Retail sector productivity hit by complex budget processes

Research conducted by Soldo indicates that complex financial processes are negatively affecting productivity in the UK's retail sector by limiting employee access to company budgets.

A significant finding in the study, which surveyed senior finance leaders and employees, shows that 95% of finance leaders reported lost growth opportunities over the past year due to constrained budget access for employees—higher than the national average of 88%.

The inability to promptly access budgets has resulted in financial repercussions, noted by finance leaders as leading to financial losses (37%), customer losses (42%), and delays in launching products or services (47%).

In an effort to circumvent these issues, 72% of retail employees admitted to bending rules regarding company spending. This behaviour stems from the belief among 40% of employees that greater budget flexibility would enhance productivity.

Despite 77% of finance leaders indicating a level of trust in employees handling company funds responsibly, many hesitate to permit direct budget access, due to a perceived lack of understanding of financial policies by staff (43%).

The report highlights that complex financial systems obstruct growth, with 80% of finance leaders stating such processes hinder the pursuit of new business opportunities monthly. Additionally, finance teams face unexpected challenges at month-end (40%) due to decentralised spending, which diverts attention from strategic growth.

Brandon Till, Head of Business Solutions at Soldo, remarked, "In retail, speed and agility are everything, whether it's restocking inventory, launching promotions or adapting to shifting consumer demand. But when employees can't access the budgets they need, operations stall, innovation slows and ultimately, growth suffers. Particularly when there are multiple stores to manage and dealing with a high variation in seasonal spending, having greater flexibility of company finances enables retailers to adapt to shifting demands and streamline expense tracking."

"By empowering employees with responsible budget access and equipping finance teams with smarter tools to manage decentralised spending, retailers can navigate financial complexity more effectively, reduce inefficiencies and drive sustainable growth," added Till.

Allowing better access to funds could enhance retail business strategies through increased employee productivity. Over half of senior leaders (55%) believe motivation and proactivity would rise, with 40% of retail employees concurring that their productivity would increase.

Improved budget access might also bridge gaps between finance and other business areas, with 40% of finance leaders and 23% of employees anticipating enhanced relationships through such measures.

For finance teams, centralised budget systems, or the lack thereof, create visibility issues and administrative burdens, leading to risks of overspending and unforeseen financial occurrences.

Till concluded, "In retail, controlling costs, increasing productivity and sustaining growth aren't just important, they're critical survival factors in what is a very competitive market. With unpredictable consumer demand and tight margins, retailers need to be able to make quick decisions and can't afford financial bottlenecks. A progressive approach to spend governance allows them to spot inefficiencies, eliminate waste and accomplish more."