The current UK landscape
In October last year, the UK Autumn Budget was presented by the new Labour government’s Chancellor of the Exchequer, Rachel Reeves.
It introduced significant changes that would have lasting impacts on businesses, including raising the National Minimum Wage by 6.7%, reducing the threshold at which employers would begin paying National Insurance contributions, and increasing the NI contribution percentage from 13.8% to 15%.
In addition to the pressures from increased staffing costs, finance teams are also finding it difficult to attract and retain key talent. Research by TalentBank showed that accounting-related roles took up 8 of the top 10 spots for most searched jobs by recruiters.
While retailers are bracing for a £7 billion surge in staff operational costs this year, 51% of businesses are prioritising investment in automation of accounting and finance tasks over hiring new staff to combat this challenge.
The challenges that lead to increase recruitment
As retailers grow, so too does the workload on the finance team. This forces businesses to hire more staff to manage the increase in invoice processing. Manual data entry can take up to anywhere between 5 and 15 minutes per invoice!
As well as mounting invoices, 87% of finance professionals reported an expanded scope of their work, taking on new responsibilities as the organisation grew. These included a focus on data analysis, the management and integration of new systems and taking on an advisory role for business strategy.
Seasonal fluctuations are common in retail and present a short-term need for more staff. On average, retailers tend to increase their workforce by 10-20% during peak times. In 2023 Tesco hired around 30,000 temporary staff during Christmas to cover increased demand. However, the significant cost associated with these recruitment campaigns including the time and cost to train temporary staff is not sustainable.
Another seasonal issue lies in the increase in fraudulent activity. While retailers are busy trying to manage a mounting workload, fraudulent invoices often slip through the net and in 2023 cost the UK retail industry £93 million according to the UK’s National Fraud Intelligence Bureau. Finance teams are becoming increasingly aware of fraud and have increased staffing numbers as a way of combating the issue.
A sustainable solution: Automation in accounting and finance
Whilst it is an automatic reaction to tackle increasing workloads with greater manpower, thinking strategically can deliver more sustainable solutions.
Think of questions for an accounts assistant interview. What key skills are essential to the job role? Numerical accuracy and attention to detail are the two most sought-after skills by employers for accounts assistants.
However, there is always a risk of human error when processing data manually.
By automating invoice processing, retail businesses have eliminated up to 97% of manual data handling and saved 40% on operational overheads. - Flinders General Store
The introduction of automation will lead to reduced processing, enabling the finance team to focus on their expanded responsibilities and deliver more value to the business.
As well as helping protect against fraudulent invoice activity, the benefits of accounting automation include scalability, meaning they can absorb the additional workload and risk involved in seasonal fluctuations. With flexible plans to accommodate consumer demands and automatic fraud detection features, automation of accounting and finance processes ensures your team is prepared for future peaks and can tackle them with confidence.
As wages rise and staff retention becomes more challenging, finance management should look to upskill their employees and provide attractive career development paths to encourage loyalty. Recent research indicated that 72% of UK companies lack the necessary talent in areas like AI and data analytics. By introducing software into the finance department, employees expand their knowledge which in turn creates higher job satisfaction.
The key takeaways
To answer the burning question of a CFO: Recruit or automate? Over 51% of finance leaders plan to invest in automation rather than hire. That percentage still indicates uncertainty amongst UK retailers.
Some fear that automation will outright replace the need for people in finance roles, however, it is clear to see that the role of a finance professional is evolving rather than being replaced. Finance teams now have the opportunity to drive strategic business decisions through data analytics and forecasting rather than repetitive tasks like entering cost centre codes and nominals to line items.
Becoming more efficient with fewer people is the goal for retailers in 2025. Automation in accounting and finance will be a key part of achieving this goal.
Download our eBook
Explore how Lightyear’s AP automation solution can help you reduce costs, and stay compliant.
