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
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.