Restrictive spending policies could be stifling business growth, say finance leaders

A significant proportion of senior finance leaders believe that restrictive spending policies are limiting business growth.

New research reveals that 88 per cent of English and Italian finance leaders have encountered missed opportunities due to employees lacking direct access to their own budgets.

The findings, published by spend management provider Soldo, indicate that while 86 per cent of senior finance leaders would trust employees with company funds, many remain reluctant to grant direct access. One of the primary reasons for this hesitation is a perceived lack of employee understanding of finance policies (35 per cent), which has resulted in more than half of UK employees (54 per cent) admitting to bending the rules to gain access to company funds.

The research, which surveyed both employees and finance leaders, highlights the negative impact that restricted budget access can have on business growth:

• Missed revenue opportunities: Among the 76 per cent of senior finance leaders who reported missed opportunities over the past year, many cited significant financial repercussions, including financial losses (39 per cent), loss of existing customers (38 per cent), and delayed product or service launches (39 per cent).
• Project delays and employee frustration: Nearly half (43 per cent) of employees stated that interactions with finance have slowed down their projects. Key issues included slow response times from finance teams (31 per cent) and an excessive focus on cost-cutting at the expense of growth (21 per cent).
• High administrative burden: One in six finance leaders reported spending six or more hours per week managing administration related to decentralised spending. Moreover, 59 per cent admitted that adjusting budgets in response to shifting business priorities remains a significant challenge.

The report also found that almost three-quarters (73 per cent) of finance leaders believe that overly complex financial processes slow down or prevent them from supporting employees in pursuing new business opportunities. Additionally, 60 per cent of finance leaders admitted to encountering financial surprises at month-end, which can shift focus away from growth strategies.

The research suggests that empowering employees by improving their access to company funds could have a positive impact on business growth strategies, particularly by boosting productivity. Key benefits identified by both employees and finance leaders include:

• Increased employee motivation and proactivity: 39 per cent of senior leaders believe motivation would improve, 35 per cent predict greater proactivity and agility, and 36 per cent foresee an increase in job satisfaction.
• Enhanced productivity: 40 per cent of employees stated that their productivity would improve with easier budget access.
• Stronger finance-business collaboration: Greater budget flexibility could bridge gaps between finance teams and the wider business, with 36 per cent of finance leaders and 22 per cent of employees anticipating stronger working relationships.