June 27, 2024   |  Read time: 4.5 minutes

In the world of small and medium-sized businesses (SMBs) the pace is frenetic, change is constant and productivity demands are increasing.  CEOs, CFOs and other leaders are crucial in steering the ship towards success. Despite their competing demands, they set the priorities and goals for the entire organization and develop the plan to achieve them.

However, one of the biggest challenges faced by these leaders today is the persistent issue of staffing shortages, particularly in the finance function. And according to the statistics, this shortage isn’t going to be resolved any time soon:

The data is startling:

  • According to the U.S. Bureau of Labor Statistics, we ended last year with approximately 350,000 job openings in the finance sector.
  • At the same time, the turnover rate of finance professionals hovered around 18% and average salaries to attract and retain those replacement roles increased by 4.5% year-over-year.
  • Because of the tightening talent supply, the time required to fill a corporate finance position increased by 12%.
  • A 2023 survey by Robert Half reported that 87% of CFOs were having difficulty finding qualified candidates for their open finance positions.

In this blog, we will delve into the implications of this issue on SMB growth, offering insights and strategies for leaders to overcome these obstacles and drive their businesses forward.

The Looming Crisis: Staffing Shortages in Finance

As SMBs strive to compete in an increasingly competitive market, the need for a robust finance function has never been more critical. From managing cash flow and financial planning to ensuring regulatory compliance and strategic decision-making, the finance department plays a central role in the success of any business.

However, many SMBs are facing a significant challenge in recruiting and retaining top finance talent. The shortage of skilled professionals in the finance field has been exacerbated by factors such as increasing competition for talent, changing job market dynamics, and evolving skill requirements in the digital age.

The Impact on SMB Growth

For CEOs and CFOs, the impact of staffing shortages in finance can be far-reaching and detrimental to the growth and sustainability of their businesses. Here are some critical ways in which these shortages can impede SMB growth:

1. Limited Strategic Insights: A lean finance team may struggle to provide timely and insightful financial analysis, hindering the ability to make informed strategic decisions. Without accurate financial data and forecasting, businesses may miss out on growth opportunities or fail to mitigate risks effectively.

2. Compliance Risks: In today’s complex regulatory environment, compliance is non-negotiable for SMBs. A shortage of skilled compliance professionals can expose businesses to legal and financial risks, potentially leading to penalties, reputational damage, and operational disruptions.

3. Inefficient Processes: Understaffed finance departments may face challenges in managing day-to-day financial operations, leading to inefficiencies, errors, and delays in financial reporting. This can impact the overall productivity of the business and hinder growth initiatives.

4. Stalled Innovation: Finance professionals play a crucial role in driving innovation and business transformation through financial planning and analysis. Staffing shortages can stifle innovation efforts, limiting the ability of SMBs to adapt to changing market dynamics and seize new opportunities.

Strategies for Overcoming Staffing Shortages

While the challenges posed by staffing shortages in finance are significant, there are strategies that SMBs can adopt to mitigate these risks and foster growth:

1. Embrace Technology: Leverage financial management software, automation tools, and data analytics to streamline finance processes and enhance operational efficiency. By automating ongoing tasks, finance teams can focus on value-added activities that drive business growth.

2. Outsource or Augment to Extend Capabilities: Accessing critical capabilities to shore up your finance function can take on many forms, including talent marketplaces to connect with freelance professionals, fractional expertise or even offshore resources. However, these often serve as a short-term fix or only address part of the functional gap. Another viable option is a managed service solution, allowing you to partner with a firm that can provide end-to-end finance services to cover critical areas such as reporting, budgeting and forecasting.

3. Collaborate Across Departments: Foster cross-functional collaboration between finance, operations, marketing, and sales teams to gain a holistic view of the business and align financial goals with overall business objectives. This can lead to more informed decision-making and accelerated growth.

Take a Proactive Approach for Long-term Growth

Ultimately, the ability to adapt and innovate in the face of adversity will be the hallmark of successful SMBs in today’s dynamic business landscape. With a strategic focus on addressing staffing shortages in finance, leaders need to take a proactive and alternative approach towards sustainable growth and prosperity.

Compass™ by EBM is a full-service finance solution that combines the expertise of a full finance team with the efficiency and agility of cloud-based, modern data and analytics software. Compass is a managed finance service that augments your internal capabilities and delivers critical business insights you are missing.

Ideal for small to medium-sized companies, Compass overcomes the challenges many CEOs and business leaders face: competing investment priorities, challenges maintaining necessary staffing levels for a wide range of critical finance functions; fragmented data and disparate data sources; ill-defined or non-existent reporting to provide the right insights; and inadequate technology resources that scale with company growth.

With Compass, SMBs can gain the upper hand on the current staffing environment.

To learn more about how Compass can help your organization, click here.