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The Right Way to Chop

Process standardization, simplification, and automation have brought finance costs to a record low level as a percentage of corporate revenue.

By Treasury & Risk Staff | Updated on December 18, 2014
How much does it cost to run the finance function? How much should it cost? And what best practices can companies implement to bring those costs down without reducing the quality of financial oversight and business support?

Answering these questions is one goal of the extensive benchmarking research compiled annually by The Hackett Group. According to the firm’s benchmark reports, the cost of finance has been falling steadily for years. Even so, this year’s result is notable: For the first time, the finance function in the median company cost less than 1 percent of corporate revenue. That’s a 34 percent reduction from two decades ago. (See Figure 1, below.)

Technology has obviously played a key role in improving efficiency, but it hasn’t been the only weapon in the finance arsenal. Treasury & Risk sat down with Hackett senior research director Lynne Schneider to uncover causes of the trend.

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