Breaking Down Barriers: How to Take F&A Out of the Enterprise Silo

March 13, 2024 Theresa Rex

picture of executive working on laptop with an overlay graphic showing financial silo data in files

Financial data silo: it's a stubborn problem that also happens to be practically universal. No matter your organization's industry, you've likely encountered these sealed-off, functionally autonomous efficiency-destroyers in one form another. There are data silos, departmental silos and silos overseen by as few as a single team member. There's truly an enterprise silo that exists for everything you can think of – it's amazing how widespread they are, considering no one actually wants one.

Why Are Finance and Accounting Silos So Easy to Build?

accountant documenting newly found financial data silos

If you have multiple business units, you have silos. A readily available example is the parallel, often counter-productive inner-workings of marketing and sales. Despite sharing common goals – like generating new business and winning contracts – the tendency of each to operate in opposition to one another is so common as to be cliché.

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Finance silos might enjoy less of the spotlight, but they're just as prolific and at least as frustrating. They're extremely easy to create, too. Part of that has to do with the fact that finance and accounting is rarely the central function of any business. Daily work in the accounting department is often absolutely necessary but rarely adds value. It's maintenance. It keeps businesses compliant, keeps the flow of cash running and keeps the bills paid. But because the work done in F&A is rarely client-facing, it's often functionally autonomous.

On top of that, the architecture of most finance departments resembles even more mini business units with all sorts of subsystems, quirks and pockets of institutional knowledge, like:

  • Accounts Receivable

  • Accounts Payable

  • Payroll

  • Treasury

  • Compliance

More: The Trouble With Tribal Knowledge: How To Document Your Accounting Processes.

You get the picture. Depending on the size of your organization, this list can get awfully big, and suddenly you've got a silo filled with – lots of little silos. When that's the case, bringing everything out into the open can be especially challenging.

When Teams Have Different Priorities, Enterprise Silos Are Inevitable

manager talking to her team about new guidelines to improve financial data silo issues

Ideally, every individual on every team in each department of an organization is working toward a set of common goals that fulfill the overarching corporate vision. And usually, they are! It's just that the path to those common goals is going to look a lot different to a Sales Associate then it will to a Controller or to the CMO or to a Data Analyst.

Each has its own set of responsibilities, goals and areas of expertise. Silos can be the result of territorialism, but we tend to think they're built less out of that instinct than just because it can be difficult to see the forest from the trees: each individual, department or team is simply focused on their own work and doesn't – or doesn't have time to – zoom out to see the big picture.

If the priority of the day in the finance department is managing the monthly close, your team is busy working on what can be a hectic and chaotic process and puts the necessary blinders on to make sure it's done on time. Triage naturally breeds opacity.

A Lack of Cross-Functional Roles Can Create Institutional Knowledge

Business director explaining the importance of cross-functional roles to his department

Another way siloes are made and reinforced is through the creation and proliferation of industrial knowledge (sometimes referred to as tribal knowledge). It's a separate issue from silo-building, but the two tend to cause duplicate problems.

There are plenty of F&A roles that overlap, but few are truly cross-functional and almost none are cross-departmental roles. This can lead to a lot of information that exists solely in an individual's head or as unspoken departmental protocol. When you have a team of individuals who are largely tasked with work that doesn't really touch the departments or functions around it the result is often insular, isolated process completion.

Consider accounts receivable. It certainly functions within the finance department, yet according to recent survey from the Institute of Financial Management, less than 5 percent of accounts receivable functions are totally integrated across the order to cash cycle. Ideally, that number would be a lot higher – imagine how much more efficient a fully integrated O2C cycle would be – this segregation means that other F&A functions don't have access to documented account receivable processes. At less than 5 percent, it's hard to make the argument that they even need it.

How can finance leaders begin to dismantle an enterprise silo in F&A when there is so much black boxing going on, when the level they're built on is as granular as this?

How Financial Leadership Can Move F&A Out of the Enterprise Silo

picture of buildings

Breaking silos requires a cultural shift. That may sound daunting, but it's absolutely doable. Consider how frustrating silos are for you as a finance leader. That frustration isn't unique – it isn't as difficult to make the case for better collaboration, communication and documentation when your team is already feeling stymied.

The key is to get emotional buy-in by through authenticity and by demonstrating that those goals can actually be met and aren't just a list of busywork tasks dressed up in important-sounding corporate lingo.

