Firms must in­vest in a strate­gic fi­nance func­tion

The pace of change in how busi­ness is con­ducted in to­day’ s mar­ket­place is stag­ger­ing, says Bron­agh Bourke of Grant thorn­ton

Belfast Telegraph - Business Telegraph - - Front Page - By­bron­agh­bourke, Di­rec­tor, Au­dit For fur­ther in­for­ma­tion or ad­vice, Bron­agh Bourke can be con­tacted at bron­ Grant Thorn­ton (NI) LLP spe­cialises in au­dit, tax and ad­vi­sory ser­vices

The pace of change in the way busi­ness is con­ducted in to­day’s mar­ket­place is stag­ger­ing. Within dy­namic com­pa­nies, the peo­ple, tech­nol­ogy and the pri­mary pro­cesses that drive the busi­ness op­er­a­tions need to con­tin­u­ously evolve in order to im­prove ef­fi­ciency, main­tain com­pet­i­tive ad­van­tage and to achieve growth.

The fi­nance de­part­ments within those busi­nesses have had to re­spond to the evo­lu­tion of their own role from the tra­di­tional model of the re­port­ing of num­bers to the in­te­gral strate­gic role that fi­nance func­tions now play in the or­gan­i­sa­tional struc­ture.

Fi­nance func­tions are now in­creas­ingly ex­pected to pro­vide in­sights for stake­holder de­ci­sion-mak­ing in the key ar­eas of risk, growth and per­for­mance, process a nd pro­duc­tion data anal­y­sis, si­mul­ta­ne­ously main­tain­ing strong con­trols and com­pli­ance, and im­prov­ing cost-ef­fec­tive­ness.

To meet that ex­pec­ta­tion the fi­nance team needs to un­der­stand each new tech­nol­ogy, process and busi­ness de­mand, and in­te­grate them into the busi­ness’s per­for­mance re­port­ing.

The busi­ness case for a strate­gic fi­nance func­tion is com­pelling.

The flex­i­bil­ity re­quired in a busi­ness’s strat­egy to ex­ploit and cap­i­talise on the op­por­tu­ni­ties that emerge from the chang­ing world we live in is a ma­jor con­trib­u­tor to com­mer­cial success.

Hav­ing a ro­bust, ef­fec­tive fi­nance ca­pac­ity to in­form the de­ci­sion-mak­ing process and to re­li­ably mea­sure ac­tual per­for­mance in light of those de­ci­sions is im­por­tant, if not fundamental.

At a prac­ti­cal level the re­wards to be reaped from the suc­cess­ful im­ple­men­ta­tion of an ef­fec­tive busi­ness fi­nance func­tion far out­weigh the ini­tial time and ef­fort re­quired to im­ple­ment it.

For the busi­ness, some of the mea­sur­able ben­e­fits in­clude the fol­low­ing: n out­puts are more rel­e­vant, more re­li­able and ac­cu­rate and more user-friendly, creating in­creased trust with stake­hold­ers and hav­ing higher value im­pact and in­sight on the busi­ness; n pro­cesses are more cost-ef­fec- tive, more flex­i­ble, less dis­rupted and take less time; n peo­ple’s ca­pa­bil­i­ties are more aligned to the needs of the busi­ness; n more ef­fec­tive use of tech­nol­ogy that leads to higher au­to­ma­tion, sys­tem func­tion­al­ity and scal­a­bil­ity; and n im­proved cor­po­rate gov­er­nance, com­pli­ance and trans­parency by the deployment of stan­dard­ised tools.

The in­vest­ment to es­tab­lish a strate­gic fi­nance func­tion should not, how­ever, be un­der­es­ti­mated, and no­tably the in­vest­ment is much more than just cost.

Suc­cess­ful im­ple­men­ta­tion also re­quires an in­vest­ment of time and de­sire by the se­nior ex­ec­u­tives and man­age­ment.

The ob­sta­cles and bar­ri­ers that tend to pre­vent the fi­nance func­tion achiev­ing its po­ten­tial will be com­mon to those across poor per­form­ing projects, and in­clude a lack of en­gage­ment and buy-in from se­nior man­age­ment; a lack of over­sight and man­age­ment of new sys­tems and data; a lack of prop­erly de­fined, mea­sured goals and sub­se­quent mon­i­tor­ing of re­sults; a lack of col­lab­o­ra­tion and com­mu­ni­ca­tion; a lack of com­mit­ted al­lo­ca­tion of re­sources; a lack of fore­sight over an­tic­i­pated risks and sub­se­quent plans to mit­i­gate; and a lack of con­nec­tion with the cor­po­rate strat­egy.

Where the ul­ti­mate aim of busi­ness is the cre­ation of value for both cus­tomer and stake­holder, then a col­lab­o­ra­tive ap­proach is re­quired across all parts of an or­gan­i­sa­tion.

Flex­i­ble, rel­e­vant fi­nan­cial re­port­ing will con­tinue to be a cen­tral strate­gic part of that evo­lu­tion.

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