment this year.
- The number of active general ledger accounts is growing at firms with more than $5 billion in revenue. According to the 2016 report, only 9 percent of these companies had more than 10,000 active general ledger accounts; this year, it’s 17 percent.
- Since 2014, there’s been a steady downward trend in the number of general ledger accounts, though this trend appears to be reversing. The largest percentages of companies in both the United States and Canada said they have between 100 and 500 general ledger accounts.
- Despite the automation trend, the reconciliation process is one area that remains manual and labor-intensive in most organizations. At US firms, 58 percent said their reconciliation process is manual; at Canadian firms, it was 66 percent. Even though manual reconciliation of accounts is resource-intensive, many accounting executives are not considering automation because they either lack the time to explore other solutions or don’t see a need to change.
- For the first time in four years, the percentage of staff resources devoted to general accounting remained unchanged. From 2014 to 2016, there was a significant decline in this percentage, from 23 percent to 16 percent. The percentage held steady in this year’s survey.
- Adoption of cloud-based solutions continues to rise, with 72 percent of US respondents saying they either will use cloud-based solutions or plan to, compared to 62 percent last year.
- The overall percentage of respondents who use enterprise resource planning (ERP) systems as their primary financial system remained steady from 2016. Slight increases were seen in US and Canadian companies adopting cloud-based ERP systems.
- This year, it appears that companies and their accounting and finance leaders have reached an important moment with cloud adoption: Most firms in the United States and Canada use at least some cloud-based solutions and many have plans to do so. However, many financial functions are adopting cloud-based solutions because they must move away from inflexible legacy systems. In many cases, they are being forced to go to the cloud because vendors are no longer supporting older systems and are expanding their cloud offerings.
- Excel is still widely used for budgeting, planning, and analysis.
- Outsourcing practices are evolving. In the 2016 survey, 39 percent of US respondents said their companies outsourced payroll. This year, only 26 percent do.
- Declines of companies that outsource tax activities also was apparent, with 31 percent of US companies outsourcing the function, compared to 43 percent last year.
- Still, tax and payroll continue to be the two most commonly outsourced accounting and finance functions among US and Canadian companies.
- Outsourcing payroll has benefits for all sizes of companies, from lack of internal staff at smaller companies to the complexity of performing payroll in multiple countries for larger firms.
- The largest percentage of US companies (42 percent) indicated that their certifying officers are responsible for signing the internal control report, while 39 percent of Canadian firms said the same.
- In the largest organizations, there’s been a shift away from certifying officers who sign the internal control report and toward the audit committee.
- Most US and Canadian companies said they now have fewer than 100 key internal controls documented. But the largest with more than $5 billion in revenue indicated that they struggle to cut the internal controls that they designate as “key.”
- While most accounting and finance executives in the United States and Canada said their compliance requirements will remain steady this year, they also expect the compliance burden to increase over the next three years.
The report is based on survey responses from more than 1,400 accounting and finance leaders at public and private organizations in the United States and Canada.
About Terry Sheridan
Terry Sheridan is an award-winning journalist who has covered real estate, mortgage finance, health care, insurance, personal finance, and accounting and taxation issues for newspapers, magazines, and websites. A Chicago native and former South Florida resident, she now lives in New England.