We recently launched a whitepaper focused on finance professionals in the nonprofit space called "How to Stay Alive in the Accrual World". It provides an overview of many of the challenges CFOs and finance professionals are facing. Integration Platform-as-a-Service (iPaaS) can be a smart solution for many of these top finance and accounting challenges. In our blog today, we'd like to dive into Finance and Accounting Challenges. I had the opportunity to interview Zachary Griggs, DataBlend's Director of Client Experiences on how iPaaS can help nonprofits. Zachary has over 10 years working with nonprofits and has served as a Director of Finance, so he has a unique viewpoint that many finance professionals can relate to. Recently Zachary hosted a webinar "Demystifying Integrations" - during the webinar, he spoke about his experience as a Director of Finance.
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Finance & Accounting Challenges
There is no denying it, CFOs and finance leaders are some of the most stressed executives in any organization. They carry a lot of weight on their shoulders. The role of the nonprofit CFO varies from finances to leadership to fundraiser. They need to be on top of the organization’s finances, ensure that the financial risks and controls are correctly handled, and that the books are accurate. CFOs also play managerial roles in the finance department, as well as participate in fundraising and overall strategy of the organization. In a recent survey, three in four CFOs expect stress levels to rise in the next few years. The study attributes CFOs’ rising stress levels to four factors: increasing workloads, growing business expectations, shorter deadlines, and a lack of skilled staff. The four top challenges for 2022 facing CFOs are: attracting and retaining talent, controlling job costs, disconnected data, and embracing modern technology.
Challenge #1: Attracting and Retaining Talent
The Great Resignation hit every industry sector. No organization was immune. 2021 was a historic year for American jobs. A record number of workers quit their jobs while US employers had more positions to fill than ever before. According to CNN, in total, 75.3 million workers were hired last year, while 68.9 million quit, were laid off or discharged. Out of these so-called separations, 47.4 million were voluntary quits.
The top three sectors that were hit the hardest from The Great Resignation were:
- Leisure and Hospitality – nearly seven percent (6.4%)
- Trade, Transportation, and Utilities – nearly four percent (3.6%)
- Professional and Business Services – nearly four percent (3.3%)
This might leave you wondering why so many people participated in The Great Resignation – a recent Pew Research Center survey found that low pay, a lack of opportunities for advancement, and feeling disrespected at work are the top reasons why Americans quit their jobs last year. Interestingly, the survey also finds that those who quit and are now employed elsewhere are more likely than not to say their current job has better pay, more opportunities for advancement and more work-life balance and flexibility.
What is a CFO to do? They can have one of the best organizations to work for and you can still feel the impact of The Great Resignation. In addition to all the amazing HR benefits, policies, and retainment tactics, enabling automation in the organization is a fantastic way to safeguard systems. With automation in place, you mitigate some of the risk of disruption associated with people leaving. Implementing automation is also a great way to tackle the number two reason people left their jobs in 2021 and give employees and staff more opportunities for advancement by allowing them to more important tasks and priorities. CFOs can focus on evaluating accounts payable (AP) instead of integrating it.
Challenge #2: Controlling Job Costs
In the post-COVID world costs have increasingly gone up. You cannot visit the gas pump – let alone the grocery store without feeling inflation firsthand. It is a sobering reality that ALL CFOs, non-profit and for-profit, are dealing with daily. However, to continue growth and not stunt it, you need to invest in people, technologies, processes, systems, etc.,
"I’m a firm believer in spending the necessary money to build a winning organization and allowing the organization to be as successful as possible. To me, that is what the nonprofit space really offers people. It gives oneself and others a great opportunity to make a big difference and to matter in the world." ~ Ed Goble advisor for the Miracle Foundation and former University of Texas as the Associate Athletic Director for Business & CFO
Invest in what matters and try to control costs in other areas. Here are a few tips from Gartner:
- Use a value framework to sequence and prioritize cost cuts. Not all organizations and costs are created equal.
- Make cost-cutting more urgent for management by having them own the naming and quantification of earnings headwinds. The key is to pass the burden of proof to line management to explain the economics of their business in a headwinds/tailwinds format so that they fully own the top- and bottom-line outcomes.
- Attack information gaps in growth investments to prevent uncertainty overwhelming investment decisions. When organizations are pressured to reduce costs, growth investments are often among the first things on the chopping block. This can set an organization back several years in the innovation game.
