3 efficiency drains that cost companies millions

There’s not a company on earth that doesn’t want to be more efficient, so why do so many businesses waste time — and therefore, money — on slow and clumsy processes? According to research firm IDC, companies can lose 20% to 30% of their revenue to inefficiencies each year, representing millions in lost funds.

Meanwhile,McKinsey’s TheState of Organisations 2023: Ten shifts transforming organisations report found that two-thirds of business leaders consider their organisational structures as too complex, with inefficiencies that hinder adaptation and responsiveness. Having spoken to thousands of clients collectively across our business, we hear the same concerns often, and see digitisation as a route towards greater efficiency and a stronger bottom lines.

What do these inefficiencies look like exactly, and is your business suffering from them? Here are three common examples for starters.

Duplication of tasks

Duplication of efforts is the main area where money is lost.Typically, this involves keying the same data into multiple sources where systems can’t talk to each other. This lack of interoperability isn’t uncommon.Although the vast pool of third-party software vendors available today gives companies ample options to find the specific tools they need to do business, such systems don’t always integrate smoothly.

In this situation, bottlenecks can appear, as manual processes need to be inserted into the workflow to complete the task — for example, transferring paper documents to online systems. What was supposed to be a fast and digitised service can quickly become overly complex and costly.

Paper-based processes

Looking more closely at paper-based processes, such methods are still commonplace in financial services. This can involve printing a copy of an invoice to be paid, alongside the bank statement, header sheet explaining the rationale for the payment, bank details, client reference, and checkbox confirming it’s been book kept. This weighty pack is then signed by two signatories who approve the payment on the banking platform. As these requests are usually ad-hoc, the task of processing a payment sometimes costs more than the invoice itself.

Reckon addresses these kinds of cumbersome processes using optical character recognition (OCR) software. OCR allows our team to automate the task of reading and pushing invoices into the accountancy system, reducing time and removing opportunities for human error. Payment runs are performed at a set time weekly, monthly, or bi-weekly, allowing multiple payments to be made at once to benefit from economies of scale. Meanwhile, workflow software or automatic email notifications are used to authorise the payment runs, allowing a full audit trail of each run. This means no duplication of efforts when providing information to auditors. 

Manual verification

Beyond paper-based processes, we often find companies relying too much on manual verification. The issue here is two-fold. First, manual processes require personnel to be present for completion — no easy feat when you’re dealing with the time-starved C-suite. Second, manual verification is prone to human error, which compounds the time lost as corrections must also be made manually.

Among the finance function, we see manual verification most often with the physical signing of documents and the verification of data such as identity and addresses, which require wet signatures. Electronic identity verification or eIDV is the answer here, providing live verification in minutes and real-time feedback on errors or quality issues with pictures and videos. 

What’s the fix?

There are several steps you can take as a company to identify and address operational inefficiencies.

·      Complete a workflow analysis: A work flow analysis will allow you to break down and study the performance of a work flow so you can identify improvements. This analysis is typically completed for a specific business operation, allowing you to target critical operations first.

·      Survey employee experiences: Your employees know your workflows more than anyone, so don’t overlook the value ingathering their collective experience to identify areas for improvement.Conduct surveys and look for trends and patterns that point to areas where attention is needed.

·      Benchmark against digital alternatives: You’ll need to demonstrate ROI before any digitisation efforts are approved. You can do so by benchmarking current approaches against digital alternatives. Compare paper-based costs and time investments against digital options to quantify the time taken to see a positive return on any new system.

·      Outsource control: Involving a third-party might at first seem like a contradiction when the aim is cost savings, but choosing the right partner to scrutinise processes and problem solve can save major funds in the long term. It’s why clients choose Reckon to take care of all the complexities in modern-day accounting and financial services.

Interested in learning more about how to simplify your financial function and grow your business? Reach out to us.

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