Finance Function Costs Increasing as Talent Shortages Intensify

By Mae Marie, Close-Up Media Staff Writer

When it comes to the costs of doing business, one area of concern for firms is the rising costs of the finance function, according to a new survey of executives from finance and accounting departments at public and private companies in North America.

Specifically, the research indicates that at companies with revenues between $500 million and $999 million, the cost of the finance function as a percentage of revenue rose from 1 percent in 2014 to 2 percent in 2015. At companies with $1 billion to $4.9 billion in revenues, median costs grew to 1.4 percent from 0.9 percent in 2014.

Executives interviewed for the study noted increased costs are in part a reflection of the recruiting and retention challenges many companies are facing and the subsequent need to raise salaries and provide increased perks.

The information is part of the sixth annual Benchmarking the Accounting & Finance Function 2015, a study from global staffing firm Robert Half and Financial Executives Research Foundation (FERF), the research affiliate of Financial Executives International (FEI). In addition to surveying finance executives, the groups also conducted in-depth interviews with financial leaders for the project.

"One of the trends that stood out in the research was the increased difficulty executives reported in recruiting skilled employees," said Paul McDonald, senior executive director, Robert Half. "Companies competing for top talent, as well as those looking to retain star performers, are boosting compensation packages. In some cases, higher costs stemming from healthcare reform might also be a factor in rising finance function costs for U.S. firms."

Report findings include:

More than half of respondents surveyed said they still reconcile accounts manually -- 54 percent of U.S. firms and 55 percent of Canadian companies. This is a decrease from 59 percent and 66 percent, respectively, last year.

Nearly half (49 percent) of U.S. companies and 55 percent in Canada report they don't use cloud-based solutions for their finance functions and have no plans to do so in the future. The largest companies surveyed (those with revenues of $5 billion or more) were most likely to use temporary or project professionals, with two thirds (67 percent) saying they employed interim staff. Sixty-one percent of companies with revenues between $500 and $999 million employ these professionals.

"Benchmarking data provide companies with important insights into what their peers are doing when it comes to practices such as closing the books, using technology, managing compliance and staffing their departments," said Mitch Danaher, FEI Board Chairman and Deputy Controller, General Electric Co. "Financial leaders can compare their performance in these areas both quantitatively through our survey data and qualitatively through accompanying interviews with financial executives. In this way, finance and accounting departments can also identify ways in which they can make better use of resources, improve their effectiveness and add even greater value within the finance function."

The report provides benchmarking data based on input from nearly 1,400 executives from finance and accounting departments at public and private companies in the United States and Canada. The groups said that executives were asked questions related to five key operational categories: workforce management, accounting operations, financial systems, sourcing, and internal controls and compliance. The results are designed to provide a framework for developing best practices and improving operational efficiencies.

Robert Half and FEI will host a webinar on June 11 at 1 p.m. EDT, to discuss the report findings. Presenters include McDonald and Thomas Thompson, Jr., senior associate, research, FERF, as well as a panel of CFOs from leading companies. The speakers will share strategies for today's finance leaders.

Register or learn more about the webinar. The complimentary session qualifies for one unit of continuing professional education (CPE) credit, the groups said.

Morristown, N.J.-based FEI is an advocate for the views of corporate financial management.

Financial Executives Research Foundation (FERF) is the non-profit research affiliate of Financial Executives International (FEI).

Calif.-based Robert Half is a specialized staffing firm.

Full report: roberthalf.com/benchmarking-in business

More information:
financialexecutives.org
roberthalf.com  

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