Challenge #3: Disconnected Data
We are living in a cloud-based world. Since the COVID-19 pandemic, digital transformation at organizations has amplified greatly. If organizations were not on the cloud before the pandemic, it is highly likely that they are on it now. In a recent report from Palo Alto Networks, they found that the COVID-19 pandemic affected cloud adoption strategies for nearly every organization over the past year. According to the survey, organizations moved quickly to respond to increased cloud demands: nearly 70% of organizations are now hosting more than half of their workloads in the cloud, and overall cloud adoption has grown by 25% in the past year.
"Data is the lifeblood of an organization. It separates opinions from facts and can provide a competitive advantage for an organization. From knowing who your customers are and what they are doing with your products, to understanding how profitable a line of business or geography is, more companies are looking to the CFO to define the metrics and measurements that will be tracked to manage growth, enable agility, and ensure long-term sustainability." ~ Jim Johnson, former CFO of Adaptive Insights
With so much data in the cloud and spread across different applications, it is very likely that many organizations are suffering from disconnected data syndrome. In a recent survey, it was reported that organizations in the UK and the US are losing $140 billion every year due to disconnected data.
Disconnected data looks like:
- Poor, fragmented decisions
- Frustrating company meetings where everyone (or every department) has a different tally for the budget/project
- No way to tell where totals came from because there is no drill-down capability
- Inaccurate or corrupted data
- Possible violation of data protection regulations
- Productivity and cost inefficiencies
- Finger pointing
- General mistakes
Disconnected data makes you feel:
- Frustrated
- Angry
- Overworked
- Crazy
Out of all the pain points that disconnected data presents, it is time that we hear about the most. What is your time worth? Is it more time that you could spend with your kids? Is it more time being strategic? Or more time to do something that you love? Do not waste time because you cannot get more of it.
Disconnected data costs money, time, and frustration. Kermit the Frog once said, “It’s not easy being green.” At DataBlend, we say, “It’s not easy being disconnected.” It is painful and unnecessary. We are living in a cloud-based, SaaS (Software-as-a-Service) world. Organizations are not going to stop adding new SaaS applications, so implementing an iPaaS platform can enable platforms to work together.
Challenge #4: Embracing New Technology
"There’s no question over the last year this new wave of technologies has had an impact on CFO decision making. CFOs are really working to get their arms around all of it and we’ve seen this not only through our survey but client interactions. If you think about the CFO’s role in the last five to 10 years, more and more responsibility has been put on their plate. They need to grasp and understand these new technologies because they are ultimately the chief allocator of capital in these organizations. The CFO is in a position where they have to make choices and articulate their rationale to the CEO and the board as to how they arrived at their recommendations." ~ Sandy Cockrell, Global Leader of the CFO Program of Deloitte.
The cascading effects of the pandemic caused an inexplicable amount of suffering. From disrupted lifestyles to work routines – not to mention the global economy and supply chains. No organization was immune to the disruption that COVID caused, and respectably, is still causing. Currently, inflation is at a 40-year high. That means consumers are losing buying power at a faster-than-usual pace. According to CNBC, The Consumer Price Index, a key inflation gauge, jumped 8.5 percent in March 2022 from a year earlier, the fastest 12-month increase since December 1981.
In addition, the pandemic-induced changes exposed the inefficiencies of some finance teams that relied on manual processes and outdated systems to complete their activities each month.
"Finance teams with a high degree of automation and defined methods were able to adapt to this sudden change over the last year and continue to execute their responsibilities in a timely manner." ~ Brandon Grinwis, CFO of Ascentis, a workforce management and HR software provider
Embracing modern technologies can be difficult and time consuming. However, in the long run, the benefits outweigh the risks.
Embracing technology – seven benefits for finance professionals:
- Integrated systems with synchronized data
- Enhanced decision making with real-time information and data
- Fewer manual errors – some of the biggest finance snafus are from manual errors made in Excel
- Easier for organizations to secure funding with more accessible financial records and resources
- Focus on higher value tasks vs. manual processes
- More time to digest the data when you are not working in the data
- Remote access 24/7
As a bonus, embracing technology with up-to-date integrated systems gives non-profit organizations increased financial transparency with donors. Non-profits that follow best practices in governance, donor relations, and related areas are less likely to engage in unethical or irresponsible activities.
Want to learn more?
Download the full whitepaper: How to Stay Alive in the Accrual World
CFOs and finance leaders are challenged with turning the numbers into something meaningful. They need to be able to derive insights and deliver information to the rest of the organization. The integrity, flexibility, and speed of that information enable your management and staff to manage the business more effectively.
You'll get an overview on:
- Top Challenges in 2022
- Funds & Grants
- Department Finances
- Reporting & Visibility
- Demystify Integrations – You can do it. You do not need IT.
- Five Frequently Asked Questions on Integrations
