Introduction
A couple of weeks ago, I shared my experience and high-level view on why decentralized finance is inefficient. Today, I would like to delve deeper into this topic.
One of the most common organizational structures in large companies is to have local finance teams in different regions or departments. The intention behind this structure is to have teams that are familiar with local laws, regulations, and business practices. However, this structure can lead to various pitfalls that can harm the company’s financial performance. In this blog post, we will discuss the three main problems that arise from having local finance teams and how they can impact the company.
Duplication of Work
One significant issue with having local finance teams is the duplication of work. When each team operates independently, they often end up performing similar tasks, such as collecting data, processing invoices, and managing budgets. This duplication of work can lead to wasted time and resources as each team can spend unnecessary hours performing tasks that have already been done. Additionally, it can lead to inconsistencies in data, making it difficult to compare financial performance across regions or departments.
Inconsistent Practices
Another major problem with having local finance teams is the inconsistency in practices. Each team may have different methods and procedures for managing financial operations, which can lead to confusion and errors. For example, one team might use a specific software program to manage their budgets, while another team uses a different program. On a regional, let alone global, level, this inconsistency can lead to mistakes in financial reporting and make it difficult to make informed decisions based on accurate financial data.
Difficulty in Coordinating Efforts
Having local finance teams can pose challenges in coordinating efforts across different regions or departments. Communication can be difficult, and it may be challenging to ensure that everyone is on the same page. This can result in missed opportunities and mistakes, such as overlooking potential cost savings or failing to identify financial risks. In addition, coordinating efforts can be challenging when each team is working with different data or using different methods of interpretation.
Conclusion
While having local finance teams may seem like a good idea in theory, it can lead to various problems in practice. Duplication of work, inconsistent practices, and difficulty in coordinating efforts can all harm the company’s financial performance. Therefore, it’s essential to consider the potential pitfalls of this structure and find ways to mitigate them. By doing so, companies can ensure that their financial operations are efficient, accurate, and coordinated.
anosis nederland 