Highlights and implications from a finance benchmarking study – Part 1
This past November 2009, a fresh benchmarking study was released that provides valuable insight into the finance and accounting operations within U.S. businesses. The study, entitled “Benchmarking The Finance Function” (see full source info at the bottom of this post) was developed by The Financial Executives Research Foundation, the research arm of Financial Executives International (FEI), in collaboration with Robert Half International, the well-known national finance/accounting recruiting firm. The study’s methodology appeared sound and the sample seemed reasonable, with the 200 financial executives surveyed representing dozens of industries and a good mix of company sizes.
Obviously, the report is copyrighted by its creators and so I will not attempt to reproduce significant portions of the information found within the report, but rather I will examine a couple of key findings of the study and discuss possible implications that could be drawn from those findings. Here in part 1, I will examine the report’s findings related to accounting department staffing and staffing costs. In part 2, I will examine the report’s findings related to finance/accounting ERP and financial systems usage.
Accounting Staff & Costs
The average total cost of internal finance/accounting staff as reported by the FERF’s report respondents, as a percentage of their sales revenues, was 2.63%. At first glance that percentage may seem reasonably small, but let’s dig into this a bit further.
Of those costs, the largest segment (8.76%) was spent on transactional processing staff.
Approximately 34% indicated temporary staff was used, but over 68% of those companies utilizing temporary staff spent less than 5% of their total staff cost on that temporary assistance
Of all the groups within the accounting/finance staff world examined (Accounting-Transaction Processing, Accounting-Analysis & Reporting, Planning & Analysis, Payroll/Benefits Management, Tax, Treasury, Credit), the Credit group was surprisingly the lowest area of cost. Given the way the groupings were arranged, combined with tight credit and cash flow realities that have prevailed in many industries over the past couple of years, I was truly surprised that businesses are not spending more on their Credit staff.
Incidentally, 48.12% of respondents indicated their payroll function was outsourced. This is not surprising as ADP grew into a giant by moving years ago to dominate this function which many financial leaders find to be the most obvious and easiest outsource decision around.
Source: Benchmarking The Finance Function, 2009. ISBN # 978-1-61509-0222-8, Financial Executives Research Foundation, http://www.ferf.org