Gather Feedback to Get Divisions Within Businesses on the Same Page

Sometimes, the first instinct when you're faced with an enterprise silo that won't crumble no matter what you do is to issue a directive. Directives handed down from on high that inform busy teams that they are now required to attend an hour-long standup meeting each morning or file quarterly work summaries or email the head of your satellite office's finance department with a daily agenda before clocking out all have one distinct common feature: none of them work.

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You'll get much better results by involving the people that are both affected by and contributing to the financial data silo. Your best first step is to gather feedback, ideally anonymously at first and then in a group setting.

Ask your people what hurdles they're encountering and what would make cross-departmental collaboration easier:

  • Is there a shortage in talent that's causing a bottleneck, resulting in the rushed development of even more institutional knowledge?

  • Are team leads and managers accessible, even to members of departments that don't report to them?

  • Can information be shared freely or is there gatekeeping going on?

You should shut down any petty infighting you encounter but listen closely to what your team has to say. You can get valuable insight if you're willing to be open to the fact that there could be a valid concern within the language that seems like an inconsequential gripe. Few department heads or team members start by griping, frankly. They'll get there fast if they feel unheard or ignored, though.

More: Retaining Accounting Talent: How To Make Your Team Stay

Take resource allocation, for example. If valid complaints about staffing discrepancies are consistently being written off as laziness, squabbling or gimme-ism, the underlying cycle of burning out and moving out that results from being chronically short-staffed will be missed completely. That's especially true for finance and accounting departments, where turnover is higher the pool of replacement talent is scarcer than other departments.

Demand, Facilitate and Enhance Collaboration Between Departments to Break Your Financial Data Silo

There is a big difference between a demand in this context and a directive, like the ones we mentioned above. The demand to work together in dissembling the enterprise silo should be holistic and authentic. By contrast, a directive like one of those listed above, is hyper-focused and driven by the need to control.

You're not assigning a task or adding to the workload. You are signaling a change in the way that teams collaborate. You're modeling this change in your own role and taking the critical step of facilitating it by empowering your team to communicate with other business units and departments.

This can look like a lot of things. Maybe you'll create more professional development opportunities or create a shared database and access protocol in your ERP or other software to resolve silo-building data segregation. For other organizations, it may be as simple as committing to covering talent and skills gaps or using communication and communication software to regularly share information like KPIs, close process documentation and upcoming deadlines in the accounting department.

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Don't try to transform everything all at once. Small changes that nudge your organization closer to a dismantled financial data silo can be particularly effective, especially when these changes are modeled from the top down. When these small changes start to become behavioral changes and then daily habit, enshrine them to ensure they become best practices for your organization.

Determine Whether Offshore Talent Is the Solution to Your Financial Data Silo Problems

manager talking about financial data silo issues to new talent

Sometimes, silo-busting takes more time than you realistically have to spare. As we've established, it takes a cultural shift in thinking, which doesn't happen overnight, and in the meantime, the daily work of managing company finances must continue. Balancing the two can often mean sacrificing the efficiency and effectiveness of both, especially if you encounter resistance internally.

This is where outsourcing makes a lot of sense in the finance and accounting department. Investing in a virtual team of professional accounting talent is an overlooked tool for dissembling the financial data silo, but it's one of the most efficient, cost-effective and straightforward ways to get it done, without affecting headcount.

More: Outsourcing Step-by-Step: Taking The Mystery Out Of Outsourced Accounting

For instance, if you need to cover a talent gap that's causing a chronically slow close every month and quarter, Personiv can hire just one or two accountants that have been trained on your processes and work with your technologies during your operating hours. This will eliminate the typical hiring headaches, and as we work to onboard your new virtual team member, we'll document desktop procedures for you to capture any institutional knowledge, alleviating the associated bottlenecks.

This allows your in-house team to focus on the work you've hired them to do and allows you to zero in on the underlying cultural undercurrents that can be redirected to create a cross-functional mindset. Ultimately, this unlocks the capability to not only dismantle your current finance and accounting silos, but it will also keep new ones at bay by fostering sustainable transparency.

While we're on the topic, we've created a transparent pricing tool you can explore if you'd like to understand how much a virtual team of accountants can save you from a cost perspective. Just visit our pricing page to get started.

outsourcing savings calculator

To understand more about how Personiv can help rescue and reinvest valuable time for your business, get in touch – tell us about your unique challenges and goals and one of our experts can guide you through potential solutions.

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