In a world where the pace of change only accelerates, public finance teams face a pivotal moment as we step into 2024. Gone are the days when spreadsheets served as the foundation of our financial systems. The truth is, relying solely on spreadsheets is a precarious foundation for any finance team, one that undermines the accuracy and robustness of vital data. In public finance, you know that your daily operations hinge on the reliability of your financial calculations, models, and forecasts. Yet, if the foundation of your work is flawed, how can you expect to build a sustainable future?
It's time for a seismic shift towards automation, strategy, and empowerment of the next generation, ensuring that the very infrastructure of public finance is not only ready for the challenges of today, but is also resilient enough to embrace the opportunities of tomorrow.
The Problem with Current Public Finance Systems
When I started DebtBook four and a half years ago, I knew that many public finance teams were primarily using Excel spreadsheets to manage their debt. I’ll say this right now, spreadsheets as a single source of truth are not an ideal centralized source of information.
This trend of using spreadsheet-based operating systems spans across various roles, including accountants, CFOs, treasurers, and other public finance professionals. In this industry, you are gathering and using financial data every single day to do your job. However, the dependence on spreadsheet-based systems means anchoring your operations to a fundamentally flawed foundation, setting the stage for inefficiency and error. And as you know, your performance is heavily reliant on the accuracy of your information.
If your team has worked in the same spreadsheets for the past 10 years, they understand those spreadsheets exceptionally well. But as members on your team become stretched too thin, receive promotions, or even leave the organization, the system your current team created can be difficult for new team members to adopt. Now they must try and learn your very specific spreadsheet and its interconnections. This is going to create an obstacle in their day-to-day lives. It's going to slow your team down, which can lead to poor outcomes given the critical role finance plays in organizations.
The Retirement Cliff and the Next Generation
Many of you have heard about the “Great Resignation” in which many Americans quit their jobs during COVID-19. This caused a problem in public finance due to the disproportionate percentage of our workforce in the later stages of their careers compared to the overall US workforce. According to a study by the National Association of State Treasurers (NAST), 31% of the total public finance workforce is over 55 years old compared to 22% of the overall US workforce. While only 16% of the public finance workforce is 25-34 years old.
This large resignation during COVID had a very real impact in public finance. Many employees that were 55 and older left or retired through these disruptive years, creating an institutional knowledge gap within their organizations. Because many people left spreadsheet-based systems behind, they were unable to create visibility for other team members and leaders in the organizations. So, the people filling in the gaps have to dive in to learn the spreadsheets and formulas without a user manual or little documentation. This approach fails to empower them and instead proves disruptive. It results in considerable time spent struggling with version control and rectifying manual errors that inevitably arise from such a setup. This will continue to happen in public finance in 2024 and beyond if financial systems aren’t modernized.
As public finance organizations strive to attract new talent to replace departing staff, we observe a notable shift in priorities among the younger generation. This demographic is increasingly focused on career development opportunities.
I witness this all the time at DebtBook. Young professionals are seeking purpose and significance in their work, valuing rapid advancement and meaningful career opportunities over traditional incentives such as salary and benefits. However, in public finance, it can be harder to promote as quickly. Public organizations often lack competitive compensation tools, such as stock options or higher pay, available in the private sector. Therefore, having technology that enables people to work more efficiently and strategically is essential in attracting new talent.
So as this mass exodus of talent impacts public organizations in 2024 and beyond, finance leaders should look at the systems that are left behind for the next generation of leaders and ask “Does this system enable new team members to do the strategic work that is necessary, or does it slow them down?”
I believe this next generation of employees is driven by a desire to find deeper meaning and impact in their work. They aspire to spend less time manually processing information and pulling numbers from one spreadsheet to another, formatting, and then sharing. Growing up in this digital age, emerging leaders will want to avoid inefficient manual work and devote more time to making a difference. This is where the future lies —more strategic operations across organizations.
The Move for More Strategy in Finance
There is a broader movement across all industries, including public finance, to view the finance function as a strategic asset rather than merely an expense, cost center, or a necessary component to produce an audit. The finance team, with its unique analytical insights, can power an entire organization.
I often hear customers say they want their people to stop gathering the data and start using the data. They are also fighting turnover and aiming to boost retention, so their organization has to become more strategic to deliver the outcomes that their community needs. Public finance teams know they need to better leverage their time. They want to do strategic work all day long, but if they don’t have enough time to do strategic work then they’re not doing strategic work.
Fundamental processes and repetitive tasks must be the first place to start. If your organization is budget and resource-constrained, like most governmental and other public entities, you’re not going to be able to simply throw people at this problem. You don’t have the extra bonus pool or incentives lying around to help with recruiting, which also feeds into the retention problem.
You must be strategic about how you approach this problem. Find ways to streamline and automate the repetitive, operational work that your team is doing and unify your organization’s information across various departments. This will free up valuable time for your team to engage in more significant work, enhancing employee satisfaction as they contribute more meaningfully within the organization. Leaders, too, will benefit because the team is focusing on important work such as financial planning and analysis, debt issuance, and data management, rather than spending excessive time on mandatory tasks such as information gathering and data reconciliation.
Enhancing Financial Operations is the Key to Delivering Essential Services in 2024
The modernization of financial systems with automation and process enhancement is critical for success in 2024.
I’m seeing that our customers, who are finance leaders for universities, hospitals, cities, counties, states, and more, understand the importance of building leverage for their teams to maintain consistent performance over time. They do this by providing growth opportunities that improve retention, reduce turnover, and bolster the resilience of their finance function, which will create ripple effects across organizations and the communities they serve.
The finance teams I see finding the most success are the ones that invest in a system that significantly simplifies their work. By enhancing financial performance, your organization can more effectively deliver essential services such as healthcare, public safety, clean water, affordable housing, transportation, and power — fundamental needs for daily life.
The leaders within these organizations are aware of their significant responsibilities. Their organizations are responsible for everything the community needs–which is a lot of pressure! If ensuring clean water in a community is part of your mandate, especially under resource constraints, you must strive to maximize resources and optimize operations. Strategic finance can help leaders accomplish these tasks, but you need to have the right system in place to allow this to happen.
You need to invest in your people and your systems so that in the near term when your team has turnover, you can recruit new talent that wants to work at your organization for years to come.
Conclusion
The finance department is responsible for money inside the organization. Whether they’re forecasting what their financial position will be in five years based on tax revenue or allocating resources to meet the expectations and desires of the community— they are responsible for the public’s money.
What do you think would happen if you gave your team more time, visibility, and better access to key financial information?
They’re going to do a better job.
In 2024 and beyond, developing systems that not only maintain but also enhance performance is vital. Adopting a long-term vision for organizational and financial health is necessary for strategic advancement. To truly integrate this strategic approach throughout your organization, teams must be freed from the constraints of menial tasks. Building more resilient systems to streamline routine processes enables employees to focus on strategic initiatives, thereby maximizing their effectiveness and extending their contributions across various functions.
