Costs associated with the finance and accounting function are increasing for many companies as the talent shortage intensifies, according to a new report.
The study, from the staffing company Robert Half and the Financial Executives Research Foundation, the research arm of Financial Executives International, found that the cost of the finance function as a percentage of revenue rose from 1 percent in 2014 to 2 percent in 2015 for companies with revenue between $500 million and $999 million. At larger companies, median costs grew to 1.4 percent from 0.9 percent in 2014 for companies with $1 billion to $4.9 billion in revenue.
Financial executives told the researchers the increased costs are partly a reflection of the recruiting and retention challenges many companies are facing and the subsequent need to raise salaries and provide increased perks.
The largest companies surveyed (those with revenues of $5 billion or more) were most likely to use temporary or project professionals, with 67 percent saying they employed interim staff. Sixty-one percent of companies with revenues between $500 and $999 million employ these professionals.
“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 of Robert Half, in a statement. “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 health care reform might also be a factor in rising finance function costs for U.S. firms.”
The survey also asked finance executives about the level of technology automation at their companies. More than half the respondents surveyed admitted they still reconcile accounts manually, at 54 percent of U.S. businesses and 55 percent of Canadian companies. However, these figures represent 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 do not use cloud technology for their finance functions and have no plans to do so in the future.
“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 FEI chairman Mitch Danaher, a deputy controller at General Electric. “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.”
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