Overcoming Capacity Constraints to Minimize Accounting Errors
Finance teams should prioritize the technology acceptance rate over the number or frequency of tech enhancements.
Almost six out of every 10 accountants report making several errors every month, and one out of three says they make a few errors each week. These alarming statistics come from a July 2023 survey of 497 accountants conducted by Gartner research. The survey also found that the error rate among accountants is highly correlated with the extent to which their controllers report capacity constraints.
Obviously, financial errors can have tangible business consequences. If errors make their way into the monthly or quarterly close, business decisions may be based on incorrect data. Worse, the organization may issue inaccurate financial statements, opening itself up to an array of potential regulatory and investor relations challenges down the road.
Corporate controllers frequently seek to increase capacity by deploying new technologies in hopes of reducing errors. But so far, this approach has had mixed results. Many controllers have told us that their staff keeps doing manual work long after it is no longer needed.
The Gartner research suggests that technology acceptance—the perception among staff members that the technologies they have are useful and easy to use—is the crucial ingredient in ensuring that an accounting team will get value from new systems, which in turn will reduce financial errors. And implementing technology without staff members’ acceptance can actually increase their error rates significantly (see Figure 1, below).
How Can Technology Eliminate Finance Errors?
Most controllers are actively working to create capacity with a goal of reducing errors. Still, most companies aren’t there yet; half of the accountants in our research said they do not have the capacity to effectively complete their current work or to take on additional work.
Accounting organizations are not likely to expand their overall staffing levels to create the needed capacity through headcount. And efforts to triage work and digitize have not yielded the anticipated results. Thus, our research indicates that it’s far better for organizations to have a limited set of technologies which treasury and finance staff members fully accept than to have a more expansive technology infrastructure without full acceptance of those systems.
To test for technology acceptance, we asked accountants four questions about the solutions they currently have available. We asked:
- Is the technology you have available easy for you to use?
- Is the technology easy for you to learn?
- Is the technology easy for you to customize to your own needs?
- [Does the technology you have available] have all the information you need in [a single] view?
We found that when the accountants have technology acceptance—in other words, when they answered ‘yes’ to all four questions—errors decreased by about 75 percent. The opposite was true too: When controllers implemented technology without acceptance, errors increased by about 61 percent. In other words, implementing technology that did not meet these criteria was worse than not implementing the technology at all.
Unfortunately, only about one-quarter of the accountants we surveyed accept the technology available to them. These organizations have not necessarily rolled out different solutions than their peers. But they have put into place a series of practices that enable staff to perceive their systems as both useful and easy to use.
Three best practices can help controllers build technology acceptance within their accounting teams:
1. Incorporate structured staff feedback into the vendor selection process, and prioritize technology enhancements. Not only is it crucial to seek employees’ feedback, but it’s also important to be mindful of the timing within which employees can provide input. Seeking feedback too late to meaningfully inform decisions—such as creating focus groups after plans have already been enacted—leaves no time to adjust decisions. On the other hand, involving too many people across too many stages of vendor testing and enhancements can slow decision-making and create opinion overload.
To strike the right balance, controllers should involve their accounting teams at key decision points and use structured methods to ensure these conversations are productive. Functional testing is a key moment when it’s ideal to solicit feedback from those who will be using the system day-to-day.
2. Replace old behaviors with new ones, leaning on long-tenured staff to guide the way. It’s unrealistic to assume that staff will automatically understand how to work differently to optimize their use of new technology. In our 2023 controller survey, almost 60 percent of respondents said staff members continued to manually double-check their work after implementing a solution that rendered this manual effort unnecessary. Similarly, nearly 75 percent of controllers reported that their accountants were spending too much time on low-value activities.
Corporate controllers should enlist long-tenured staff, who have gravitas and knowledge of processes, to serve as change champions within the company and influence other team members. For example, the corporate controller at one U.S. financial services business prioritizes selecting change champions with institutional knowledge over those with technological skills, even for conveying how useful and easy-to-learn technology can be. This company’s accounting leaders saw technology acceptance increase by 30 percent when they began assigning long-tenured staff to be change champions.
In addition, several of the controllers we surveyed realized that, in order to get staff to work differently and resist manual tasks after tech implementations, they needed to go through the added step of thoughtfully and intentionally replacing old behaviors with new ones.
3. Provide transparency into errors and the resolution of those errors. Giving staff visibility into the organization’s process for identifying and resolving errors builds technology acceptance because it makes the technology seem more normal and less alien. Instead of trying to quickly and quietly fix the tech issues that inevitably accompany new launches, transparency regarding errors and the path to resolution lessens the harmful and negative impact those issues have on acceptance.
The corporate controller at one of the companies Gartner surveyed created a transparent environment during a technology implementation, encouraging all staff to report any challenges they found. This process allowed staff to see whether their peers had already registered the same issue, and to see how the organization—whether finance staff or IT—planned to resolve it.
This relatively simple step brought technological shortcomings into the spotlight, where the corporate controller and finance leadership team could more easily manage them.
Generating Accurate, Timely Financial Data
The accounting function ensures that the rest of the business has accurate and timely financial information. It is, therefore, imperative that accountants work productively and confidently with the technologies designed to serve them.
By building a culture where the accountants on their team accept the available technologies and put them to trusted use, corporate finance leaders can unlock desired process improvements, increase capacity, and minimize errors.