Top Challenges Faced by Today's Finance Managers

By Linda RoperNovember 1, 2021

-This article was last updated on 9 May 2023-

In a rapidly changing corporate world, those within financial management are certainly facing more challenges today than they did even just a decade ago. Gone are the days when running an efficient finance department meant, having to solely focusing on record keeping and other day-to-day transactional tasks. Now, a finance manager’s role has shifted to encompass additional responsibilities in-line with developing technology and compliance.

From a lack of human resources and the introduction of digitised tax to the challenges that come with remote working; these are just some of the biggest challenges faced by today’s finance managers.

Table of Contents

Stressed Finance Manager sitting on desk with computer and calculator

What Challenges are Finance Managers Facing Today?

There are numerous challenges of being a finance manager today.

These challenges include, but are not limited to:

  1. Small teams

  2. Embracing new technology

  3. Reporting and providing real-time data

  4. Communicating with other departments

  5. Rules, regulations, and compliance

1. Small Teams

At the start of 2021, there were 5.5 million small businesses in the UK containing just 0 to 49 employees. While this is something to be commended, it does present specific challenges to those in executive positions.

Finance managers, for example, find themselves working within smaller teams and wearing various hats to ensure objectives are met. This may include assisting finance team members with their day-to-day tasks, as well as performing their management role.

It also comes as no surprise that small businesses often lack a dedicated human resources manager. Therefore, tasks such as hiring new team members, and subsequently training them, may also fall under new challenges finance managers are facing.

2. Embracing new Technology

Another challenge faced by finance managers is embracing new technology. With the digital transformation of businesses, financial professionals are experiencing a radical shift in how they perform their duties. An increasing focus on technology has seen financial workers move away from the traditional spreadsheet and turn to automation tools including cloud-based software.

This rapid transformation to digitised methods was partly brought about by the UK Government with their Making Tax Digital initiative. As a result, finance professionals have had to adhere to the initiative’s vision for the end of the traditional tax return and a ‘transformed tax system’ by 2020.

3. Reporting and Providing Real-Time Data

Data is a game changer for all areas of business, particularly finance. According to a survey from Deloitte, 49% of respondents said data analytics helps them make better decisions, 16% say it better enables key strategic initiatives, and 10% say it helps them improve relationships with both customers and business partners.

Despite its advantages, the requirement to report and provide real-time data can still pose challenges for finance managers. Along with dealing with poor data quality or inaccuracies, CFOs must also grapple with slow data production and the time-consuming nature of manual data ingestion. Without these responsibilities, however, a finance manager is unable to develop a financial strategy and support the wider business.

Challenges faced by today's finance managers

4. Communicating with Other Departments

A challenge for finance managers is communicating with other departments. A Head of Finance is not only limited to working with their fellow finance workers. As an executive position, they must also communicate and collaborate effectively with other departments within the company, as well as additional stakeholders. Finance plays a very crucial role in business, because it is the department that looks after the funds coming into and flowing out of a business.

In a typical office environment, fewer challenges exist with this responsibility. However, in the wake of the Covid-19 pandemic, companies are now dispersed, with employees working from home or across several different locations. Therefore, trials such as different time zones, poor internet connections, and relying on teleconferencing technology can hinder this communication.

5. Rules, Regulations, and Compliance

All industries are subject to rules, regulations, and compliance, but perhaps none more so than the financial industry. In a survey of 1,100 financial services executives, 88% of respondents said they are challenged in managing regulatory change. The need to balance compliance demands as well as profitability goals is another challenge finance managers are facing. In order to do this successfully, finance professionals are having to work longer hours, as well as outsource tasks, or hire extra staff to manage the additional work required to keep on top of compliance.

How Can Finance Managers Overcome the Challenges?

We’ve explored some of the emerging challenges of being a finance manager. Now let’s look at how those challenges can be overcome.

  • Communicate Clearly When Managing a Small Team

Clear communication is vital when managing a small team to help everyone understand what's expected of them. It’s a two-way street, though, and feedback from employees should be welcomed and encouraged. Empowering your team through a coaching leadership style will help boost team morale and allow your employees to develop.

Recognition programs are an excellent way to acknowledge and reward your team for their hard work. In small teams where everyone is working hard, ensure your employees have a good work-life balance. This is good for overall well-being, and a happy workforce will be more productive.

  • Focus on the Benefits When Embracing a New Technology

To embrace a digital landscape, employees need to understand why a new system or process is being adopted. Focus on the benefits that the new technology will bring to your team and allow plenty of opportunities for training and getting hands-on with new technology.

A challenge of being a finance manager is that some employees will take to new technology faster than others. Encourage your more tech-savvy colleagues to partner up with those who are less so, enabling the sharing of skills and knowledge across your team.

  • Know What You Want to Measure When Reporting With Real-time Data

Providing the right metrics for your organisation is critical, so before you start sifting through your data, consider what you want to measure, how it fits in with the company’s goals and whether it can be used to inform decision-making.

Finance managers should ensure that any tools they invest in give the optimum benefit to the finance team. Cloud-based accounting software allows you to automate many tasks, freeing your team up to focus on other tasks.

  • Be Open and Transparent When Communicating With Other Departments

Communication works both ways, but financial leaders can lead by example to overcome this challenge. Sharing information about the activities of your team, such as current projects and personal changes, will encourage other departments to do the same.

Being open and transparent is an excellent way to build trust in other departments. That being said when communicating with the rest of the business, straightforward language, free from financial jargon, will always land better with colleagues.

  •  Keeping an Eye Out For New Rules

This challenge is never going to go away, as 'regulatory compliance is an organization's adherence to laws, regulations, guidelines and specifications relevant to its business processes'. However, there are ways that a finance manager and their team can make them less obstructive.

Regulatory changes happen all the time, but keeping an eye out on information released by relevant governing agencies and regulatory bodies means you can stay informed about what’s coming your way, giving you more time to prepare.

Regular internal audits are useful, as they have the potential to spot any potential issues before they get out of hand. Investing in compliance management software can also help by saving you time and resources by streamlining and automating compliance-related processes.