What Happens When Transaction Volumes Double but Finance Headcount Does Not?

Sometimes, when transaction volumes doubles, finance teams may experience more work without a corresponding increase in headcount. With an upturn in revenue and customers volumes, finance teams can work harder but do not necessarily have more resources to work with, consequently can suffer from backlog, longer month-end close and higher control risks.

The real challenge is not more transactions, but complexity. As the transaction volume grows, CFOs should look to process improvements and automation before increasing headcount.

As organisations expand, the volume of transactions seldom follows an upward trend in a straightforward manner. The more customers, invoices, payments, or bank accounts that you have, the more abnormal events you‘ll need to manage, and the more you are likely to experience delays. What was maybe a manageable manual process at 5,000 movements a month turns unbearably inefficient at 10,000 or 20,000. Payment matching, discrepancy investigation and reconciliation take up finance teams’ time while the value added activities prediction, strategy shrink.

Without scalable processes, growth can increase the strain on finance operations and constrain the support the finance team can provide to the rest of the business.

Volume increase affects several processes such cash application, bank reconciliation, collections, deductions, and accounts payable. The more transactions the more related tasks such as match, code, review, post, correct and report for each single transaction. Manual process becomes too expansive as the volume increases.

The following indicators often suggest that a finance team’s operating model has reached its limit:

Adding extra staff will do nothing to address process inefficiencies. It may alleviate the problem in the short-term but it doesn‘t necessarily address the cause.

New employees may not yet have adopted new, end-to-end processes. As a result, the cost of hiring, training, and managing a new employee will be higher and recruitment and training will be more difficult than if they were using a streamlined process. Companies should ask whether redesigning or automating processes would produce more capacity at a lower total cost before increasing headcount

Automation allows finance teams to expand capacity without added complexity and avoid the temptation of adding staff. Employees are freed from the drudgery of repeated manual processes so they can work faster, smarter and more consistently.

Tools such as Cashbook’s cash management software automate tasks such as bank reconciliation, cash application, deductions management, accounts payable, and collections. By integrating with existing ERP systems, Cashbook simplifies work and reinforce control,  enabling finance teams grow without having to grow headcounts.

Automation should not be seen as a disruptor, but rather an enhancement. Finance professionals will never be replaced, but being freed up to focus on exception management, analysis and planning can be highly beneficial.

Portwest, a global company, faced challenges with a faced a disjointed cash allocation process across 19 banks, and 5 divisions processing approximately 16,000 payments a month.

After implementing Cashbook:

Once the business outgrows its existing finance resources, no amount of additional headcount can support the increased transaction volume. Growth will only be sustainable if finance processes are scalable and workflows streamlined so they are able to provide the responsiveness required with the right level of technology to avoid transactional manual processing. Implementing solutions like Cashbook, can drive profits by maximizing efficiency, lowering operational risk and then freeing up the ‘human capital’ to support the next period of growth.