Finance shouldn't cost your company more than 1.5 percent of your revenue

Altron Karabina's Paul Morgan says finance teams that use technology wisely can have a huge impact on results.

In the current economic climate, businesses are on massive cost-cutting drives, and this, often results in retrenchments. Finance teams are not exempt from these exercises with the end result that fewer people are expected to do the same amount of work as before. The answer, according to Paul Morgan, the business unit lead for Data, Planning and Analytics at Altron Karabina, lies in finance optimisation with innovative technology. 

“This supports finance departments getting operational work completed quicker, and being able to benefit the organisation with guided analysis, rather than just producing reports,” he says. 

Altron Karabina is a Microsoft Gold Partner – and Paul points out that the trillion dollar company is a case in point for this kind of optimisation. Prior to 2013, he says, Microsoft followed the usual trajectory of increasing its finance team as its revenue grew. “More people were needed to handle the additional revenue streams and associated administration that was required,” he says. Then, in 2013, Microsoft appointed Amy Hood as CFO, and in the six years since then, the technology company has enjoyed almost 100 percent revenue growth. However, under Amy’s technical optimisation and automation drive, the finance headcount only increased by 14 percent in the same timeframe. 

“They were able to deal with a doubling of revenue from new channels, with only a small increase in the finance team,” says Paul. “As a technology company, she was able to leverage some of Microsoft’s resources – but that’s not to say that a manufacturing company can’t do the same with their team. That’s where we’re trying to get our customers to.” 

Morgan says that according to Charles Tilley, chief executive of CIMA, world-beating finance departments only cost 0.6 percent of their organisational revenue, in terms of personnel, systems, overhead and day-to-day spend. Organisations that spend 1.5 percent of the revenue, are in the average spending band. Anything over that and their finance operation is costing more than it should. 

“So, a well-run finance team running at high optimisation can actually have a massive impact on the results of the organisation. They are not just a cost centre – they are able to have a direct impact on business outcomes as well.” 

Paul says there are many things finance teams can do to be more optimal, falling roughly into three categories: 

Foundational: No matter how small a company you might be, you need financial reports. If you can improve efficiencies in basic financial reporting, then your team can get more involved in analysis and insight, rather than copying and pasting from one report to another. Optimisation: How can you get to better planning and forecasting? Companies use big Excel spreadsheets for month end, end of quarter, year-end, budgeting, reforecasting, with lots of macros tying everything together in what Paul describes as a “spaghetti scenario”, so addressing this complexity will help teams to become better and more efficient. 

Innovation: Robotic process automation can take over routine tasks that don’t actually need human intelligence to perform them – such as bank recons, which can involve dozens of people in large organisations. With robotic process automation putting the numbers in and getting the results out, finance teams will have more time available for guiding the business. 

Karabina was founded in 2001, and joined the Altron group in 2018. Paul says that the change has been for the better. “We’ve been able to carry on with what we do, which is producing great solutions for our clients, as well as looking at the many new opportunities Altron has brought to us.” 
Altron Karabina co-hosted a stand at the Finance Indaba Africa on 16 and 17 October 2019 with Host Analytics. Paul presented on Thursday 17 October, explaining how Host Analytics allows finance teams to gain control of their time. 

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